Annual Compliances for Private Limited Company

What is the Private Company’s Annual Compliance?

A private company is a legal entity with its own identity that must keep its active status by filing documents with the MCA on a regular basis. Every financial year, every company must file an annual return and audited financial accounts with the MCA. The filing of the RoC is required regardless of the turnover, whether it is zero or in crores. Annual compliances for private limited companies are required for all registered companies, whether they do a single transaction or none at all.

Both forms are submitted to report on the activities as well as the financial date for the relevant Financial Year. The date of the Annual General Meeting determines the due date for a company’s annual filing. Continuous failure may result in the company’s name being removed from the RoC register, as well as the directors being disqualified. It has also been noted that MCA has taken active and courageous steps to address any such failures.

Advantages of Annual Compliance

Increasing the credibility of the company

Compliance with the law is the most important prerequisite for any company. On the Master Data page of the MCA portal, the date of the company’s annual return filing is provided. Regularity in compliance is a crucial element for determining an organization’s trustworthiness in government bids, loan approval, and other comparable situations.

Attract Potential Investors

Investors want full financial documents and dates before finishing a proposal when they are seeking money for a company. Investors can either contact the company directly or use the MCA site to review the financial information. Investors also prefer organisations that have a good track record of compliance.

Keep your Active Status to avoid fines

Failure to file the return on a regular basis puts the corporation in default, resulting in hefty fines. It’s also possible that the corporation will be deemed defunct or removed from the RoC. The directors in question have also been disqualified and prevented from being appointed in the future. Since July 2018, an extra fee of $100 will be charged for each day of delay till the date of filing.

Documents required for a company’s annual filing

Document of Incorporation

PAN Card, Certificate of Incorporation, and Memorandum of Association – AoA of Private Corporation

Financial Statements That Have Been Audited

Independent auditors must audit financial statements.

Reports from the Audit Committee and the Board of Directors

A report from an independent auditor as well as a report from the Board of Directors must be presented.

Director’s DSC

One of the directors must produce a valid and active DSC.

Private Limited Company Annual Compliances

First Auditor’s Appointment:

Within thirty days of the company’s incorporation, the Board of Directors must appoint an auditor. A private limited business that does not appoint an auditor faces a monthly penalty of Rs 300. Furthermore, the company will not be permitted to begin operations. He or she must remain in the office until the 1st AGM is completed.

Following Auditor:

A later auditor is hired to keep track of a company’s financial operations. He or she is elected at the first AGM and remains in that post until the sixth AGM. The filing of Form ADT-1, as required by the Companies Act of 2013, appoints a subsequent auditor.

Meetings of the Board:

The first board meeting must take place within a month or thirty days of the company’s establishment. Each financial year, the board is obligated to hold four meetings. It’s also worth noting that the time between two consecutive meetings cannot exceed 120 days. Each director must be notified at least seven days prior to the meeting date of the declaration of board meetings.

The Annual General Meeting:

The Annual General Meeting, or AGM, is one of the most important annual requirements for a private limited corporation. The company’s Board of Directors is required to present the company’s genuine financial status to the shareholders at the AGMs. Every financial year, an AGM must be held on or before September 30th, during normal business hours. The AGM should not be held on a holiday or outside of normal work hours. It must be held at the registered office once a 21-day notice has been issued.

Annual Returns Filing:

Within sixty days of having the Annual General Meeting, all private limited corporations must file their annual returns. MCA Form MGT-7 can be used to accomplish this. Non-filing of yearly returns carries a penalty of Rs 200 per day from the due date.

Financial Statements Filing:

Within thirty days of having the Annual General Meeting, every private limited company must file its financial statements, including the Profit and Loss Account and Balance Sheet, as well as the Director Report, using Form AOC-4. A penalty of Rs 200 per day is imposed if Form AOC-4 is not filed.

Disclosure from the Director:

On the first Board Meeting of each year, all private limited firms must file Form MBP-1 to report their involvement in other companies.

DIR-3 KYC of Directors:

According to the Companies Rules, 2014, directors with an active DIN (Director Identification Number) must file DIR-3 KYC yearly. Failure to submit a DIR-3 KYC will result in an inactive DIN on the MCA portal. Please note that if DIR-3 is deactivated, no Form of annual compliances for private limited companies can be filed.

DIR-8 Form:

Every director of a private limited company must complete Form DIR-8 at the time of his or her appointment to ensure that he or she is not disqualified or banned from acting as a director.

Certificate of Completion of Business:

Every company must get a commencement of business certificate within 180 days of its incorporation. If a corporation fails to obtain this certificate, the company will be fined Rs 50,000 and the directors will be fined Rs 10,000 each day.