What are the post-incorporation compliance requirements for a Private Limited Company in India? In India, post-incorporation compliance for Private Limited Companies is dictated by a series of mandatory submissions and procedural checks as stipulated under the Companies Act 2013, and other relevant regulations. These requirements ensure that companies maintain updated records with the Ministry of Corporate Affairs (MCA).
Private Limited Companies must also comply with routine operational compliances like issuing share certificates, maintaining minutes of board meetings and other disclosures such as loans, investments and changes in the registered office. Companies must regularly update compliance status through the MCA’s e-filing system and failure to adhere to these protocols results in the company being marked as non-compliant, which restricts its ability to make subsequent statutory filings. Regular updating of the company’s master data and adherence to specific filing deadlines are critical to maintaining active status and avoiding significant penalties
Post-Incorporation Compliances for a Private Limited Company in India
Key submissions in post-incorporation compliance for a Private Limited Company include the filing of annual returns and financial statements, maintaining statutory registers and regular filings related to changes in share capital and directorships. Specific forms such as MGT-7 (annual return) and AOC-4 (financial statements) need to be submitted electronically through the MCA portal. Additionally, adherence to specific sections such as DIR-12 (changes among directors), PAS-3 (return of allotment) and form DIR-3 ( KYC filing for directors) is required to avoid penalties. Below are some key post-incorporation compliances for a Private Limited Company in detail:
1. Board Meetings
One of the initial steps in post-incorporation compliance for Private Limited Companies involves holding the first board meeting within 30 days of the company’s incorporation.
This meeting is crucial for setting up the company’s administrative framework, including the appointment of statutory auditors, opening of the company’s bank account and issuance of share certificates. Subsequently, the company must hold a minimum of 4 (four) board meetings every year, with not more than 120 days between two meetings, ensuring ongoing governance and compliance. Small Companies are exempted from this provision, Board of Directors of Small Companies must conduct at least one meeting in each half of the calendar year. There must be a minimum gap of ninety days between these two meetings.
2. Issuance of Share Certificates
Companies are required to issue share certificates to the subscribers of the memorandum, which is the foundational document of the company, within 2 (two) months from the date of incorporation. This certifies their ownership in the company.
The share certificate must include details such as the number of shares issued and the signature of a company officer, which acts as proof of ownership and is necessary for the exercise of shareholder rights.
3. Statutory Registers
Maintaining various statutory registers is mandatory for a Private Limited Companies. These registers include records of members, directors and key managerial personnel, shares and debentures issued, loans and guarantees given by the company, among others. These records must be kept up to date and are subject to inspection by shareholders and regulatory bodies, serving as a permanent record of the company’s statutory obligations and events. The key registers are as follow:
- Register of Members containing the details of the company’s shareholders, including their names, addresses, the number of shares held, the date on which each person was entered into the register as a shareholder and the date on which any individual ceased to be a shareholder.
- Register of Directors and Key Managerial Personnel including information about the directors and key managerial personnel, such as their names, addresses, the dates of their appointments and the duration of their terms.
- Register of Charges including any charge created by the company on its assets, whether tangible or otherwise.
- Register of Loans, Guarantees and Investments documenting all loans extended, guarantees given and investments made by the company.
- Register of Deposits recording details about the depositors and the terms of these deposits.
- Minutes of board meetings and general meetings are recorded and maintained as well. This includes discussions, resolutions passed and decisions made during the meetings.
4. Filing of Disclosure
Directors of the company disclose any concerns or interests in any company or companies at the initial Board meeting they attend as a director, and subsequently at the first meeting of each financial year or whenever there is any change in the disclosures already made. This disclosure helps in identifying potential conflicts of interest and ensures transparency in the management of the company. These disclosures are filed with the Registrar of Companies and must be updated whenever there is a change in the directorships held by any director.
5. Financial Statements and Annual Returns
Every year, Private Limited Companies must prepare and file their financial statements and annual returns with the MCA. The financial statements, which include the balance sheet, profit and loss account and cash flow statement, should be audited by a chartered accountant. The annual return provides a comprehensive overview of the company’s activities throughout the financial year.
These documents must be filed within specified deadlines—financial statements within 180 days from the financial year’s end and annual returns within 60 days from the annual general meeting.
6. GST Registration
Companies expected to exceed the GST threshold (currently Rs 20 lakhs in annual revenue, or Rs 10 lakhs for North-Eastern and hill states) must register for GST within 30 days of qualifying.
This is mandatory for companies engaged in interstate trade regardless of revenue. GST registration is vital for invoicing, claiming input tax credits and compliance with tax regulations.
7. Professional Tax Registration
Applicable in certain states in India, this tax is levied on professions and employments. Companies must register for Professional Tax as per the local state regulations where they operate.
This compliance is generally required within 30 days of hiring employees or starting business operations.
8. Other Licenses and Registrations
Depending on the specific business activities, additional licenses might be required. Common examples include the Import Export Code (IEC) for businesses involved in international trade, Food Safety and Standards Authority of India (FSSAI) licensing for food-related businesses and environmental clearances if applicable.
9. Compliance under Labour Laws
Companies employing staff must comply with various labour laws, such as the Provident Fund (PF), Employees’ State Insurance (ESI), Professional Tax and Labour Welfare Fund contributions. Registrations for PF and ESI are mandatory once a company employs a certain number of individuals (typically 10 for PF and 20 for ESI) and regular filings need to be maintained to comply with these regulations.
10. Annual Compliance Filing
This involves the submission of several forms to the Ministry of Corporate Affairs. Form MGT-7 (Annual Return) and Form AOC-4 (Financial Statements) must be filed annually. These forms report on the company’s financial health and operational status throughout the financial year and must be submitted by specified deadlines.
11. Event-Based Filings
Certain events, such as changes in the directorship, shareholding pattern or the registered office, require immediate reporting to the MCA via specific forms. For example, Form DIR-12 is used for appointment or resignation of directors, Form SH-7 for alteration of share capital and Form INC-22 for a change in the registered office location within a city.
Final Thoughts
Adherence to post-incorporation compliance for private limited companies in India is vital in maintaining both legal and operational integrity. These requirements, ranging from holding timely board meetings to filing annual returns and financial statements, ensure transparency and accountability within the company.
Failure to Post-incorporation compliances for Private Limited Companies can lead to severe consequences, including legal penalties, operational disruptions, loss of reputation and financial losses. Furthermore, non-compliance may result in restrictions on business activities and damage the company’s standing in the market. Therefore, prioritizing compliance with regulatory obligations is essential for private limited companies to uphold their credibility,
Ensure Compliance with Burgeon Law’s Expertise
Explore Burgeon Law’s compliance services to navigate the intricacies of post-incorporation compliances of Private Limited Companies. With our comprehensive legal expertise, we specialize in assisting businesses in ensuring full compliance with regulatory requirements, allowing them to focus on growth and operational excellence. Let us guide you through the complexities of establishing and maintaining legal integrity, enabling your company to thrive in the dynamic business environment.
FAQs
1. What are the post-compliance requirements for a Private Limited Company in India?
Requirements of post-compliance for a Private Limited Company in India typically include:
- Board Meetings
- Issuance of Share Certificates
- Maintaining Statutory Registers
- Filing of Disclosures
- Financial Statements and Annual Returns
- Income Tax Compliances
- GST Registration
- Other Licenses and Registrations
- Compliance under Labour Laws
- Annual Compliance Filing
- Event-Based Filings
2. How do I obtain PAN and TAN for my new company?
To obtain a PAN for your new company follow the following steps:
- Go to the NSDL website and select either Form 49A (for Indian entities) or 49AA (for foreign entities) from the application menu.
- Choose the ‘Firm’ category and enter your company details, including the name (in the ‘Last Name’ field), incorporation date and contact information.
- Fill in the company-specific details like registration number, financial information and mailing address.
- Determine your AO (Assessing Officer) code by visiting the website’s ‘AO Code Search for PAN page.
- Upload the necessary documents (proof of identity, address, etc.) and pay the application fee.
- You will receive an acknowledgement via email containing a PDF of the acknowledgement form and a unique number. Note this number down for tracking your PAN card status.
- Print and fill out the acknowledgement form and send it to the NSDL office within 15 days, along with a copy of your company’s registration certificate. If you chose demand draft (DD) as your payment method, include the DD with your form. Remember to mark the envelope as ‘Application for PAN with Acknowledgement’ and note that processing will occur once proof and payment are received.
To obtain a TAN for your new company follow the following steps:
- Log in to the official website of NSDL TAN.
- Click on ‘Online Application for TAN (Form 49B)’.
- Select the ‘Apply for new TAN’ option and click on the category of deductors.
- The TAN application form will open. Fill out the form as required, and do not miss filling in the mandatory fields with * marks.
- A confirmation screen will display before you if your form contains no errors. You can choose the edit option on this confirmation screen to amend any data.
- After thoroughly checking all the information, click ‘Confirm’.
- Pay the required fees online. You can also pay via cheque, DD, or credit/debit card.
- You will receive an acknowledgement slip after completing the payment procedure successfully. You can use the 14-digit acknowledgement number by which you can track your application status.
3. Is GST registration mandatory for all private limited companies?
A company can choose to get GST registration at the same time as its incorporation, but this is optional. Only when the company’s turnover exceeds a certain limit, it become compulsory to get GST registration. The sales or turnover of your business in a year if it crosses the threshold of 40 lakhs for Goods & for services 20 lakhs GST registration is mandatory.
4. What documentation is needed to open a corporate bank account?
Following are the documents necessary to open a current account in the name of the Company:
- Certificate of incorporation and Memorandum & Articles of Association;
- Resolution of the Board of Directors to open an account and identification of those who have authority to operate the account;
- Power of Attorney granted to its managers, officers or employees to transact business on its behalf (if applicable);
- Copy of PAN allotment letter;
- Copy of the telephone bill.
5. How often should board meetings be held according to Indian law?
As per Section 173 of the Companies Act, 2013, Private Companies are mandated to convene a minimum of four board meetings within a calendar year. These meetings serve as crucial platforms for the company’s directors to deliberate on various strategic, financial and operational matters. Small Companies are exempted from this provision, Board of Directors of Small Companies must conduct at least one meeting in each half of the calendar year. There must be a minimum gap of ninety days between these two meetings.
6. What is the significance of maintaining proper bookkeeping for a private limited company?
Maintaining proper bookkeeping for a Private Limited Company is crucial for legal compliance, financial transparency, informed decision-making and risk management. It ensures adherence to regulatory requirements, fosters trust with stakeholders, facilitates tax compliance, supports effective risk mitigation, simplifies auditing processes and enhances overall operational efficiency and credibility. In essence, proper bookkeeping serves as a foundation for the company’s financial management, governance and long-term success
