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Annual Compliance for Private Company

Annual Return Filing for Private Limited Companies

A Private Company is a distinct legal entity separate from its directors, and it is essential to maintain its active status by regularly submitting documents to the Ministry of Corporate Affairs (MCA). Regardless of the company’s revenue, whether it’s zero or in the millions, every private company must submit an annual return and audited financial reports to the MCA for each fiscal year. Annual compliance with Registrar of Companies (ROC) filings is mandatory for all registered private limited companies, even if they have only one business activity or none at all.

These forms are used to report the company’s financial activities and data for the specific financial year. The deadlines for filing annual reports depend on the timing of the Annual General Meeting (AGM). Repeated failures to meet these deadlines can result in the removal of the company’s name from the register of companies and may even lead to the disqualification of its directors. It’s worth noting that the MCA has been actively taking strong actions to address such failures. Company compliance requirements can be categorized into two main sections: Mandatory Compliances and Event-Based Compliances.

Mandatory Annual Compliances

Certainly, here are the mandatory requirements for a private limited company in different words:

  1. First Board Meeting: A private limited company must convene its inaugural board meeting within 30 days of its incorporation. Notice of this meeting should be sent to all directors at least seven days in advance.
  2. Subsequent Board Meetings: The company is obligated to hold a minimum of four board meetings each year, with no more than 120 days between them.
  3. Disclosure of Director’s Interests: Directors must disclose their interests in any other companies, corporate bodies, partnerships, or organizations, including their shareholdings, during the first board meeting they attend, at the first meeting of the board in each financial year, or whenever there is a change in their interests. This disclosure is made using Form MBP-1 and must be maintained in the company’s records.
  4. Appointment of First Auditor: The board of directors must appoint the company’s first auditor within 30 days of incorporation. The first auditor will serve until the conclusion of the first Annual General Meeting. Filing Form ADT-1 is not required for the first auditor appointment.
  5. Subsequent Auditor Appointment: In the first Annual General Meeting, the board of directors must appoint the auditor, who will serve until the sixth Annual General Meeting. The company must notify the Registrar of Companies (ROC) by filing Form ADT-1 within 15 days of the appointment.
  6. Annual General Meeting (AGM): Every company is obliged to hold an AGM on or before September 30th each year, during business hours, at the company’s registered office within the relevant locality. A 21-day notice must be given for the AGM.
  7. Filing of Annual Returns (Form MGT-7): Private limited companies must submit their annual returns within 60 days of the AGM. The yearly return covers the period from April 1st to March 31st.
  8. Filing of Financial Statements (Form AOC-4): Private limited companies must file their ‘Balance Sheet,’ ‘Profit and Loss Account,’ and ‘Director’s Report’ within 30 days of the AGM.
  9. Statutory Audit of Accounts: Every company must prepare its financial accounts and have them audited by a Chartered Accountant or a qualified professional at the end of each financial year. The auditor must provide an audit report along with the audited financial statements for filing with the Registrar.

Event-Based Compliances

Event-based compliance requirements are obligations that must be met when specific events occur within a company, such as alterations in directorship, relocation of the registered office, or modifications to the authorized share capital. Below are some examples of event-based agreements, each accompanied by its respective timeframe for compliance.

ActionsForm No.Phase Limit
Change in registered officeINC-22  Within fifteen days starting from the date of such change
Change in Directors or KMP  DIR-12  Within 30 Days of such change
Increase in Authorized Share capital  SH-7  Within a month of the Ordinary Resolution being approved,
Filing of resolution and agreements  MGT-14  Within a month from the date when the resolution is approved.
Increase in Paid up share capital (Issue of security)PAS-3Within fifteen days from the date of the allotment
Alterations in secured borrowing (Establishment, modification and satisfaction of charge)CHG-1  All types of Charges within 30 days of its creation
Application for KYC of Directors  DIR-3 KYC  On or before 30th April of immediate next Financial Year (Annual Compliance)
ACTIVE (Active Company Tagging Identities and Verification)INC-22AOn or before 25th April 2019 (Applicable to all companies registered before 31st December 2017)
Declaration of Commencement of BusinessINC-20A  Within 180 days from the date of incorporation of the company. (Applicable to companies incorporated after 2nd November, 2018.)

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EssentialsForm No.Phase Limit
Change in Directors or KMPDIR-12Within 30 Days of such change
Increase in Authorized Share capitalSH-7Within 30 days of passing OR
Increase in Paid up share capital (Issue of security)PAS-3Within fifteen days from the date of the allotment
Change in registered officeINC-22Within fifteen days from the date of such change
Change in secured borrowing (Creation, modification and satisfaction of charge)CHG-1All types of Charges within 30 days of its creation
Change of name of companyINC-24Within 60 days from the date of applying reservation of name in INC-1
Conversion of companyINC-27
Filing of resolution and agreementsMGT-14Within 30 days from date of passing resolution
Removal of Auditor before ExpiryADT-2Within 30 days from date of passing SR
Application for KYC of DirectorsDIR-3 KYCOn or before 30th April of immediate next Financial Year (Annual Compliance)
Report for Disqualification of the DirectorDIR-9To be filed by company within 30 days of such disqualification

 Stipulations of Non-Compliances

If a declines to follow any of the administrative compliances, both the company itself and every employee responsible for this non-compliance will be subject to fine for the period for which the default continues.

Benefits of Annual Compliance

Greater Company’s Credibility:

Compliance with the law is the fundamental requirement for any company- the company’s annual return filing date is prominently displayed on the MCA portal, making it a key indicator of a company’s credibility. Regularly fulfilling compliance requirements not only boosts a business’s reputation but also makes it more appealing to customers. Moreover, it significantly improves the company’s prospects of securing government tenders and loan approvals.

Attracting More Investors:

Investors place great importance on a company’s financial records and compliance track record. Prior to investing in a company, investors closely examine the consistency with which annual returns are filed on the MCA portal. Companies that exhibit regular compliance tend to be more favored by investors. Therefore, for a private company looking to attract more investors, it is important to consistently file annual compliance reports.

Sustaining Active Company Status and Avoiding Penalties:

To maintain its active status and steer clear of penalties, a private company must diligently submit its annual compliance reports. Neglecting this obligation could result in penalties and adversely impact the company’s business standing. It may even lead to the company being labeled as defunct or removed from the Registrar of Companies (ROC). In addition, the directors associated with the company may face disqualification and be barred from future appointments. It’s worth noting that since July 2018, a supplementary fee of ₹100 per day of delay has been imposed until the compliance is filed.

Checklist of Annual Compliance for Private Start-ups

 A startup operating as a private limited company must follow various compliance requirements established by different laws and regulatory authorities. These obligations encompass, but are not limited to, regularly submitting tax and other financial reports, organizing board and other crucial meetings, and maintaining authorized financial records and accounts.

  • Payment of periodic dues: GST obligations, mandatory TDS, and TCS payments.Top of Form
  • Non-Registrar compliance of periodic returns – (Monthly, quarterly, annual returns for GST, TDS, etc.)
  • Monthly/Quarterly- GST Returns 
  • Quarterly-TDS Returns
  • Assessing and managing advance tax liability and payment of advance tax periodically.
  • Filing of Income Tax Returns (Tax will be obligatory at a flat rate of 30% plus Education Cess) 
  • Filing of Tax Audit Report
  • Assessing trade activities under various legal acts, such as the Environment Protection Act, Money Laundering Act, Competition Act, Factory Act, and others, from an administrative perspective.

Documents Required for Annual Filing of Company

  • Incorporation Certificate
    • PAN Card
    • Certificate of Incorporation and
    • MOA – AOA of Private Company
  • Audited Financial Statements
  • An independent auditor must audit financial Statements
  • Audit Report & Board Report
  • Independent Auditor’s report and Board report should be taken into consideration.
  • DSC of Director
  • An accurate and active DSC of one of the directors must be provided and presented.

If you have any doubt regarding this, then you can send your doubts on companysuggestion and our team of experts will guide you.

CS Deepa Sharma

Author is a associate member of the Institute of Company Secretaries of India (ICSI) and apart from that she holds LLB degree and Master in Commerce degree from Rajasthan University. She is having over 5 years of experience as a Practicing Company Secretary. She is well versed with all the matters related to Company Law and ROC matters, RERA , statutory reporting, Compliance Report and Corporate Governance. She is having good exposure in maintaining secretarial records as prescribed under Companies Act, 2013.

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