A Private Limited Company is the most popular way to start a business; but, once your company is incorporated, you must adhere to several regulations. Managing the day-to-day operations of your firm while also complying with corporate rules may be stressful for any entrepreneur. As a result, it is critical to seek the assistance of a professional as well as comprehend such legal requirements to ensure timely compliance without the imposition of interest or penalties.

Recently, the government barred over 2 lakh firms and disqualified over 3 lakh directors for failing to comply with various provisions of the Companies Act, 2013. This type of historic action occurred at a period when the government became aware of the different strategies employed by business organizations to avoid paying taxes.

Firm law specifies the legal requirements that must be met by every company, such as reporting financial results, reporting management changes, maintaining statutory registers, auditing accounts, and so on.

What are The Mandatory Compliances for Private Limited Company?

To make Mandatory Compliances and Event-Based Compliances easier to grasp, all compliances granted under the Company Law may be separated into two components.

We have elaborated on the following compliances that a private limited corporation must ensure:-

Compliance With Statutory Audits

Statutory audit compliances are performed to assess whether a company delivers accurate financial information by analyzing bank balances, bookkeeping records, and financial transactions.

  • A statutory auditor is hired for the company.
  • The company’s auditors will complete the yearly accounts.

Annual ROC Filings

Private Limited Businesses must file annual accounts and reports with the registrar of companies, stating the identities of its shareholders, directors, and so on.

The following forms must be filed with the ROC as part of the annual filing:

  • Form MGT-7 (Annual returns) must be filed no later than 60 days after the annual general meeting.
  • A private limited company must file Form AOC-4 (Financial statements) within 30 days, including the balance sheet, profit and loss statement, and director report.
Mandatory Compliances For A Private Limited Company In India

Annual General Meeting

  • A shareholder meeting must be held once every year, within six months of the end of the fiscal year.
  • AGMs are convened to approve financial statements, declare dividends, appoint or re-appoint auditors, commissions, and director salaries, among other things.
  • The meeting is held during regular business hours on a non-holiday day. It must happen at the time of the company’s registration or in the city, village, or municipality where the registered office is located.

Board Meeting

  • The first meeting of a company’s Board of Directors must be held within 30 days of the company’s incorporation.
  • Four board meetings should be held every three months, with a minimum of two directors or one-third of the total number of directors required to attend.
  • Furthermore, the meeting’s discussion must be produced and recorded in the meeting’s minutes, which must be kept at the company’s registered office.
  • The date and purpose of the meeting should be announced seven days ahead of time.

Directors Report

Every year, the Director is required to submit information regarding his directorships in other firms. This can be accomplished by submitting a written declaration to the corporation each year.

Income Tax Compliances 

  • Quarterly payment of advance tax Income Tax Return Filing.
  • Tax audit (required if a company’s turnover or gross revenues in the preceding year relevant to the assessment year exceeded Rs. One crore). 
  • Filing of the Tax Audit report.

Maintenance of Statutory Registers And Records

A Private Limited Company is required by law to keep numerous statutory registers and records. Such records must be kept at the company’s registered office. In addition, every company’s books of accounts for at least eight fiscal years should be preserved.

Event-Based Compliances

These are triggered by the occurrence of specific events. There is paperwork to be completed, and there are numerous deadlines for these duties. Aside from Annual Filings, there are a variety of other compliances that must be completed whenever an event occurs in the Company.

Examples of such events include:

  • A change in the Company’s authorized or paid-up capital.
  • Allotment of additional shares or transfer of existing shares Loans to other companies
  • Providing Directors with Loans Appointing a Managing or Full-Time Director and paying remuneration
  • Loans to Boards of Directors
  • Changes in the signatories of bank accounts or the opening or shutting of bank accounts
  • Appointment or removal of the Company’s Statutory Auditors.

Non-compliance

The annual filing of companies with the Registrar of Companies is one of the most important documents for compliance with the Companies Act. Noncompliance, or merely missing a deadline, may result in penalties, increased costs, or a compounded offense. As a result, meeting compliances on time is always preferred.

In addition to the mandatory compliance filings stated above, additional examples of Non-ROC compliance for private limited firms are:·         

  • TDS/TCS payment
  • GST payment and GST filing
  • Other payments of periodic
  • Filing of quarterly TDS returns
  • Advance tax payment
  • Filing of IT returns
  • Filing of tax audit reports Tax audits.

Benefits of Mandatory Annual Compliances:

Why Does A Private Limited Company Need To File ROC Compliance?

For any failure to comply with the ROC, the company and the executives responsible will be penalized for the period of non-compliance. The fine will be calculated daily and for the duration of the default. Furthermore, in the event of a filing delay, an extra charge must be paid. As a result, every organization must comply with ROC rules.

Conclusion:

Running a business, particularly a private limited company, is not something to be done lightly, and involves both a continual investment of significant time and effort, as well as significant knowledge of numerous financial and regulatory intricacies.

Compliance is a business asset that, when managed correctly, can provide firms with a competitive advantage, consumer trust, and, eventually, a return on investment. Compliance is more than just ‘doing the right thing’ or ‘ticking a box,’ it is a way of life, a part of the business, investor trust, and transparent and open culture.

Keep in mind that the cost of non-compliance is always greater than the cost of compliance. There are established and skilled professionals on the market today that are ready and prepared to assist you at every step of the business cycle, not only in incorporation but also with all compliance and regulatory requirements throughout your organization’s lengthy existence.