Company Annual Compliances

Company Annual Compliances

Ensuring adherence to Company Annual Compliances (Annual RoC compliance) is pivotal for companies operating in India. Company Annual Compliances for Private Limited company can be broadly classified into:

• Annual Compliance: These are the regular, yearly filings and disclosures companies must make, including submitting annual returns and financial statements.
• Event-Based Compliance: These are specific compliances that need to be addressed as and when certain events occur within the company, such as changes in the company's management, share capital, or registered office.
• Other Compliances: This category includes a range of other regulatory obligations that might not fall strictly under annual or event-based categories but are essential for maintaining the company's legal status, such as director KYC updates and maintenance of statutory registers.

Annual Compliances for Private Limited Company

INC-20A: Declaration for Commencement of Business

For companies registered in India post-November 2019 with a share capital, securing a Commencement of Business Certificate is a prerequisite before initiating any business activities or exercising borrowing powers. This certificate must be acquired within 180 days of incorporation by filing Form INC-20A. Failure to obtain this certificate results in penalties, with the company facing a fine of Rs. 50,000 and directors being charged Rs. 1,000 per day for each non-compliance.

Appointment of Auditor and Filing E-form ADT-1

The first auditor must be appointed within 30 days of incorporation and ratified by the shareholders during the first Annual General Meeting (AGM). Following the AGM, Form ADT-1 confirming the auditor's appointment must be filed with the Registrar of Companies (ROC) within 15 days.

Board Meetings

The first board meeting should be held within 30 days of incorporation. Subsequently, companies must hold at least four board meetings every year, ensuring that the interval between two meetings is at most 120 days. A notice should be given seven days in advance about the meeting's date and purpose.

Annual General Meeting (AGM)

The first AGM should be conducted within nine months from the closure of the first financial year. For subsequent years, the AGM must be held every year within six months from the end of the financial year, ensuring that the gap between two AGMs is at most 15 months. AGMs are held for approval of financial statements, declaration of dividends, appointment or re-appointment of auditors, commission, remuneration of directors, etc.

Annual ROC Filings

Private Limited Companies must file annual accounts and returns to the companies' registrar, disclosing the details of their shareholders, directors, etc. The following forms are to be filed with the ROC:

• AOC-4 (Filing of Financial Statements): must be submitted within 30 days following the AGM.
• MGT-7 (Annual Returns): must be filed within 60 days of the annual general meeting.
• DIR-12 (Appointment/Resignation of Directors): must be filed within 30 days of such changes.
• DIR-3 KYC (Director KYC Submission): Directors are required to submit their KYC details through Form DIR-3 by September 30th each year. Failure to file DIN eKYC results in a penalty of Rs. 5000.
• DPT-3 (Return of Deposits): Companies must report details of deposits and other non-deposit receipts annually by June 30th.

Directors' Report & Statutory Registers

An abridged Directors' Report covering all required information for small companies under Section 134 must be prepared, authorized by the Chairperson or at least two directors. Companies must maintain and regularly update various statutory registers and records, including minutes of board meetings and AGMs, books of accounts, financial statements, and files with the ROC. Companies must send approved financial statements, along with the Directors' and Auditors' reports, to all members at least 21 clear days before the AGM.

Event-Based Compliances for Private Limited Company

Besides the annual filings, there are various other compliances that need to be complied with on occurrence of any event in the company:

• Change in the authorized capital or the paid-up capital of the company.
• Allotment of new shares or transfer of shares.
• Giving loans to other companies.
• Giving loans to directors.
• Appointment of managing or whole-time Director and their payment.
• When a bank account is opened or closed, or there is a change in the signatories of a bank account.
• If there is an appointment or change of the statutory auditors of the company.

It is necessary to file different forms with the registrar for all such events within a specific period. In case of missing out on this, additional fees or penalties might be levied.

Non-Registrar Compliance

These regulatory obligations do not directly involve the ROC but are essential for lawful business operations:

• Payment of Periodic Tax Due: Regular payment of Goods and Services Tax (GST) liability, Tax Deducted at Source (TDS), Tax Collected at Source (TCS), Advance Tax, and Professional Tax (PTax).
• Filing of Periodic Returns: Monthly/Quarterly/Annual GST Returns, Quarterly TDS Returns, Filing of Income Tax Returns, Filing of Tax Audit Report, Filing of half-yearly ESIC returns, Filing of Provident Fund (PF) returns, and Filing of professional tax (PTax) returns.
• Regulatory Assessment and Reporting: Compliance with various regulatory assessments and reporting requirements under different acts of law, such as the Environment Protection Act, Competition Act, and Factory Act.

Non-compliance Penalty

Non-compliance with the rules and regulations of the Companies Act in India can result in penalties for the company and its defaulting members. Penalties typically involve fines imposed for the duration of the non-compliance. Additionally, delays in annual filings may incur additional fees.

Limited Liability Partnerships (LLPs) Compliance

Limited Liability Partnerships (LLPs) are recognized as separate legal entities, and therefore, they are bound by specific compliance obligations. The key LLP compliance requirements include:

• Maintenance of Proper Book of Accounts
• Filing of Annual Return (LLP Form 11) — within 60 days after the conclusion of the financial year (by May 30th each year).
• Filing of Statement of Accounts & Solvency (LLP Form 8) — within 30 days from the conclusion of six months after the financial year ends.
• Filing of Income Tax Return (ITR-5)
• Filing of Tax Audit (If Applicable) — LLPs with an annual turnover exceeding Rs. 40 lakhs or a contribution surpassing Rs. 25 lakhs are obligated to have their books of account audited.

Failure to file the LLP annual filing forms within the stipulated timeframe incurs a penalty of Rs.100 for each day of delay.

Benefits of LLP annual filing

• Higher Credibility: Meeting the annual compliances of LLP enhances the organization's credibility, aiding in loan approvals.
• Record of Financial Worth: These filings create a financial track record for LLPs, attracting potential investors and partners.
• Stays Active and Penalty-Free: Consistent compliance keeps LLPs from being declared defunct, preventing penalties and additional fees.
• Conversion and Closure: Regular filings simplify the process of converting LLPs into other business structures and expedite partnership dissolution.

Other Company Compliances

We also handle Section-8 Compliance, Partnership Firm Compliance, PF Return Filing, ESI Filing, GST Return Filing, Nidhi Company compliances, and event-based compliances such as Appointment and Resignation of Directors, Removal of Director, Change in Registered Office, Change in Share Capital, Change in LLP Agreement, Winding Up of Private Limited Company, Closing a Limited Liability Partnership, Revival of Struck Off Companies, and conversions between company structures.