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Company Compliances
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~ ROC Compliance for Private Limited Company ~
Ensuring adherence to ROC compliance is pivotal for companies operating in India. ROC Compliance for Private limited company can be broadly classified into:
Annual Compliances for Private Limited Company
Annual compliances are a critical aspect of corporate governance for companies registered in India. Key annual compliances include:
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, underscoring the importance of promptly adhering to this regulatory requirement.
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.
Further, the discussion in the meeting needs to be drafted and recorded in the minutes and maintained at the company's registered office.
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.
The meeting is held during business hours on a day that is not a public holiday. It shall occur at the company's registration or the city, village, or town in which the registered office is situated.
Annual ROC Filings
Private Limited Companies must file annual accounts and returns to the companies' registrar, disclosing the details of their shareholders, directors, etc.
As a part of the annual compliance for private limited company, the following forms are to be filed with the ROC:
AOC-4: Filing of Financial Statements
This form is for filing the company's financial statements and must be submitted within 30 days following the Annual General Meeting (AGM).
MGT-7 - Annual Returns
Form MGT-7 (Annual returns) must be filed within 60 days of the annual general meeting
DIR-12: Appointment/Resignation of Directors
This form pertains to changes in the company's directorship, including appointments and resignations, and 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, provided their Director Identification Number (DIN) was allotted by March 31st of that year and the status is 'Approved'. Failure to file DIN eKYC results in a penalty of Rs. 5000.
DPT-3: Return of Deposits
Companies must use this form to report details of deposits and other non-deposit receipts annually by June 30th.
Directors’ Report
An abridged version covering all required information for small companies under Section 134 must be prepared. It should be authorized by the Chairperson or at least two directors.
Maintenance of Statutory Registers and Books of Accounts
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.
Circulation of Financial Statements and Other Relevant Documents
Companies must send approved financial statements, along with the Directors’ and Auditors’ reports, to all members at least 21 clear days before the AGM.
For ready reference, below is a table summarizing the annual compliances for private limited company and their respective due dates:
| Annual compliances for Private Limited Company | Due Date |
|---|---|
| Commencement of Business Certificate (COB) | Within 180 days of incorporation |
| Appointment of Auditor and Filing E-form ADT-1 | Within 15 days of the AGM |
| Holding Board Meetings | As per the schedule of board meetings |
| Conducting the Annual General Meeting (AGM) | Within 9 months from financial year-end |
| INC-20A: Declaration for Commencement of Business | Within 180 days of incorporation |
| AOC-4: Filing of Financial Statements | Within 30 days of the AGM |
| MGT-7A: Annual Returns for Small Companies/OPCs | Within 60 days of the AGM |
| DIR-12: Appointment/Resignation of Directors | Within 30 days of appointment/resignation |
| DIR-3 KYC: Director KYC Submission | By September 30th each year |
| MGT-14: Filing of Board Resolutions | Within 30 days of passing the resolution |
| DPT-3: Return of Deposits | By June 30th each year |
| Directors’ Report | At least 21 days before the AGM |
| Maintenance of Statutory Registers and Books of Accounts | Throughout the financial year |
| Circulation of Financial Statements and Other Relevant Documents | At least 21 days before the AGM |
Event-Based Compliances for Private Limited Company
Besides the annual filings, there are various other compliances that need to be compiled with on occurrence of any event in the company.
Here are specific instances of such events:
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. Hence, it is necessary to meet such compliances on time.
Non-Registrar compliance
These regulatory obligations do not directly involve the ROC but are essential for lawful business operations. They may be governed by various other regulatory bodies and laws, depending on the nature of the business, its size, and the industry it operates in. These include:
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. Therefore, companies should fulfil their compliance obligations promptly to avoid penalties and financial repercussions.
~ 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 responsibility for ensuring compliance rests with the Designated Partners of the LLP. The key LLP compliance requirements for LLPs include the following:
Ensuring annual compliances of LLP with these obligations not only maintains the legal status of the LLP but also helps in building transparency, credibility, and financial accountability.
Maintenance of Proper Book of Accounts
In LLP annual filing, one must diligently maintain accurate and up-to-date financial records. These records should encompass details of the LLP’s financial transactions, profits, expenses, assets, and liabilities. Proper bookkeeping is crucial to assess the financial health and performance of the LLP.
Filing of Annual Return – LLP Form 11
LLPs are required to file an annual return with the Ministry of Corporate Affairs for each financial year. This annual return is submitted using Form 11, and it provides essential information. This form gathers essential details about the LLP, including the total number of designated partners, comprehensive partner information, contributions received by partners, and a summary of all partners involved.
Filing Deadline
All LLPs are required to submit Form 11 within 60 days after the conclusion of the financial year. This means that Form 11 should be filed by May 30th each year.
Importance of Timely Filing
It’s crucial for LLPs to adhere to this deadline, as failure to do so can have consequences. One significant implication is that an LLP will not be permitted to close or wind up its operations until it has filed all its annual returns, including Form 11.
Penalty for Late Filing
In the event that an LLP neglects to submit its LLP annual filing forms within the stipulated timeframe, it will incur a penalty of Rs.100 for each day of delay performed.
Duration of Penalty
The penalty will be applicable from the due date of filing the return and will continue until the actual return is filed.
Filing of Statement of Accounts – LLP Form 8
LLPs must submit a Statement of Accounts & Solvency annually, which details the financial position of the LLP, including its assets and liabilities. This statement is filed using Form 8.
Due Date
LLPs are required to file Form 8 within 30 days from the conclusion of six months after the financial year ends. This means that Form 8 should be filed within this timeframe to maintain LLP compliance.
Signing and Certification
Form 8 can be digitally signed by two designated partners of the LLP. Additionally, it must be certified by a company secretary, chartered accountant, or cost accountant.
Form Components: Form 8 consists of two main parts:
Penalty for Late Filing
It’s essential for LLPs to adhere to the filing timeline for Form 8. Failure to file this form on time can result in penalties, specifically a daily fine of Rs.100.
Ensuring LLP annual Compliance with the filing requirements outlined in Form 8 is vital to maintain good standing and avoid financial penalties.
Audit and Tax Filing Requirements for LLPs
Limited Liability Partnerships (LLPs) are subject to specific audit and tax filing obligations as per the provisions of the Limited Liability Partnership Act 2008, and the Income Tax Act, 1961. Here are the key requirements:
Tax Audit
Audit Requirement: 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 by practicing Chartered Accountants. The deadline for filing the tax return for such LLPs is September 30th.
Note: From Assessment Year 2021-22 (Financial Year 2020-21) onwards, the threshold limit for a tax audit has been raised to Rs. 5 crore under certain conditions. This applies if the taxpayer’s cash receipts constitute less than 5% of the gross receipts or turnover and if cash payments are limited to 5% of the aggregate payments as per the Income Tax Act 1961.
Tax Filing Deadline (Without Tax Audit)
For LLPs not required to undergo a tax audit, the due date for tax filing is July 31st.
International Transactions – Form 3CEB
LLPs that have engaged in international transactions with associated enterprises or have undertaken Specified Domestic Transactions must to file Form 3CEB. This form should be certified by a practicing Chartered Accountant. The deadline for LLPs obliged to file Form 3CEB is November 30th.
Compliance with these audit and tax filing requirements is essential for LLPs to fulfill their legal obligations and avoid penalties.
Income Tax Return (ITR – 5)
LLPs are also required to file their income tax return using Form ITR-5. The due date for ITR filing is July 31st unless the LLP is subject to a tax audit, in which case the deadline is extended to September 30th. The income tax return provides details of the LLP’s income, expenses, and tax liability.
LLP Annual Filing Compliance Calendar is given here for your quick reference:
| Form Type | Description | Due Date | To be filed with |
|---|---|---|---|
| Form-8 | Filing of Statement of Accounts | 30th October | Registrar of Companies |
| Form-11 | Filing of Annual Returns | 30th May | Registrar of Companies |
| ITR – 5 | Income Tax Return | 31st July (or 30th September, if tax audit is mandatory) | Income Tax Department |
| ITR – 5 | Income Tax Return | 31st July (or 30th September, if tax audit is mandatory) | Income Tax Department |
| Audit | Tax Audit (only if applicable) | 30th September | Income Tax Department |
Benefits of LLP annual filing
The benefits of LLP annual compliance are listed as follows:
~ Nidhi Limited Company Compliance ~
Post Incorporation Compliances of a Nidhi Company
There are few necessary compliances set out by the Nidhi Company Rules to be followed by every Nidhi Company within one year of its incorporation, such as:
Limitations Imposed on Nidhi Companies
According to the Rule 6 of Nidhi rules 2014, a Nidhi Company has been restrained from performing given undertakings:
Note:
If the company meets all the aforementioned provisions, it can facilitate locker facilities to its members if the income from locker render does not surpass 20 percent of the total income of the Nidhi company at any instance during the FY.
Private circulation of the particulars relating to FD schemes among members bearing the terms “for private circulation to members only” shall not be considered as an advertisement.
Types of Compliances
There are two types of compliances as mentioned in the Companies Act and Nidhi Company Rules:
Annual compliances of Nidhi Company
Annual Compliances are generally those compliances that include the status and performance of the Nidhi Company in the whole year. The annual compliances are filed annually, but few such compliances are filed after a certain interval of time.
Event-Based Compliances of Nidhi Company
Event-based compliances are only filed at the time of incorporation of Nidhi Company. And again, these compliances are needed to be fulfilled at the time of any alteration in the structure of the Nidhi Company, and such alteration is non-periodical. These compliances are not mandatorily to be filed at a fixed interval.
Filing Compliance with Registrar of Companies as Per Nidhi Rules 2014 and Amended Rules 2022:
Form | Due Date | Contents | Noteworthy Points |
NDH – 1 Return of Statutory Compliance | Within ninety days from the closure of the first financial years & where applicable form the second Financial Years. | Details relating to members, deposits loans, reserves for the financial years, | E- Form GNL-2 Form relating to the submission of paper workss with the registrar |
NDH – 2 Application to Regional Director and Intimation to Registrar | Within thirty days from the closure of the financial year | Application relating to the extension of timeline for not meeting requirements of members and deposits as required post-incorporation. | E- Form RD -1 Applications made to Regional Director |
NDH – 3 application for Half Yearly return | Within thirty days from the closure of each half year | Details relating to members, deposits, loans, for the said duration. It entails details such as total members admitted in the half-year, overall members who ceased to be members as on date | E- Form GNL-2 Form relating to the submission of paper workss with the registrar |
NDH -4 | For New Nidhi Company Within the duration of sixty days post expiration of one year From the date of incorporation For Existing Nidhi Company Within a timeline of one year from its incorporation date or within the duration of 6 months from the date of commencement of Nidhi Rules 2019, whichever is later | For filing application for declaration as Nidhi Company and updating of status | Failure to file form NDH -4 Companies shall not be permitted to file Form No.SH -7 (Notice to Registrar of any changes to share capital) and Form PAS -3 (Return of Allotment) |
NDH -5 | A Nidhi shall not close any branch unless it: (a) publishes an advertisement in a newspaper in vernacular language in the place where it carries on business at least thirty days prior to such closure, informing the public about such closure. (b) Fixes a copy of such advertisement or a notice informing such closure of the branch on the notice board of Nidhi for a period of at least thirty days from the date on which advertisement was published under clause (a) and (c) gives an intimation to the Registrar within thirty days of such closure. | Format of advertisement to be given while closing branch | |
AOC – 4 | Within the duration of 30 days from the date of the Company’s AGM | Filing of Financial Statements | |
MGT -7 | Within the duration of 60 days of the AGM | Annual return along with a list of members serving the company |
Forms NDH-1 and NDH-3 should be filed with standard fees and should be approved by the concerned professional.
Limits under Rule 15 of Nidhi Rules 2014 for the grant of loan against certain deposit valuation are:
Deposit Made (Rs) | Loan Granted (Rs) |
Less than 2 crores | 2 lakhs |
higher than 2 crores but lower than 20 crores | 7.5 lakh |
Higher than 20 crores lower than 50 crores | 12 lakhs |
50 crores or more | 15 lakhs |
A Nidhi company that has failed to ensure profitability in the three preceding financial year shall not disburse any new loans surpassing 50 per cent of the max. amount of loans cited above.
A member cannot have access to any loans in case of previous defaulting history relating to loan repayment.
The loans can be disbursed only against the given security.
Checklist for compliances for Nidhi Company
There is an important checklist for Nidhi Company compliances which each Nidhi Company must fulfil with the time.
The checklist for Annual compliance:
The checklist for Event-based compliance:
Penalties for non-compliance
When the Nidhi Company fails to comply with the required compliances as mentioned under the Companies Act or the Nidhi Company Rules, then it is made liable for:
The Nidhi Company (Amendment) Rules 2022
The followings are the said amendments made under the Nidhi Company (Amendment) Rules 2022:
Branch
The definition of the Branch has been inserted. According to this rule, Branch means a place other than the registered office of Nidhi Company.
Deposit raised by the company
However, Not anything written under these rules shall apply to the company incorporated on or after the commencement of these Nidhi Company Amended Rules.
Declaration of Nidhi Company
Any public company wanting to be declared as a Nidhi company shall apply in Form NDH-4 within a period of 120 days from the date of its incorporation for declaration as a Nidhi company, after fulfilling the following conditions:
After examining the application, the central government conveys its decision within 45 days to the company, and if it fails to do so within 45 days, it will be deemed to be approved.
When the central government gets satisfied that the company meets all the requirements, then it will notify it as Nidhi Company or Mutual Benefit Society in the official gazette. However, the company shall commence its business only if the central government approves its application.
Fit and proper person
The company shall attach a declaration with regard to the fulfilment of fit and proper person by all of its directors and promotors with the Form NDH-4.
To determine that any promoter or director is a fit and proper person, the following criteria should be looked upon:
Integrity, honesty, ethical behaviour, fairness, reputation and character
Not incurring any of the following disqualifications
Minimum paid-up share capital
In the amendment, the minimum paid-up share capital has been raised from 5 lakhs to 10 lakhs.
Rules for an existing company
Nidhi company existing on the date of enforcement of Nidhi Company New Rules shall comply with all the requirements within a period of 18 months from the date of such enforcement.
Rule 5 of Nidhi Rules
Rule 5 talks about the minimum number of members, Net owned fund, etc., and in the amendment, it has been mentioned that it will not be applicable for the companies incorporated as Nidhi Company on or after the enforcement of Nidhi Company New Rules 2022. So, the requirement of filling of application in Form NDH 1 within 90 days from the incorporation of the company shall not be applicable to the companies incorporated on or after the enforcement of new Rules.
Restrictions on Nidhi Company
Transfer of the shares
Any member shall not transfer more than 50% of their shares during the subsistence of such loan or deposit. However, members shall retain the minimum number of shares required.
Net owned funds
The requirement of Net owned funds for Nidhi company has been changed from 10 lakhs to 20 lakhs.
Opening of branches
In case a Nidhi company wants to open more than three branches outside the district or any branch outside the district, then it shall now have to apply in Form NDH 2 along with the fee as required under the Companies (Registration Offices and Fee) Rules, 2014 and intimate about such opening to the Registrar within 30 days from the opening. However, it cannot open branches unless it has filed its financial statement or annual return to the Registrar. And, it shall not open its Branch outside the state where its registered office is situated.
Closing of Branches
A Nidhi company shall not close any branch unless the proposal to close the Branch with the plan of how the existing deposits shall be paid and how the existing loan shall be recovered is approved by the Board of Directors in the meeting and has obtained the prior approval of Regional Director as per the Companies (Registration Offices and Fee) Rules, 2014. The regional director shall pass the order of approval within 30 days of the application. After obtaining approval from Regional Director, the Nidhi Company shall publish in the local newspaper at the place of its business prior to 30 days of such closure, and it shall also fix a copy of the information of closure on the notice board of Nidhi Company for a period of thirty days since the day of such publication and give an intimation to the Registrar within 30 days of such closure. Also, any place which is not a registered office or Branch where a Nidhi Company carries its business shall be closed within a period of 6 months from the date of enforcement of Nidhi Company (Amendment) Rules 2022 and also intimate this to the Registrar.
Silver
Under Rule 12 and Rule 20, the word silver shall be added next to the word gold where ever it is stated, so from now Nidhi Company will able to grant loans to its members for silver jewellery.
Joint shareholders loan
In the case of joint shareholders loan Nidhi Company will be able to it only to the member whose name appears first in the register of members.
Dividends
A Nidhi company shall not declare dividends exceeding 25% in a financial year, and this has been added to Nidhi Company New Rules under Rule 18 by substituting old Rule 18.
Compliances by certain companies
The Nidhi Company New Rules have added two provisos under the first proviso of Rule 23A. These provisos deal with compliance with the requirements of Rule 3A. These provisos state that if a company does not comply with the requirements or fails to comply with any of the requirements on or after the date of enforcement of Nidhi Company New Rules or if the central government has rejected the application, then it shall not raise the deposit from its members or provide any loan to its member under the provisions of these rules from the date of non-compliance or the date of enforcement of the Nidhi Company Amended Rules or the rejection of the application, whichever is later. And, also that the deposit raised by a company after the date of non-compliance or date of enforcement of the Nidhi Company New Rules or the date of rejection of the application, whichever is later, shall be deemed to have been raised in pursuance of Chapter V of the Companies Act and shall be subject to all the requirement of that chapter or any other provisions of the said Act. No fee shall be charged for filing an application under this rule if it is filed within nine months from the enforcement of the new rules; however, earlier, it was six months.
Forms
In the Annexure, an amendment has been made to Nidhi Company New Rules by making changes to the old rule 2014. The changes have been made in the heading of NDH 2 Form, serial no. 4, serial no. 6, in Form NDH 3 and NDH 4. Also, after NDH 4, another Form of NDH 5 is inserted.
~ Other Company Compliances ~
- Section-8 Compliance
- Partnership Firm Compliance
- PF Return Filing
- ESI Filing
- GST Return Filing
- Event Based Compliances in a Company
- Appointment and Resignation of Directors
- Removal of Director
- Change in Registered Office
- Change in Share Capital
- Change in Directors
- Change in LLP Agreement
- Other MCA Compliance
- Winding Up of Private Limited Company
- Closing a Limited Liability Partnership
- Revival of Struck Off Companies
- Sole Proprietorship to Pvt. Ltd. Company
- Conversion of Pvt. Ltd. to Public Limited
- Conversion of LLP to Private Company
- Partnership Firm into Pvt. Ltd. Company