Introduction
Compliance means a set of rules, regulations, or laws which is to be followed by the company in India. The companies are registered and incorporated under the Companies Act, 2013, or under any previous laws. It must ensure that regular compliance is laid down by various statutes and other regulatory bodies. The ROC Filing is required irrespective of the turnover. Every company has necessary to file an annual return and audited financial reports with MCA for every Fiscal Year.
Annual Compliance for each company
In India when it comes to a company under the corporate law, there are two primary categories of companies and which are defined mentioned below: -
Public Company –
Section 2(71) of the Companies Act, 2013 defined the Public Limited Company. It is a company that offers the share to the general public and has limited liability. It requires publishing its true financial status to its shareholders. Public Limited Companies also provide a subsidiary company which shall also be deemed to be a public company though it continues to function as a private company in its articles.
Private Companies –
Section 2(68) of the Companies Act, 2013 defines private companies. According to the Act, private companies are those companies whose articles of association expressly mention a restriction for the transferability of shares and prohibit the public at large to subscribe company.
Types of Annual Compliances:
The applicable compliances of a company which are classified as mandatory compliances and event-based compliances must be submitted with the ROC and with fees in the prescribed manner and within the limits which are set by the Ministry of Corporate Affairs.
The companies act, 1956/2013 mentions some rules, regulations, or compliances which are necessary to be complied with and submitted to the MCA portal formed and maintained for the purpose at certain times in a year annually set down and it also includes a newly registered company unfailingly every year.
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Mandatory Annual Compliances for a Company:
The mandatory annual compliance is necessary of a Limited Company includes given below-
1. Annual General Meeting & Board Meetings –
In a Private Limited Company, shareholders must meet once every year within six months from the date of closing of the Financial Year. The Annual General Meeting is required to be held at the registered company’s office or some other places within the town or city in which the company’s registered office is situated. The main purpose of the annual general meeting can be related to the approval of financial statements, the appointment of auditors, directors, and declaration of dividends, etc. every company in which required to conduct at least four meetings every year and the gap between these meetings should not be more than 120 days under section 173 of the Companies Act, 2013. The most important resolution of the company must be filed with the Registrar.
2. Annual Returns & Financial statements-
Every financial year mandatorily filed the annual return and financial statements of the Private Limited Company by every registered company irrespective of its turnover or activities. The annual return must be filed within 60 days of holding the AGM and it gives all the information about the company’s shareholders, directors, members, etc.
But the Financial Statements are different documents that relate to the finance of the company. It includes the balance sheet, statement of Profit and Loss Account, and Director Report. It must be filed of holding the AGM within 30 days.
3. Income Tax & GST returns-
Every year Company must file an income tax return along with other mandatory compliances like Advance Tax, TDS and Professional Tax, etc. The company is must require to file its tax audit report every year if the turnover of the company is above the limit of INR 1Crore.
According to the GST Act, 2017 where a company is involved in the manufacture of goods and services that crosses the limit of 40Lakhs in its annual turnover. It also mandatorily submits GST monthly, quarterly and annual returns.
4. Audit Report-
Every corporation will manage its accounts and get the equivalent compulsorily reviewed by CA towards the end of the fiscal year. The duty of the auditor is to give an audit report of the evaluated financial statements in which provides his remarks and after that submit the report to the concerned Registrar of the Jurisdiction.
5. Maintenance of Register & Records-
A limited company must maintain all records in its registered office. Such records must be kept open for inspection at the registered office of the company. The registers and records of a company shall include the register of shares, register of members and annual general meetings, etc.
6. Auditor Appointment-
Under the Companies Act, 2013 every registered company needs to conduct its first Annual General Meeting and has to appoint an auditor. According to section 139 of the Companies Act, 2013, the Board of Directors must be appointed an auditor within 30 days of incorporation. After that, his appointment must be informed to the Registrar of the companies in the prescribed manner within 30 days from the date of his appointment.
Event-Based Annual Compliance of the Company:
Similarly, there are some rules, regulations, and compliances which are needed to be fulfilled only in the happening of an event or some conditions. The company will be necessary to file its return in the prescribed manner for informing the Registrar of the Companies.
These event-based compliances of a Limited Company include:
Providing Loans to other Companies
Providing Loans to Directors
Appointment of KMP.
Change in Paid-up Capital.
Allotment of new shares and transfer of shares
Opening or closing a bank account
Appointment or change of the Statutory Auditors.
In the case of Public Companies, there may be other compliances includes which shall be mentioned below-
Return of Deposits;
Appointment of Key Managerial Personnel (KMP)
Appointment of CSR Committee
Director’s Disclosure
Consequences of non-complying with the Annual Compliance
There are some consequences of non-compliance with the annual compliance which are given following: -
MCA shall be penalized by the company and undergo further investigation and removal of the name from the MCA registry.
It is very crucial for new as well as existing companies to be aware of all compliance that is applicable to them.
Directors of the company are also called the “brain” of the company and bear all the responsibility to take any action on behalf of the company. It ensures that the Company compliance the applicable rules and regulations.
If a Director is disqualified, his/her DIN would become inactive or where a company commits any default and the person would be ineligible to be appointed as a Director of any company for a period of 5 years from the date of disqualification.
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