Compliances of Private Limited Company is the parliamentary act through which all the legal working of the companies may conduct its business activities by following some specific rules and regulations prescribed under the Companies Act 2013. The government can strike off the names of the companies who are going forward without following the compliances as well as disqualify the directors in case of non-compliances. The various techniques of corporate sectors to dodge taxes often put them into a great problem. This article will further describe you about the compliances of Private Limited Company.
Compliances are categorized as Mandatory Compliances and Event-Based Compliances.
Compliances of Private Limited Company on the mandatory base
Following are the Mandatory compliances which are to be fulfilled by every private limited company:
Board meetings: at least one board meeting in a quarter and four board meeting in a year must be held. All the Directors are mandatory to be there at the time of meetings. Quorum is one-third or two Directors whichever is greater. The logged and signing minutes must be maintained at the registered office. The Notice of Board meeting needs to be sent before 7 days of meeting to every director through email or in hand.
General meetings: The shareholders meeting must be held every year. In this meeting, the approval of financial statements, declaration of dividends, the appointment of auditors etc is the first and foremost motive. It shall be held in a city of registered office.
What advantages will be availed by small companies
Small companies are the Private limited companies which have started with the paid capital of Rs. 50,00,000 and turnover less than Rs. 2 Crore. 2 board meetings are enough for the small companies.
The agenda of the first board meetings of small companies are to approve Company incorporation expenses, authorize any director for issuing share certificate and the opening of bank account, first auditor appointment of the company etc.
- Issue of share certificates: The Company shall issue Share Certificates to the memorandum subscribers within 60 days of Incorporation of Company.
- Disclosure of interest by Directors: In the first board meeting of every financial year, the directors are liable to disclose their interest in any business entity and also in FORM MBP-1 to the company.
- Annual General meeting: within the period of 18 months, the company may hold its first AGM.Although and it should not be more than 9 months from the closure of the financial year. At least one meeting every year with the gap of not more than 15 months between two AGM. However, a meeting shall not be held later than 6 months from the closure of financial year.
- Minutes of proceedings of broad meetings, general meetings: within 30 days of the conclusion of meeting concerned, it is mandatory for a company to cause minutes of the proceedings of every board meetings and general meeting. Minutes shall be preserved permanently and shall act as an evidential value in case of any dispute.
- Approval and Signing of Financial Statements: the financial statement must be approved by the board of directors and sign by 2 directors. Out of which one must be the managing director and the chief executive officer.
- Report by Board of Directors: The detailed statement of the company operations, net profit, dividend declaration and its compliance with a set of financial responsibility standards must be prepared by the company as a board report.
- Filling of financial results: Every company must maintain its financial statements within 30 days of its AGM with registrar company in E-FORM AOC-4 provided in mca.gov.in which must be digitally signed by minimum one director. It needs to be certified by a company secretary or company accountant in practice or cost accountant in practice if in case the company is not a small company.
Maintenance of Statutory Registers
Specific numbers of registered are required to be maintained like Register of a member, Register of directors, Register of contracts, Register of charges etc. The register shall be kept in the registered office of the company.
Compliances of Private Limited Company on the Event-Based
|FORM NO.||For what needs to fill|
|DIR-12||If any change in directors|
|SH-7||If any change in Authorized share capital|
|PAS-3||If an increase in paid-up share capital|
|INC-22||If a change in registered office|
|CHG-1||If a change in secured borrowings|
|INC-24||If a change in name of the company|
|INC-27||In case of conversion of the company|
|MGT-14||Fillings of resolution and agreements|
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