How To Ensure MCA Compliance For Your Pvt Ltd Company?

Every private limited company registered in India is expected to abide by the provisions of the Company Act, 2013. Under the ambit of the Ministry of Corporate Affairs (MCA), the act regulates the formation, functioning, dissolution, and governance of companies in the country. With this, MCA oversees companies’ compliance with legal requirements, protects investor interests, and promotes ethical business practices in the organizations.

Once a business Complete Pvt Ltd Registration, it has to consistently maintain statutory registers and file forms like INC-20A (declare commencement of business), AOC-4 (For statutory audits), and ADT-1 (intimate appointment of auditors). The company must appoint key personnel like directors and auditors within the stipulated time frame, adhere to all the requested declarations, and comply with KYC requirements.

The following are certain key MCA compliances necessary to comply with to bring greater legal conformity in your private limited business.

Compliance for Pvt Ltd Company: What is it?

Compliances refer to the rules, orders, requests or obligations a company must fulfil to legally operate in the economy. In India, the Company Act, 2013, under the Ministry of Corporate Affairs (MCA) enforces these compliances and disclosures through the submission of annual returns, maintenance of statutory registers, etc. Compliance with the MCA rules and regulations is necessary for a company to showcase its dedication to accountability, integrity, and good governance. Further, it assists the company in creating a solid foundation and boosts investor confidence. File Pvt Ltd Company Registration and keep reading to get a greater understanding of key MCA compliances.

What are the MCA Compliances for Pvt Ltd Company?

The compliances keep on evolving with the changing market dynamics, where changes are often seen in deadlines and degree of penalties. However, core compliance requirements remain relatively constant. The following checklist includes some of these core rules and regulations pivotal to operating a business in India.

● AGM (Annual General Meeting): AGM is a yearly gathering of the company’s board of directors and shareholders. At the gathering, shareholders discuss the performance of the company, make key decisions, and approve financial statements. The first AGM of private limited companies must be conducted within 9 months from the closure of the financial year (FY). For subsequent years, it must be held within 6 months from the end of FY, i.e., by 30th September. The time between two AGMs cannot exceed 15 months (180 days).

● Board Meeting: Companies are mandated to convene a regular gathering of directors to address strategic and corporate matters of the company. The meetings are conducted to monitor financial performance, ensure timely decision-making, and address several operational challenges. As per the Company Act, 2013, the first board must be held within 30 days from the date of incorporation. In addition, the company must conduct a minimum of 4 meetings in a financial year and the gap between two consecutive meetings cannot exceed 120 days. The company must send notice to directors at least 7 days before the meeting. Understand the Importance of Corporate Governance for Pvt Ltd Companies and comply with the stipulated regulations to reap in greater benefits.

● Statement of Interest: Every director in a private limited company is legally obligated to declare any personal financial interest they have in other companies. Forms like MBP-1 are used to intimate ROC about the interest of the director at the time of his/her appointment and in case of any change in it. The major objective behind this is to enhance transparency and uphold the fiduciary duty of the director in the best interest of the company and shareholders.

● Maintenance of Statutory Registers: Once a business File Pvt Ltd Company Registration and receives a certificate of incorporation, it becomes obligated to maintain all its records and register like director register, member and charge register. In addition, it is also required to document all its board meetings and AGM, creditors meetings, minutes of board meetings, etc. A private limited company is also mandated to maintain its books of accounts for a minimum of 8 years, immediately before the current year.

● Statutory Audits: Mandated by the law, statutory audit ensures that a company’s books of account are fair, true, accurate, and prepared in accordance with the specified standards. The audit must be conducted annually by a practising chartered accountant to examine the company’s financial statements, bank accounts, bookkeeping records, ledgers, and other important corporate documents. The audits help in detecting instances of fraud or violations of any guidelines, mitigate financial risks, promote good governance, and build investors’ and stakeholders’ trust in the organization.

● Change in Authorized Share Capital: As per the law, any alteration in the authorized share capital of the business must be intimated to the ROC within 30 days from the date of passing the Ordinary Resolution. For this, the MCA’s form SH-7 is used. The form requests specifications on resolution type, original and new authorized share capital amount, digital signatures, meeting date, etc. Following a similar manner, a company’s paid-up capital and subscribed capital can be increased as well using the form PAS-3.

Important Compliances for Private Limited Companies

Compliances are important to ensure the smooth functioning of the business and offer legal security in the meantime. Simultaneously, implementing Consumer Protection Measures by Pvt Ltd Companies is also important to yield significant growth.

Let’s take a brief look at some of the key compliances, along with the timeline and penalties due to violations.

● AOC-4: As per the Company Act, 2013 section 137(1), every company is required to file a copy of financial statements including balance Sheet, Cash Flow Statement (if applicable), Profit and Loss Account, Statement of Change in equity (if applicable), and any notes with ROC (Registrar of Companies). The AOC-4 form of the Ministry of Corporate Affairs (MCA) is used to file this financial statement. The form must be filed within 30 days of the Annual General Meeting (AGM) or else the company can face a penalty of Rs.100 per day.

● DIR-3 KYC: According to the MCA, it is mandatory for each director in a company, who has been allotted a Director Identification Number (DIN) or whose DIN is yet to be approved, to file DIR-3 KYC. The objective is to obtain the KYC details of directors and keep MCA’s director database updated. The deadline to file the form is before 30th September of the next financial year. Non-compliance with the norm can lead to a penalty of Rs. 5,000 per director. Director who is providing KYC details for the first time needs to use DIR-3 KYC and those who have already filed it in the previous year can use DIR-3 KYC (Web).

● MGT-7: After Complete Pvt Ltd Registration, the company is provided with the MGT-7 form to file their annual returns containing information related to shareholders, shareholding patterns, changes in the board, and other corporate details as of the last day of the financial year. The details include the company’s principal business activities, indebtedness status, remuneration of directors and KMP, etc. The form must be filed within 60 days of the conclusion of the AGM. Penalty for not filing the returns can lead to Rs. 100 per day of penalty.

● ADT-1: Every private limited company is mandated to appoint an auditor within 30 days of its incorporation. And within 15 days of appointment, the Registrar of Companies (ROC) must be intimated using ADT-1. The form has to be filed every after the completion of the AGM. It must include information on the category of auditor (individual or auditing firm), auditor’s PAN number, Chartered Accountancy membership details, date of appointment, etc. ROC can levy a penalty of Rs. 300 per month for delay in filing of this firm along with additional penalties.

● DIR-12: A company notify ROC regarding appointment, resignation, or vacancy of the position of directors/KMP due to absence from meetings with the help of form DIR-12. Within 30 days of the appointment/ resignation of the director or KMP, the registrar has to be intimated. The form enables ROC to maintain records and be informed about any change in the company’s board structure. The penalty for non-compliance is Rs.300 for each day.

● MGT-14: MGT-14 documents certain resolutions of the company like board resolution and special resolution. The form requires companies to document their certain corporate decisions like alternation to AOA, the appointment of a new director, and change in share capital. The form must be filed within 30 days from the date of resolution passing and approval by members of the board. Violations can lead to a penalty of Rs. 100 per day, along with additional fines.

Note: Compliance with these rules commences immediately upon the establishment of the business. Thus, once you Complete Pvt Ltd Registration, start adhering to legal requirements, file the required forms, appoint key personnel, maintain statutory registers, and gauge Metrics for Monitoring Pvt Ltd Company’s Success, among others.

Final Thoughts

Staying compliant is crucial to instill confidence and trust in investors towards your brand. A company that diligently follows and fulfills the compliances is more likely to appear professional and trustworthy. Moreover, it facilitates uninterrupted day-to-day operations as regulatory actions due to violations can cause delays or shutdown of the business. Accessing funds becomes easier and compliance increases the chances of quicker and seamless loan approval.

Annual compliance with MCA can feel complex and overwhelming for many entrepreneurs. Navigating through the legal regulations and requirements, filings, and deadlines can make you stressed and confused. However, compliance is also important to avoid hefty penalties, damages to brand reputation, and legal repercussions. File Pvt Ltd Company Registration with the assistance of Legal Raasta Private Limited to tackle all these issues, keep your business safe, build credibility, and grow your company with no unnecessary hurdles.