Introduction
Private Limited Companies are a popular form of business structure in India, known for their limited liability protection and ease of operations. To maintain their legal and financial integrity and comply with regulatory requirements, private limited companies are obligated to fulfill various annual compliance obligations mandated by the Companies Act, 2013, and other regulatory authorities.
Key Compliance Requirements
Annual General Meeting (AGM)
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Conduct AGM: Private Limited Companies are required to convene an Annual General Meeting of shareholders within six months from the end of the financial year (usually by September 30th).
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Approval of Financial Statements: The AGM must approve the financial statements, including the Balance Sheet, Profit and Loss Account, and Cash Flow Statement, for the preceding financial year.
Financial Statements and Annual Return
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Preparation of Financial Statements: Private Limited Companies must prepare financial statements in compliance with the Indian Accounting Standards (Ind AS) or Generally Accepted Accounting Principles (GAAP).
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Filing of Financial Statements: File the audited financial statements, along with the Director’s Report and Auditor’s Report, with the Registrar of Companies (RoC) within 30 days from the date of AGM in e-Form AOC-4.
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Filing of Annual Return: Submit the Annual Return (Form MGT-7) containing details of shareholders, directors, and key managerial personnel, along with other statutory information, within 60 days from the date of AGM.
Board Meetings and Resolutions
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Conduct Board Meetings: Hold at least four Board Meetings in a calendar year with a gap of not more than 120 days between two consecutive meetings.
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Approval of Accounts: Approve the financial statements, appointment/re-appointment of auditors, declaration of dividends, and any significant corporate actions in Board Meetings.
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Passing of Resolutions: Pass necessary resolutions for approving related party transactions, investments, loans, borrowings, and other significant matters as required under the Companies Act, 2013.
Statutory Registers and Records
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Maintenance of Registers: Maintain statutory registers such as Register of Members, Register of Directors and Key Managerial Personnel, Register of Charges, etc., at the registered office of the company.
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Filing of Forms: File necessary forms with the RoC for any changes in directors, share capital, registered office address, or other key information within the prescribed timelines.
Income Tax Compliance
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Filing of Income Tax Return (ITR): File the income tax return (ITR) of the company with the Income Tax Department by the due date, generally September 30th of the assessment year.
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Tax Deducted at Source (TDS): Deduct TDS on payments made as per the Income Tax Act, 1961, and deposit it with the government within the stipulated time.
Goods and Services Tax (GST) Compliance
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GST Registration and Returns: Register the company under GST if applicable and file monthly/quarterly returns (GSTR-3B and GSTR-1) as per the GST law
Penalties for Non-Compliance
Non-compliance with annual compliance requirements can result in penalties, fines, and other legal consequences, including:
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Late filing fees and additional fees for delayed submission of documents with the RoC.
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Prosecution of directors and officers of the company for defaults and non-compliance with statutory obligations.
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Disqualification of directors and the company itself from holding office or exercising certain rights under the Companies Act, 2013.
​Conclusion
Annual compliance for private limited companies in India is critical for maintaining legal and financial transparency, safeguarding the interests of shareholders, and ensuring corporate governance standards. It is essential for companies to adhere to the prescribed timelines, maintain accurate records, and seek professional assistance from qualified professionals such as Chartered Accountants, Company Secretaries, and Legal Advisors to fulfill their annual compliance obligations effectively and efficiently. By prioritizing compliance, private limited companies can mitigate risks, build trust with stakeholders, and create a conducive environment for sustainable growth and success in the business landscape.