Home / Private Limited Company Compliance

Updated on 21 Sep 2021  9.00 AM IST | 4 min read

An Overview to Private Limited Company Compliance

A Private limited company has more compliance requirements in comparison to sole proprietorship, partnership firm & LLP. Private limited compliance includes periodic filing of tax & other returns, maintaining statutory books & accounts, holding board meetings, other meetings etc. Non-compliance will lead to penalties & may end up your business also in extreme cases. The compliance requirements may differ on the basis of nature of business, product or service provided, the volume of turnover etc. The statutory compliance's of a private limited company is given below –


Annual Compliance checklist for the Private Limited Company

  1. First board meeting - The first Board of Directors meeting should be held within 30 days of the Company's establishment.
  2. Subsequent board meetings

    a) A minimum of four Board meetings per calendar year shall be held, with no more than 120 days between meetings.

    b) Minimum of two meetings in each half of the calendar year for smaller companies, with a minimum break of 90 days between meetings.

  3. First Annual General Meeting - It should be held within nine months of the Company's first financial year's ending.
  4. Subsequent Annual General Meeting - Within six months period from the date of the financial year's ending. A period of no more than fifteen months shall elapse between the dates of one company's annual general meeting and the next.
  5. Disclosure of interest by Directors/Declaration - Each Director shall disclose his or her interest in form MBP-1 and declaration in form DIR-8 at the Board's first meeting of every financial year.
  6. Appointment of First Auditor - The Board of Directors should appoint the first auditor within 30 days of establishment.
  7. CAppointment of subsequent Auditor -

    a) It will be appointed for five years at the AGM,

    b) Within fifteen days of appointment at the Annual General Meeting.

  8. Filing of Financial statements, i.e. Form AOC-4 -It should be filed within 30 days of AGM.
  9. Annual return filing, i.e. form MGT-7 - It should be filed within 60 days of AGM.
  10. Filing of form ADT-1 - Form ADT-1 must be filed within 15 days from the date of the auditor's appointment.
  11. Statutory audit of accounts - Statutory audit should be done by the Chartered Accountant.
  12. Filing of Company Income tax return - 30th of September every year.
  13. KYC of directors - 30th of September
  14. Maintenance of statutory registers, Minutes books and records - All companies are advised to maintain several statutory registers in the required format, including a register of members, a register of charges, a register of directors and key management personnel and a register of loan and guarantee. You also need to maintain minutes of board and general meetings, books of accounts, attendance register, etc.
  15. Proof of circulation of Notice, Draft and Signed Minutes - It should be maintained for a period of three years after the end of the meeting.
  16. E-form DPT-3 - All companies with an outstanding loan/amount as of March 31 of each financial year are required to provide details and bifurcation of such outstanding amount by June 30, regardless of whether such amount falls within the definition of deposit or not.
  17. E-form MSME-I - If a company owes money to micro and small businesses and the payment is more than 45 days overdue, the company is required to provide the following information:

    a) April to September by 31st October

    b) October to March by 30th April


Event-based Compliances for the Private Limited Company

These are activated in response to the occurrence of specific events. There is paperwork involved in the process, and various deadlines apply to these tasks. In the case of non-compliance or simply a missed deadline, penalties, additional fees, or compounding of the offence may apply. As a result, it is critical to track the occurrence of such events and ensure that compliance requirements are completed on time.

  1. Director/KMP Change
  2. Increase in authorized share capital
  3. Increase in Paid-up share capital
  4. Change in the name of the Company
  5. Change in the registered office
  6. Change in secured borrowing
  7. Conversion of Company
  8. Appointment of directors
  9. Resignation of directors
  10. Dividend Declaration
  11. Payment revision of the Managing or full-time director remuneration
  12. Loans given to other Companies
  13. Creation of charge
  14. Modification of charge
  15. Filing of resolution and agreements
  16. Unpaid/Unclaimed dividend transfer to IEPF
  17. Shares transfer

Non-Registrar Compliance for Private Limited Company

  • Quarterly TDS returns
  • Monthly/quarterly GST returns
  • Payment of periodic dues (TDS & TCS Payment, GST Liability)
  • Tax Audit report filing
  • Income tax return filing
  • Periodic assessment of advance tax due and payment of advance tax
  • Assessment of businesses in accordance with various acts of legislation (Eg. Environment and Protection Act, Factory Act, Money Laundering Act, Competition Act, etc.)

Documents required for Annual Compliance for Private Limited Company

  1. Certificate of incorporation

    a) PAN card

    b) Incorporation certificate

    c) Memorandum of association and Articles of Association of the Private Limited Company

  2. Audited Financial Statements
  3. Report - Audit & Board
  4. Auditing of Financial statements by the independent auditor
  5. DSC of the Director
  6. Active and accurate DSC of any of the director

Annual compliance benefits for a private limited company

  1. Avoid being a defaulter - Annual compliance filing is necessary for a private limited company to avoid severe penalties and additional fees in the event of non-compliance with the required forms.
  2. Invitation to prospective investors - Potential investors are keen on examining the organization's financial position to assure the company's creditworthiness. An investor can contact a company directly or monitor the progress of a regular filing on the MCA portal. As a result, prospective investors prefer to invest in a company that maintains a regular filing schedule for Private Limited Company annual compliance.
  3. Ensures Credibility - Every organisation must adhere to legal requirements. For various stakeholders, including investors, ministry tenders, and loan support purposes, the regular filing of annual compliances by a private limited business is a critical criterion for determining the company's reliability.

Procedure For Private Limited Company Annual Compliance Fulfillment

  • Maintain proper books of accounts
  • Preparation & filing of balance sheet
  • Get your accounts audited by a chartered accountant
  • Filing of form ADT-1, MGT-7 & form AOC-4 to the registrar of companies (ROC)
  • Filing of an income tax return to the income tax department

Penalty for Non-Compliance for Private Limited Company

  1. Late filing or non-filing of annual return will attract a penalty which is 12 times more than the normal fees.
  2. A Private company cannot be closed without the filing of a tax return.
  3. Therefore, it is best to file the annual return before the due date to avoid fines, penalties etc.
  4. Rs.10000 will be paid for the late filing of the Income-tax return.

Private Limited Company Compliance FAQ’S

AGM means annual general meeting. This meeting is held every year for the shareholders. The main aim of this meeting is the approval of financial statements, the appointment of auditors and the declaration of dividends. It is always held in the city where the registered office of the company is situated.
Form RD1 is used to file an application to the regional director.
Form GNL.1 is used to file an application to the registrar of companies.
An annual general meeting is held within the period of 6 months after the end of the financial year, i.e. before 30th September
No, a Private company cannot be closed without filing the tax returns.
The penalty for late filing or non-filing of annual return in case of a private limited company is 12 times more than the normal Fees.
The Statutory Auditor can be appointed or replaced using Form ADT-1.
MGT-9 is an attachment to the director report of the company, which is an extract of MGT -7.
The annual general meeting (AGM) is organised for interaction between management and shareholders. The Companies Act, 2013 requires companies to have annual general meetings to discuss financial results and appoint auditors.
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Due Dates

  • GSTR-7 Summary of Tax Deducted at Source (TDS) and deposited under GST laws

    Sep 10th ,2021
  • GSTR-8 Summary of Tax Collected at Source (TCS) by e-commerce operators under GST laws

    Sep 10th ,2021
  • GSTR 1 for Aug 2021 (turnover more than INR. 1.50 Crore)

    Sep 11th ,2021
  • GSTR-6 Details of Input Tax Credit (ITC) received and distributed by an Input Service Distributor (ISD)

    Sep 13th ,2021
  • GSTR-3B is a summary return to be filed by all taxpayers except those registered under the composition scheme, every month. However, from 1st January 2021, there is also quarterly filing option provided to taxpayers with annual aggregate tunrover of up to Rs.5 crore, opting for the QRMP scheme for Aug Month. (Aggregate turnover exceeding Rs.5 crore in the previous financial year)
     

    Sep 20th ,2021
  • GSTR-3B is a summary return to be filed by all taxpayers except those registered under the composition scheme, every month. However, from 1st January 2021, there is also quarterly filing option provided to taxpayers with annual aggregate tunrover of up to Rs.5 crore, not opting for the QRMP scheme for Aug Month. (Aggregate turnover up to Rs.5 crore in the previous financial year)

    Sep 20th ,2021