India is slowly but steadily becoming the hub of unicorn startups and the startup culture has been the bandwagon that everyone has been jumping on. All private limited companies, including startups, running a business are required to carry out various regulatory and statutory compliances. As a startup owner, it is imperative to be aware of these regulatory and statutory requirements and hence follow an Annual Compliance Checklist for Startups to avoid heavy penalties. These are mostly regulated by the Companies Act, 2013 and various guidelines laid down by RBI, SEBI, FEMA, among others. There are majorly two types of compliances, namely, registrar-based compliances which are also called mandatory compliances and non-registrar compliances.
Maintaining and complying with an Annual Compliance Checklist for Startups are extremely imperative steps in running a company or any startup. These checklists are curated depending on whether the Company is a small company that is company with a paid-up capital of Rupees Fifty Lakhs or with an annual turnover not exceeding Rupees Two Crore or a private limited company other than small companies. Compliances involve registrar-based and non-registrar-based compliances. Scroll down to check the Annual Compliance Checklist for Startups.
Mandatory Compliances (Registrar-based) – Annual Compliance Checklist for Startups
There are certain compliances which are required to be mandatorily adhered to and requisite information is submitted to the Registrar of Companies either at the end of each year or on the occasion of happening of specific events like, inter alia, changes in the Memorandum of Association (MoA) or Articles of Association (AoA) of a company, appointment or change in directors or change in share capital. These compliances are required to be adhered to and notified to the concerned authorities or ROCs within a stipulated time from the happening of the specific event.
- Appointment of auditor (e-Form ADT-1) – Section 139 of the Companies Act, 2013. Within 30 days of Company Incorporation, a statutory auditor must be appointed at the board meeting, and other auditors are to be appointed at the Annual General Meeting (AGM) by filing Form ADT-1 within 15 days of the AGM. The auditors are appointed for five years and the appointment must be confirmed by the shareholders at AGM every year.
- Notice of interest by Directors (Form MBP-1) – Section 184(1), of the Companies Act, 2013. Each Company director is required to disclose her interests in other entities at the 1st board meeting in each Financial Year. A fresh MBP-1 shall be submitted when there is a change in the interests of the Directors.
- Notice of Disqualification by Directors (Form DIR-8)– Section 164(2) of the Companies Act, 2013. Every Company’s Diretcor is required to intimate the existence of any disqualification or non-qualification in each financial year.
Filings with the Registrar of Companies
- E-form INC-20A: A declaration as to the initiation of business of
the Company must be filed within one-eighty days of the Company’s
- E-form AOC-4: Within thirty days of the AGM being held, financial statements, namely, balance sheet, profit and loss account, directors and auditors’ reports, and notice of AGM.
- E-form MGT-7: The Company ought to file its annual returns within sixty days of the AGM being held for the Financial Year (FY) from 1st April to 31st March.
- E-form DIR-12: This form regarding the appointment or resignation of directors and their consent for the same should be filed within 30 days from the date of such appointment or resignation.
- E-form DIR 3KYC: Every director whose DIN has been generated before 31st March must complete KYC according to the applicable regulations.
- E-form DPT-3: The Company ought to file returns which contain information pertaining to deposits/receipts of loans other than deposits.
- Board Meetings– Section 173 of the Companies Act, 2013. Every Company ought to conduct its first board meeting within thirty days of incorporation. At least four board meetings must be conducted every financial year and the gap between each board meeting must not exceed one hundred and twenty days.
- Annual General Meeting (AGM)– Section 101 of the Companies Act, 2013. The 1st AGM must be held within 9 months from the end of the 1st Financial Year. Subsequent AGMs must be held every year within six months from the end of the financial year. There ought not to be a gap of more than fifteen months between two AGMs. Notice of AGMs must be sent to all Directors, Statutory Auditors and Members.
- Keeping Book of Accounts and Statutory Registers– Section 88 of the Companies Act, 2013
Every Company is required to maintain and update certain records for the perusal of the Registrar of Companies like:
- Statutory Registers- Register of Company, Members, Directors, Key Managerial Persons, Charges, Employee Stock Options, Shares. Share Certificates, Related Party Transactions
- Book of accounts and financial statements
- Minutes book of general and board meetings
- Circulation of Financial Statements and relevant documents– Twenty-one days before the AGM, approved cash flow statement, financial statement, directors’, and auditors’ reports must be sent to the members.
- Director’s Report– Section 134 of the Companies Act, 2013. Directors of the Company have to submit a report containing disclosures as to the financial status of the Company to the shareholders by giving information as to the operations of the Company and its subsidiaries.
- Appointment of Company Secretary– Section 203 of the Companies Act, 2013. Every Company with a paid-up share capital of Rs. 5 Crores/more ought to appoint a whole-time company secretary.
Non-Registrar-based Compliances – Annual Compliance Checklist for Startups
Some annual compliance checklists for startups are not mandated by the Registrar of Companies but must be adhered to due to other existing rules and regulations. These include:
- Periodic dues payments like GST, TCS, TDS, Advance tax
- Filing periodic returns like
- Filing of income tax returns
- Filing of tax audit report
- Filing of GST returns (annual/monthly/quarterly)
- Assessment of tax liability
- Quarterly TDS returns
- Filing of PF returns
- Filing of half-yearly ESIC returns
- Filing of professional tax returns
- Compliance to regulatory requirements as to reporting and assessment under various statutes.
From a legal and regulatory standpoint, creating and running startups require strict adherence to certain mandatory and non-registrar-based compliances to ensure the smooth running of the business and avoidance of hefty penalties and embargoes on the Company. Maintaining and adhering to the above Annual Compliance Checklist for startups is an imperative step for startups. Entrepreneurs ought to be diligent and mindful of these requirements right from the inception stage of their business.
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