A private limited company is arguably one of the best business structures in India. It renders ample benefits to the business owner in terms of legal stability and shareholders’ liability. It is one of those business structures that revolve around plenty of mandatory compliances. This write-up aims to render a complete briefing regarding the rules for Pvt ltd company.
A Complete overview of the compliances cum rules for Pvt ltd company
A firm registered in India is mandated to comply with the yearly-based legal compliances set out by the corporate laws such as Company Act, 2013. Since most start-ups are operating a company, annual compliance for Pvt ltd company becomes the most prominent nuisance encountered by growing businesses.
Read our article:Private Limited Company Registration Procedure in India
The table below manifests the compliance cum rules for Pvt ltd company
Form MBP-1- Disclosure of Directors Interest by Directors
Every Director of comany in the First Meeting of the BOD in each Financial Year shall reveal his interest in other entities.
Ø Directorship of other entity
Ø Partnership firm where he/she is acting as an active partner
Ø Shareholding of more than two percent in other entity
Ø List of relatives of Director
On every first meeting of the given financial year, every director is mandated to furnish MBP-1, in case there is a change in his/her interest form the earlier submitted MBP-1
There is no compulsion of filing MBP-1 with ROC
Form DIR-8- Disclosure of Non- Disqualification by Directors
Every Director in each financial year will file the
Disclosure of non-disqualification. In general, it is a declaration that confirms that the director was not opted out by the entity to act as Director during the FY 2020-21.
The filing must be done at every first board meeting of the financial year.
Dispensing late Payment to MSME Vendor: Form MSME – 1
The company must file this return every six months w.r.t outstanding payment to MSME vendors
All dues of more than 45 days payable to the supplier of Micro or small enterprise.
· April to Sep – 30th October
· October to March – 30th April
· No filing fee is chargeable in this case
KYC of Directors – Form DIR – 3 KYC & online KYC of all Directors.
Directors KYC seeks authentication of email or phone OTP both at a time. The validity of OTP is 10m.
KYC is requiredif theemail or phone no. of a director is altered during the filing of the DIR-3
For a change in other areas such as an address, form DIR-6 is needed to be filed.
Must file on or before 30th Sep every year for all company’s directors
Return of Deposit: Form DPT-3
Return about deposit must file to share detail relating to deposits and/or outstanding receipt of loan or money other than the deposit.
An auditor certificate is required when the form is filed
Ø “Return of Deposits” or
Ø “Return of Deposits & Exempted Deposits
Must be filed every year on or before 30th June
Circulation of Financial Statement as well as other necessary Documents
The company must share the approved Financial Statement,Directors’ Report and Auditors’ Report, &Auditors’ Report with the company’s members at least 21 days before AGM.
At least 21 days before AGM.
Directors’ Report shall be drafted following relevant rules cited in Section 134 of the Company Act. It must enclose the signature of the board-approved Chairperson.
at least 21 clear days beforeAGM.
Notice of Annual General Meeting
Enclose given agendas seeking mandatory approval of shareholder
· Auditor appointment (in case the term expires)
· Directors (if appointed during the financial year/Rotation of Director)
· ETC as and when needed event-based.
MD & WTD need to be re-appointed post expiry of every 5 years by the shareholders
Due to the last date: 30/Sep/2021
Financial Statement: Form AOC-4
The company is mandated to file its Balance sheet & P&L account, Cash flow statement, auditor & director report in this form within thirty days of holding of AGM
Criteria pertaining to XBRL Filling
If paid-up capital surpasses Rs. 5.00 Cr or yearly revenue is more than INR 100.00 Cr.
Due date – Filing within thirty days of AGM.
AGM due date: 30/Sep/2021
Annual Return – Form MGT-7
The annual return shall be filed for the period 1st April to 31st March.
Annual returns seek all dates of board meetings &the name of directors present in such meetings. Further, it seeks the names of Directors who have to attend the AGM. Facilitate signing attendance to serve such a purpose.
Transfer of shares, if any to be shared via executed transfer form with legit stamp duty payment & resolution passed by the board for the same.
The company is mandated to share the MGT-7 in their website
Penalty – Rs. 100/ day will be imposed from the date of failure of return
Last date – filing within sixty days of Annual General Meeting
The last date of AGM is 30/09/2021
Report issued by Practicing CS –Form MGT-8
Private Company with:
paid-up share capital of Rs 10 Crore or more or yearly turnover of Rs. 50 crore or more are mandated to avail Company Secretary approval and need to file Form MGT -7
Filing requires Annual Return MGT-7.
Certificate MGT – 8 With UDIN number.
Back dating is not possible.
Appointment/Resignation/Change in Designation of Director – Form DIR-12
If there is any change in the Director’s designation at the Annual General Meeting or Appointment or Resignation of Director.
Regularization of Additional Director
If an organization seeks to appoint additional director, then it must regularize the individual as director in General Meeting via Shareholder resolution.
In case of change in Director’s designation, file form DIR-12 along with ordinary resolution within thirty days of Annual General Meeting.
Due date of filing – within thirty days of meeting
Form ADT-1- Appointment of Auditor
Form ADT- 1 is required to be filed by every entity to notified ROC about the auditor’s appointment after the conclusion of its AGM in light of the 4th proviso to sub-section (1) of section 139 of The Companies Act, 2013.
The company must appoint the auditor for 5 years & form ADT-1 will be filed for the same timeline. After this period, the Shareholder will ratify the Auditorevery year in AGM. Under this situation, there is no requirement of filing ADT-1.
Form ADT -3 Resignation by Auditor
Due date within 15 days of the appointmentof an auditor.
Filing Special Resolution : Form MGT-14The special resolution approved in Annual General Meeting
Due date within 30 days of AGM
Declaration of Commencement of Business – INC 20A
The given establishments are not obligated to file form 20A:
· Companies registered prior to 2 Nov 2018 (i.e. prior to the commencement of the Companies (Amendment) Ordinance, 2018).
· Entities registered after 2nd Nov 2018 without share capital.
Every registered organization is obligated to file Form 20A within 180 days of its incorporation.
A supplementary timeline of 180 days shall be granted as per notification dated
Return to the Registrar relating to the declaration under Sec 90
Form BEN -2: refers to a declaration wherein beneficial owners reveal their interest and shares in the company to the RoC.
Details of SBOs i,e. Significant Beneficial Owners. In laymen terms, Beneficial Owners are the shareholder holding SBO of not than 10& of the shareholdings or voting rights either directly or indirectly
Form BEN-3: Register of beneficial owners enclosing beneficial interests.
Form BEN-4: Notification of member seeking detail in light of Section 90.
Applicable to all entities 30 days from the date of receipt of such declaration (BEN – 1)
Section 203- Appointment of Company Secretary
Pvt ltd company holding paid-up share capital of INR 5 crores are obligated to avail service of full-time CS.
Within 30 days from a resolution passed in meeting.
Maintenance of Statutory Registers.
The company is liable to maintain the given registers.
Ø Register of Director,
Ø Registers about the Directors’ Shareholding
Ø Registers of Members
Ø Registers about the Transfer
Ø Registers of Related Party transaction etc.
Ø Other register cited under the companies act , 2013
Board Meetings – 173 & SS-I
Every registered entity shall hold a mini. No. of 4 meetings of its BODs every financial year in a way that max. Timeline between the two meetings must not be more than 120 days.
Notification regarding the Board Meeting must be shared 7 days prior to the meeting. The notification can be shared by any means
Every board meeting is obligated to follow norms pertaining to quorum which is 1/3 of the total no. of direct of the organization or two whichever is higher.
Notice of Annual General Meeting 101 & SS-II
Every notice relating to AGM will be prepared in light of section 101 of the Companies Act,2013 and Secretarial Standard – II.
2 members present must be presented in the quorum for a meeting.
Some more rules for Pvt ltd company (Event-Based Compliances)
As the name suggests, these compliances revolve around the eventualities occur within the organization. Event-based compliances are mandated to be followed before a prescribed timeline, failing to which penalties would be levied. Hence, it is of paramount importance to track the eventualities and meet the compliances aptly.
- Change in Director/KMP
- Increase in Paid-up Share Capital or Authorized Share Capital
- Change in the registered office
- Alteration in secured borrowing (creation, alteration & satisfaction of charge)
- Change in the company’s name
- Company’s conversion
- Filing of agreement & resolution
- Changes in the remuneration paid to Managing or Full-time Director
- Appointment of new auditor or resignation of the existing one
- Dividend declaration for shareholder
- Transfer of unpaid dividend to IEPF
- Loans bestowed to other entities
- Creation/alteration of charge
- Loan Repayment in full for the satisfaction of Charge
- Transfer of shares
Aligning with the aforementioned compliances is a mandate for every private limited company in India. Of course for new entities, such compliances may cause some nuisance, particular in the initial phase. Since these rules for Pvt ltd company is imperative for its growth and existence, its important to avail professional guidance every now and then.
Read our article:Steps for Private Limited Company Incorporation In India