Private Limited corporations must adhere to a number of legal and regulatory requirements after being incorporated. Annual compliances of Private Limited Company are a significant component of these duties. Every Private Limited Company in India is required to comply with these regulations, and each financial year, these deadlines must be reached. The Companies Act of 2013 specifies annual compliances of Private Limited businesses. The Act lays out a number of requirements for the management and regulation of Indian corporations, including their yearly compliances. These compliances are subject to regulation and supervision by the Ministry of Corporate Affairs. Private limited firms must file a variety of forms each year, including an annual return (Form MGT-7), financial statements (Form AOC-4), and income tax returns (ITR). These are just a few requirements for the annual compliances of Private Limited Company; others include convening annual general meetings (AGMs), hiring auditors, and keeping statutory registers current. Depending on the particular compliance, different dates are required for certain compliances. For example, the deadline for submitting the Annual Return (Form MGT-7) is 60 days after the AGM, whereas the deadline for submitting the Financial Statements (Form AOC-4) is 30 days after the AGM. Similar to this, the deadline for submitting Income Tax Returns (ITR) is July 31 of each financial year. Scroll down to check mandatory annual compliances of Private Limited Company.
What Are The Requirements For Annual Compliances Of Private Limited Company?
The underlying law that governs all kinds of companies incorporated in India is the Companies Act, 2013. For such incorporated companies, the Act specifies annual compliances of Private Limited Company that must be met within the established deadlines each financial year.
- Objective: An organisation’s or business’s financial performance and status are shown in a collection of official records and reports known as financial statements. The financial activities of the entity, including its income, costs, assets, liabilities, and equity, are detailed in these accounts. A corporation must yearly compile and publish the following three financial statements as part of its financial reporting:
- Profit And Loss Statement or An Income Statement: This statement details the company’s earnings for a specific time period, usually a year, including revenues, costs, and net income (or loss).
- Balance Sheet: The Company’s assets, liabilities, and equity are listed on the balance sheet at a particular point in time, usually the conclusion of the fiscal year.
- Cash Flow Statement: This statement, which often covers an entire year, displays the input and outflow of cash and cash equivalents. It contains details about financial, investing, and operating activity.
Financial statements are significant because they offer essential information about the health and performance of a company’s finances to a variety of stakeholders, including investors, creditors, and regulatory agencies.
- Due Date: All businesses must complete their financial statements within six months of the conclusion of their fiscal years. For instance, if a company’s fiscal year finishes on March 31, the deadline for completing its financial statements is September 30 of the same year. The financial statements must be accurate and fairly represent the company’s financial situation, and they must be prepared in compliance with the accounting rules announced by the Ministry of Corporate Affairs.
When to Submit the Financial Statements to the ROC?
Within 30 days of the date of the annual general meeting, every firm must submit its financial statements to the Registrar of Companies (ROC) (AGM). The balance sheet, profit and loss account, cash flow statement, statement of changes in equity, and any other document the company is obliged to attach to its financial statements are among the financial statements that must be filed.
A certified auditor must also audit the financial statements, and they must be accompanied by an audit report from the auditor. The auditor’s report will offer an unbiased assessment of whether the financial statements are prepared in compliance with the relevant accounting standards and give a genuine and fair picture of the business’s financial condition and performance.
Financial penalties and fines may be levied by the ROC for failure to submit financial statements to it by the deadline. Depending on the type of business and the number of days of delay, the penalty could change. To prevent fines or other repercussions, it is crucial for businesses to ensure the timely production and submission of their financial statements to the ROC.
Income Tax Return (ITR)
Income Tax Return is referred to as ITR. It is a form that both people and businesses submit to the government in order to disclose their earnings and taxes paid over the course of a fiscal year. Companies must file an income tax return in the authorised format, which includes information on the company’s earnings, claimed deductions, paid taxes, and any unpaid taxes for the fiscal year. In India, businesses must file income tax returns regardless of whether they gained money or lost money during the fiscal year. Penalties and interest payments may be incurred for late or incorrectly filed income tax returns.
- Due Date: In India, the fiscal year 2022–23 runs from April 1 through March 31, 2023. For the Indian fiscal year 2022–2023, corporations must file their Income Tax Returns (ITR) by October 31, 2023.
It’s crucial to remember that the government reserves the right to declare any adjustments or extensions to the deadline in the event of unanticipated events or for other causes. To ensure that deadlines are met, it is always recommended to stay up to date on the newest changes from the Income Tax Department.
Annual General Meeting
This is one of the mandatory annual compliances of Private Limited Company. AGM, or annual general meeting, is a required gathering of a company’s shareholders each year under the 2013 Indian Companies Act. The primary goals of the AGM are to present the company’s financial accounts to the shareholders, as well as to discuss and approve business-related issues. Every business must hold its first AGM within nine months of the end of its first financial year, and all future AGMs must be held within six months of the end of each financial year, according to Section 96 of the Companies Act.
The chance to ask questions, voice concerns, and cast votes on the company’s numerous initiatives, such as the election of directors, selection of auditors, and endorsement of dividend payments, is provided to shareholders during the AGM. The AGM gives shareholders a chance to talk with the company’s management and offer their opinions on how well it is doing.
- Due Dates: According to the Indian Companies Act, a business must convene its annual general meeting (AGM) no later than six months after the end of its fiscal year. This means that if a company’s financial year finishes on March 31, the AGM must be held by September 30 of the same year.
However, a firm must hold its first AGM within nine months of the end of its fiscal year. Hence, if a company’s fiscal year closes on March 31, for instance, its first AGM should be held no later than December 31 of the same year.
Punishment for failing to comply: According to the Companies Act of 2013, it is a breach of the Act for a business to fail to hold its Annual General Meeting (AGM) within the allotted period. The following sanctions apply if an AGM is not held on time:
- Penalty on the company: The Company may be subject to a fine of up to Rs. 1,000,000 or a larger sum as the government may from time to time specify.
- Penalty on Directors: In addition to the fine imposed on the firm, the Directors of the company may also be subject to fines of up to Rs. 1,000,000 for each default.
It is crucial that businesses have their AGMs within the allotted period in order to avoid fines and other legal implications.
According to the Companies Act, a company’s first auditor must be chosen by the Board of Directors within 30 days of the company’s incorporation date. Following that, the firm is required to elect an auditor at each Annual General Meeting (AGM), who will serve in that capacity from the meeting’s end until the following AGM.
If a corporation does not elect an auditor at its annual general meeting (AGM), the incumbent auditor will continue to serve until a replacement is chosen. The corporation must notify the Registrar of Companies (ROC) within seven days after the AGM if the current auditor declines to remain. In this circumstance, the ROC has the power to choose a new auditor.
- ROC Filing: Within 15 days of the AGM, the business must file Form ADT-1 with the Registrar of Companies following the selection of an auditor. This document notifies the ROC of the auditor’s appointment and includes information about the auditor and their appointment. Within 30 days after the date of the AGM, the company must also file its audited financial statements and the auditor’s report with the ROC. These filings are required, and failing to do so may result in fines and other legal repercussions.
- Penalty: Section 450 of the 2013 Companies Act outlines the punishment for failing to file the ADT-1. The company and each officer who is in default are subject to a fine that cannot be less than Rs. 10,000 but which may reach Rs. 100,000 if a company fails to submit ADT-1 within the allotted time. The business could additionally be charged extra fees for filing late.
A company’s annual filing with the ROC refers to the submission of different papers and forms to the Registrar of Companies in accordance with the 2013 Companies Act’s requirements. A business must submit the following vital forms to the ROC on an annual basis:
- Annual Return: Within 60 days of the end of the Annual General Meeting, each firm must submit its annual return in Form MGT-7 to the ROC (AGM).
- Financial Statements: Within 30 days following the conclusion of the AGM, each business must file its financial statements (containing the Balance Sheet, Profit and Loss Account, Cash Flow Statement, and Notes to Accounts) in Form AOC-4 with the ROC.
- Appointment of an auditor: Within 15 days of the AGM’s appointment of an auditor, each business is required to submit Form ADT-1 to the ROC.
- Director’s Report: Within 30 days of the end of the AGM, each business must file its Director’s Report and financial statements in Form AOC-4.
- Registration of Members: Within 60 days of the conclusion of the AGM, each business is required to keep a current Register of Members and submit it to the ROC in Form MGT-7.
Penalties and fines may apply if these forms are not submitted by the deadlines specified. So, in order to avoid any legal issues, it is crucial for every business to make sure that these annual filing requirements are met on time. The fine levied on the defaulting company will not be less than Rs. 50,000 or more than Rs. 5 lakhs. In addition to this, each officer who defaults will be fined the same amount, sentenced to six months in prison, or both.
The DIR-3 KYC form, which includes information like the director’s name, residence, PAN, Aadhaar number, and cellphone number, must be filed annually with the MCA by all directors. The deadline date for this file is normally April 30th of the applicable financial year, and it must be submitted by then. Penalties and even the deactivation of the director’s DIN may occur from the non-submission or delayed filing of DIN KYC.
- Forms: There are two different forms available for submitting the KYC information of directors who hold DINs. Directors who hold a DIN but have never completed a DIR-3 KYC or who need to update their KYC information should submit the first form, DIR-3 KYC.
The second form is DIR-3 KYC Web, a web-based form for directors who have already submitted DIR-3 KYC and do not need to make any modifications to their KYC information.
- Due Date: Prior to September 30th of each financial year for the financial year that just ended.
- Penalty & Repercussions for Failure to File: The DIN of the concerned director will be “deactivated owing to non-filing of DIR-3 KYC” until the forms are filed with a late fee of Rs. 5,000 if the Form DIR-3 KYC is not completed by the deadline.
Compliance Calendar for Private Limited Company
The following is the list of essential reporting forms, applicable timelines, and filing due dates on India’s Compliance calendar:
QUARTER 1 – (APRIL TO JUNE)
|Section & Rules
|Particular of Compliance
|Receipt of MBP-1
|Form MBP- 1 Each Director of the Company shall disclose his stake in the other entities at the First Meeting of the Board of Directors of each Financial Year. Every time a Director’s interest changes from the MBP-1 that was previously provided, a new MBP-1 must be submitted to the Company. It is not necessary to file MBP-1 with ROC.
|Receipt of DIR- 8
|Form DIR – 8 Each Director of the Company shall annually provide a disclosure of non-disqualification to the Company.
|Half Yearly Return
|MSME-1 Delay in Payment to MSME Vendor The company is required to submit this return every six months in regards to any outstanding payments to MSME suppliers as of the half-end. year’s (only for payments that have been overdue for more than six months) October to March-30th April April to Sep-30th October
|Yearly Return (June)
|Section 73 Rule 16
|E-form DPT-3 Return of Deposit: The company must submit this form annually on or before June 30th in order to report returns of deposits and particulars that were not deemed deposits as of March 31st.
QUARTER – 2 (JULY TO SEPTEMBER)
|Approval of Financial Statement
|Financial statement preparation and approval. Every financial statement must be accompanied by the auditors’ report.
|The Directors’ Report must include all the details that the Company is required to provide under Section 134, as well as any applicable regulations and laws. If the “Chairperson” is not so approved by at least two Directors, one of whom should be an MD if there is one, the document must be signed by the “Chairperson” designated by the Board.
|Holding of AGM
|Every corporation must hold a general meeting as its annual general meeting every year in addition to any other gatherings. It must be held within a six-month window starting on the financial year’s last day.
|Sending of Notice AGM
|101 & SS
|All of the following parties will get notice of the annual general meeting: Directors, Members, Auditors, Debenture Trustees.
|Circulation of Financial Statement & other relevant Doc
|At least 21 days before the annual general meeting, the company will provide the members of the company with the approved financial statement, the directors’ report, and the auditors’ report. The aforementioned materials must be distributed on shorter notice if the AGM is called with less notice. Companies must get the necessary authorization in accordance with the Act in order to convene the AGM with less notice.
|Rule 12 A
|DIR-3 KYC Directors must submit this form with their KYC by September 30th of each year, at the latest.
QUARTER – 3 (OCTOBER TO DECEMBER)
|E-form: AOC-4 Financial Statement: Within 30 days of the annual general meeting, the company must file this form with its balance sheet, statement of profit and loss, cash flow statement, directors’ report, and auditors’ report. Attachment: Directors’ Report, Auditors’ Report, Cash Flow Statement, Balance Sheet, Statement of Profit & Loss, and Notification of the Annual General Meeting
|E- Forms Filing Requirements Annual
|E-form: MGT-7 Annual Return: Within 60 days of the annual general meeting, each company must submit its annual return. The annual return will cover the time frame of 1 April through 31 March. Every private company (apart from small companies) must have a company secretary sign the annual report.
|Certification of Annual
|MGT-8 Private companies need to have a company secretary in practice to certify them if they have paid-up share capital of at least 10 cr or a revenue of at least 50 cr.
QUARTER – IV (JANUARY TO MARCH)
There is no mandatory annual compliances of Private Limited Company for this quarter.
|173 & SS-I
|Every Business shall hold a minimum of FOUR meetings of its Board of Directors each year, with no more than 120 (one hundred twenty) days separating any two meetings.
|Maintenance of Statutory Registers
|88 and other sections
|The following registers must be kept up to date by the company: the register of directors, the register of director shareholdings, the register of members, the register of related party transactions, etc.
|Appointment of Auditor
|E-form ADT-1 Within 15 days of the annual general meeting, form ADT-1 for the appointment of the auditor for a 5-year term will be filed.
In conclusion, Private Limited firms have important legal and regulatory duties that must be fulfilled each year, including yearly compliances. The Ministry of Corporate Affairs is in charge of enforcing these compliances as required under the 2013 Companies Act. To avoid fines and keep up with the law’s requirements, certain annual compliances of Private Limited Company must be met by the due dates. We hope that after reading our in-depth analysis of annual compliances of private limited companies, you have a clear understanding of the topic. But if you need any extra clarity or information on the matter, feel free to ask us. You can also get in touch with one of our startup advisers for professional advice and support.