A Private Limited Company enjoys an identity separate from its Directors. Thus, in order to maintain its active status, every business is required to file annual compliances for a private limited company with the Ministry of Corporate Affairs (MCA). Since the inception of the Companies Act in 1956, the scope of private limited companies has undergone a myriad of changes.
The Ministry of Corporate Affairs and the Registrar of Companies, in an attempt to limit the functionalities of private limited companies, issue a lot of compliances as mentioned under the Companies Act, 2013. These complex terminologies might be a little difficult to comprehend for a non-professional. Thus, it is advisable to consult a professional right after private limited company registration to deal with your annual compliances.
Private Limited Company Compliances
According to Section 149 (1) of the Companies Act, 2013, the minimum number of directors required to incorporate a private limited company is two and the maximum is fifteen. In addition to this, it has a threshold limit of 200 members. All the shareholders of a private limited company have a liability, limited to the extent of the capital invested by them in the firm.
On the other hand, a public limited company registration requires a minimum of three directors at the time of its incorporation. A public limited company registration enjoys more benefits in comparison to private limited company registration, in terms of perpetual existence, ease of transferability and borrowing capacity. A private company must also file its annual compliance with the Registrar of Companies, even in case of nil annual turnover.
What are the Annual Compliances for Private Limited Company?
Almost all activities performed by a private limited company are regulated by the Companies Act, 2013. These include the appointment, qualification, remuneration, and retirement of the company’s directors and other aspects such as conducting the board meetings and shareholder meetings. It is always a better choice to seek professional advice to understand the legal requirements and to ensure timely fulfillment of all mandatory compliances so as to waive off the penalties. Outsourcing annual compliances for the private limited company after private limited company registration also allows you to focus on the key areas of your business.
The due dates for the annual filing of a private limited company are based on the date of its Annual General Meeting. If a business regularly fails to meet annual compliances for private limited company, it may lead to the removal of the company’s name from the MCA register and permanent disqualification of the company directors.
Benefits of Annual Compliances for Private Limited Company
1. Greater Credibility:
The date of filing annual compliances for private limited company is displayed on the MCA portal and is visible to everyone. Thus, the regularity in filing compliances increase your business’s credibility, attracting customers, helping obtain government tenders and attaining loan approvals.
2. Attracts investors:
Financial records and compliances are the key points of focus with regard to investors. Before investing in your business, investors check the regularity of filing annual returns on the MCA portal. Thus, regular filing of annual compliances for private limited company is a quintessential part to obtain investors.
3. Maintain active status of your business:
Filing annual compliances for private limited company is essential to avoid penalties on accounting services. Failure to file may also reduce the status of your business to default and levy huge penalties. Moreover, the company will also be declared ‘in-operational’ and removed from the Registrar of Companies. The directors of such companies are debarred from all future businesses. With effect from July 2018, an additional fee of Rs 100 per day will be charged per day from the due date of filing.
Documents required for Annual Compliances for Private Limited Company
The documents requirement for Annual Compliances for Private Limited Company are:
• Certificate of Incorporation
• PAN Card of Directors
• MOA (Memorandum of Association) and AoA (Articles of Association) of the company
• Audited Financial Statements
• DSC (Digital Signature Certificate) of Directors
• Audit Report and Board Report
• Annual Compliances for Private Limited Company
1. Appointment of First Auditor:
The Body of Directors is required to appoint an auditor within thirty days of incorporation of the company. A private limited company that fails to appoint an auditor is liable to pay a penalty of Rs 300 per month. In addition, the company will not be allowed to commence business. He/She is required to stay in the office till the completion of 1st AGM.
2. Subsequent Auditor:
A subsequent auditor is appointed to monitor the fair dealings of a company in terms of its financial position. He/She is appointed in the first AGM and contin
