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What is Annual Compliance for Private Limited Company?
After incorporation, every private limited company needs to comply with some legal and regulatory requirements, including annual compliances under the Companies Act 2013. These compliances are obligatory and must be complied within the prescribed time.
What are Annual Compliances for Private Companies?
While private companies have benefits of lots of exemptions, compared to public companies, they still have to adhere to specific annual compliance requirements under the Companies Act 2013. These compliances are essential to ensure the company's legal and financial integrity.
Let’s discuss the different annual compliances a private company must adhere to.
Benefits of Annual Compliances
- Enhancing the Company’s Credibility: Consistent compliance plays a crucial role in establishing an organization's credibility.
- Attracting Investors: Companies with a strong record of regular compliance are more appealing to potential investors.
- Maintaining Active Status and Avoiding Penalties: Failure to file returns regularly can lead to the company being marked as default and subjected to heavy penalties.
Types of Compliances
The compliance necessities for Private Limited Companies have significantly evolved over the years. Below is a brief overview of the current compliance obligations for private limited companies.
The compliances are divided into two main categories:
- Registrar-Related Compliance
- Non-Registrar Compliance
Registrar Related Compliances
Here is the table of all the registrar-related compliances for the private companies:
| Registrar-Related Compliance | Company Law Compliance | Due Date |
|---|---|---|
| Declaration of Commencement of Business | Form INC-20A | Within 180 days of incorporation |
| Active KYC of the Company | Form INC-22A | Till April 25, 2019 (without late fine) |
| Directors' KYC | Form DIR-3KYC | Till April 30 (or declared by MCA) |
| Directors' Disclosure of Interest in Other Firms | Form MBP-1 | Within 30 days of the first board meeting |
| Directors' Disclosure of Non-Disqualification | Form DIR-8 | Within each financial year |
| Mandatory Appointment of Auditor | Form ADT-1 | Within 15 days of incorporation (can be filed post-first AGM) |
| Meetings of the Board of Directors | - | Minimum 4 meetings per year, maximum gap of 120 days |
| Annual General Meeting (AGM) | - | Within 6 months of the financial year's closure (first AGM within 9 months) |
| Annual Return | Form MGT-7 | Within 60 days of the AGM |
| Financial Statements | Form AOC-4 | Within 30 days of the AGM |
Non-Registrar Compliances
In addition to the registrar-related compliance, private limited companies must also fulfill several non-RoC compliance requirements, which include:
Payment of periodic dues such as GST liability, TDS, TCS, advance tax, and professional tax (PTax).
Filing regular returns, including:
- Monthly/Quarterly/Annual GST Returns
- Quarterly TDS Returns
- Filing Income Tax Returns -
- Assessment of advance tax liability
- Half-yearly ESIC returns
- Filing Tax Audit Report
- Professional tax (PTax) returns
- PF returns
Ensuring compliance with various regulatory assessments and reporting under different laws such as the Environment Protection Act, Competition Act, Factory Act, and more.
Frequently Asked Questions
Q- Is an annual report mandatory for private companies?
These compliances are required annually. As part of the annual filing process, the following forms must be submitted to the ROC: Form MGT-7 (Annual Return): Every private limited company must file its annual return within 60 days of holding the Annual General Meeting.
Q- Whether the Annual Filing is necessary for all companies?
All registered Private Limited Companies in India are required to adhere to RoC (Registrar of Companies) compliance, regardless of their turnover or capital. This annual compliance must be fulfilled within a year of the company's Annual General Meeting (AGM) starting from its first financial year.
Q- What are the penalties for a Private Limited Company that fails to file its annual return?
Since July 2018, companies failing to follow the statutory compliance for Private Limited will be charged ₹100 for each day of a delay till the actual date of filing. There is no ceiling limit to an additional fee. For continuous failure, penalties apart from the additional Government fee can be levied on both – the company and directors, including imprisonment.
Q- Does the appointment of a statutory auditor fall under annual compliance?
A statutory auditor's appointment for a Private Limited Company can last for five consecutive years or until the next Annual General Meeting (AGM). This appointment is not considered an annual compliance requirement.
Q- In case there are no operations in the company, are directors required to sign directors' reports?
Under the Companies Act 2013, all companies must file an annual return with the MCA (Ministry of Corporate Affairs), including a signed Director Report. This report is a mandatory attachment to Form MGT-7.
