What are the post-incorporation compliances for a Private Limited Company? Upon successful incorporation, a Private Limited Company in India is required to adhere to a series of statutory and regulatory compliances to ensure smooth functioning and legal validity. These post-incorporation compliances for a Private Limited Company include a broad range of obligations such as obtaining mandatory registrations, maintaining proper documentation, conducting board meetings and filing returns. Adherence to these compliances is crucial for maintaining transparency and avoiding legal penalties.
The post-incorporation compliances of a Private Limited Company are designed to safeguard the interests of stakeholders, promote corporate governance and enhance the company’s credibility. Key compliances involve the appointment of auditors, issuance of share certificates, maintenance of statutory registers and compliance with tax regulations. Additionally, companies must adhere to annual filing requirements with the Registrar of Companies (ROC), including the filing of financial statements and annual returns. By meticulously following these post-incorporation compliances for a Private Limited Company, businesses can foster trust among investors and partners thereby laying a robust foundation for sustained growth and success.
Post Incorporation Compliance for Private Limited Company in India
Ensuring adherence to post-incorporation compliances of Private Limited Companies in India is crucial for the smooth and lawful operation of any business. These compliances include a series of statutory requirements and filings mandated by the Companies Act, 2013 and other relevant regulations. Fulfilling these obligations not only ensures legal adherence but also helps in maintaining the company’s good standing.
1. Holding the First Board Meeting
A Private Limited Company must hold its first board meeting within 30 days of incorporation. This meeting is crucial for setting the tone of corporate governance and taking initial decisions necessary for the company’s operations as per the secretarial compliances.
- As per Section 173(1) of the Companies Act, 2013, the first board meeting should be held within 30 days from the date of incorporation.
- At least one meeting of the board of directors must be held in each quarter of the calendar year, and there should not be a gap of more than 120 days between two consecutive meetings.
2. Appointment of Auditors
After the incorporation of a Private Limited Company, it is mandatory to appoint the first auditor of the company. The Board of Directors must appoint the first auditor within 30 days from the date of incorporation. If the board fails to appoint an auditor, the members of the company must appoint one within 90 days at an extraordinary general meeting.
- As per Section 139(6) of the Companies Act, 2013, the first auditor shall hold office until the conclusion of the first annual general meeting.
- The appointment of subsequent auditors must be done by the shareholders at the annual general meeting as per Section 139(1) of the Companies Act, 2013.
3. Issuance of Share Certificates
The share certificates serve as proof of ownership of shares in the company and must contain specific details such as the name of the shareholder, the number of shares held and the distinctive number of shares.
- As per Section 56(4) of the Companies Act, 2013, every company is required to deliver the certificates of all securities allotted within two months from the date of allotement.
- The certificates must be issued under the common seal of the company (if any) and signed by two directors or by a director and the company secretary.
4. GST Registration
If the annual turnover of the company is expected to exceed the aggregate turnover in a financial year (which is ₹40 lakhs for most states and ₹20 lakhs for special category states), the company must register under the Goods and Services Tax (GST). This registration is essential for collecting and remitting GST on goods and services sold.
- Any business whose turnover exceeds the specified threshold must register for GST.
- The application for GST registration can be made online on the GST portal. The required documents include the company’s PAN, proof of address, bank account details and the incorporation certificate.
5. Professional Tax Registration
Depending on the state in which the company operates, it may be required to register for professional tax. Professional tax is a tax levied on professions, trades and employment and is collected by the state government.
- The requirements and procedures for professional tax registration vary from state to state. For instance, states like Maharashtra, Karnataka and West Bengal have mandatory professional tax registration for businesses.
- The application for professional tax registration can be made through the respective state government’s website or tax department. Necessary documents typically include the PAN of the company, incorporation certificate, address proof and details of directors and employees.
6. Maintenance of Statutory Registers and Records
A Private Limited Company is required to maintain various statutory registers and records as per the Companies Act, 2013. These include the register of members, register of directors and key managerial personnel, register of charges and minutes of board meetings and general meetings.
- As per Sections 88 and 170 of the Companies Act, 2013, a company must maintain a register of members, a register of directors, a register of debenture holders and a register of other security holders.
- The company must also maintain minutes of all board meetings and general meetings.
- These registers and records must be kept at the registered office of the company and should be updated regularly to reflect any changes.
7. Conducting Annual General Meeting (AGM)
A Private Limited Company must conduct its first Annual General Meeting (AGM) within six months from the end of the first financial year. The gap between two AGMs should not exceed 15 months.
- As per Section 96 of the Companies Act, 2013, every company, other than a one-person company, must hold an AGM each year.
- The notice for the AGM must be sent to all members, directors and auditors of the company at least 21 days before the meeting.
- During the AGM, the company must present its financial statements, directors’s reports and auditor’s reports to the shareholders for approval.
8. Filing Annual Returns
Every Private Limited Company must file its annual returns with the Registrar of Companies (ROC). The annual return provides a report of the company’s general state of affairs, including information about its directors, shareholders and financial conditions.
- Every company must file its annual return in Form MGT-7 within 60 days from the date of the AGM.
- The financial statements must be filed in Form AOC-4 within 30 days from the date of the AGM.
- Non-compliance with annual return filing can result in penalties and disqualification of directors.
9. Compliance with Labour Laws
A Private Limited Company must comply with various labour laws, including the Payment of Wages Act, Minimum Wages Act, Gratuity Act, and others. These laws ensure fair treatment and adequate benefits for employees.
- Payment of Wages Act, 1936: Ensures timely payment of wages to employees.
- Minimum Wages Act, 1948: Ensures employees receive at least the minimum wages as prescribed by the government.
- Gratuity Act, 1972: Ensures gratuity payments to employees who have completed five years of service.
- Employees’ Provident Funds and Miscellaneous Provisions Act, 1952: Mandates provident fund contributions for companies with 20 or more employees.
Frequently Asked Questions
1. How and when should a Private Limited Company appoint its first auditor?
A Private Limited Company must appoint its first auditor within 30 days of incorporation. The appointment must be done by the Board of Directors. If the Board fails to appoint the auditor, the shareholders must appoint one within 90 days at an extraordinary general meeting.
2. What are the annual compliances for a Private Limited Company in India?
Annual compliances for a Private Limited Company include holding an Annual General Meeting (AGM), filing the annual return (Form MGT-7) and financial statements (Form AOC-4) with the Registrar of Companies (ROC), maintaining statutory registers and adhering to income tax filings and audit requirements.
3. What statutory registers must a Private Limited Company maintain?
A Private Limited Company must maintain various statutory registers such as the register of members, register of directors and key managerial personnel, register of charges and minutes of meetings. These records are crucial for regulatory compliance and transparency.
4. What is the importance of obtaining a PAN and TAN for a Private Limited Company?
Obtaining a PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) is crucial for a Private Limited Company in India as these are necessary for tax-related transactions and compliances. PAN is used for income tax purposes, while TAN is needed for TDS (Tax Deducted at Source) compliance.
5. How can a Private Limited Company ensure ongoing compliance?
To ensure ongoing compliance, a Private Limited Company should adopt best practices such as maintaining proper documentation, conducting regular internal audits and seeking professional assistance from legal advisors.
Conclusion
By diligently following the mandatory requirements such as holding board meetings, appointing auditors, issuing share certificates, and registering for GST and professional tax, companies can uphold corporate governance standards and maintain their good standing. Compliance with labour laws further ensures fair treatment and benefits for employees, contributing to a positive work environment. By meticulously adhering to these post-incorporation compliances of a Private Limited Company, businesses not only avoid legal penalties but also foster trust among investors and partners.
Ensure Compliance with Maheshwari & Co.’s Support
Navigating these complexities can be challenging, but businesses don’t have to do it alone. Explore Maheshwari & Co.’s expertise in navigating the intricacies of post-incorporation compliance for a Private Limited Company. Our comprehensive legal services can assist your business in ensuring full compliance, allowing you to focus on growth and operational excellence. To learn more about how we can support your compliance needs, explore our Regulatory & Compliance services.
