Annual compliance for companies refers to the process of filing required documents and reports with the state or government to maintain good standing status. This typically involves disclosing essential business information, meeting filing deadlines, and adhering to state-specific regulations.

Annual compliance for a Company refers to the set of regulatory and legal obligations that a Company must fulfil each year to stay in good standing with the authorities. These requirements can vary depending on the jurisdiction and the type of business.Some of the compliance that has to be done annually is outlined in the Companies Act 2013. Any default in the mandatory set of compliance may lead to strike off of the Company and disqualification of its directors. Hence, during annual Compliance various returns have to be furnished to the Income Tax Authority, MCA, GST etc . This article will give a glance to some of the standard compliance that has to be mandatorily done in relation to a company.

Private limited company as well as one person company, limited liability Partnership company and section 8 companies that are operating in India are required to fulfil statutory annual compliances like filing of annual returns and income tax returns annually.

Concerning compliance with the legislation, Private Limited Companies demonstrate a rather significant shift in recent years. The following is the summary of compliance for Private Limited Company: 

•  Declaration of Commencement of Business:

Form INC-20A: It has to be done within the first 180 days of the incorporation of the business. 

• ACTIVE KYC of the Company:

Form INC-22A: To be filed by 25 April 2019 to avoid late fees.

• Director KYC:

Form DIR-3 KYC:To be filed by 30 September (or as per the date announced by the Ministry of Corporate Affairs).

• Disclosure of Directors' Interests:

Form MBP-1: Must be filed within 30 days of the first board meeting to disclose interests in other firms.

• Directors' Non-Disqualification Report:

Annual return for directors: Each director of the company is required to fill form DIR-8 which contains a non-disqualification report. 

• Mandatory Appointment of Auditor:

Form ADT-1: An auditor must be appointed within 15 days of incorporation. Form ADT-1 can be filed after the first AGM.

• Board Meetings:

A minimum of four board meetings must be held annually. The maximum interval between meetings is 120 days, ensuring meetings are held quarterly.

• Annual General Meeting (AGM):

AGM Timing: Must be held within six months of the financial year’s end (by 30 September each year).

First AGM: AGM must be completed within nine months of the end of the financial year (31 December). 

• Annual Return:

MGT-7 Form: Should be filed within sixty days of holding the AGM, covering the period from 1 April to 31 March.

• Financial Statements:

 Form AOC-4: Financial statements must be filed within thirty days of the AGM.

In addition to the Compliance mentioned above, some of the non-RoC Compliance for Private Limited Companies are: 

•  Payment of other taxes (Goods and Service tax liability tax deducted at source tax collected at source advance tax and Professional tax which are paid periodically). 

• As shown by the table below, all companies other than those engaged in insignificant activities shall file at least one return per year while a few companies file as many as twenty returns in a year consistent with the views of the practitioners Monthly/Quarterly/Annual GST Returns 

• Quarterly TDS Returns 

•  Preliminary computation of the amount of tax to be paid in advance

• Submission of Income Tax Returns 

•  Filing of Tax Audit Report 

• As part of their half-yearly ESIC returns , employees’ state insurance corporations are statutory records submitted by the employers. 

• Filing of PF returns 

• Filing of the professional tax or PTax return 

• Risk evaluation and documentation with reference to stipulations of various acts of law

• Enhancing the Company’s Governance Standards:  regularity in Compliance is one of the measures that can be used to determine the credibility and corporate governance standards of an organisation. 

• Investor Perception: Like with compliance records, investors also only pick firms that make it common to adhere to compliance. 

• Avoid penalties: This means that if one fails to file the Return continuously, the company status goes to default and the company is charged hefty penalties.

Filing Annual Reports

• File annual reports with the state to update business information, such as:

• Business name and address

• Registered agent information

• Officer and director information

• Business activities and operations

Maintaining Business Licences and Permits

• Obtain and renew necessary business licences and permits to operate legally

• Ensure compliance with industry-specific regulations and standards

Meeting Tax Filing Obligations

• File tax returns and reports with the state and federal government

• Pay annual fees and taxes to maintain good standing status

Holding Annual Meetings and Recording Minutes

• Hold annual meetings of shareholders and directors to discuss business operations and make important decisions

• Since it is crucial to capture some of the discourse content, minutes of meetings should be taken. 

Maintaining Corporate Records

• Keep accurate and up-to-date corporate records, including:

• Articles of incorporation

• Bylaws

• Meeting minutes

• Stock certificates and ledgers

It is essential for companies to stay on top of annual compliance requirements to avoid penalties, fines, and even dissolution. Instabiz filings, a document filing service, offers a year-end checklist to help businesses review their operations and ensure compliance with state regulations.

The cost of annual compliance for companies varies based on the type of company and the complexity of its operations. Here is an overview of the typical costs for different types of companies in India:

Private Limited Company (PLC)

• Annual ROC Filing Fees: ₹1,000 to ₹10,000 (depending on the authorized capital)

• Auditor's Fees: ₹10,000 to ₹50,000 (varies based on turnover and company size)

• Tax Filing: ₹5,000 to ₹15,000 (professional fees)

• Compliance for Board Meetings & AGM: ₹10,000 to ₹20,000

• Total Cost: ₹30,000 to ₹1,00,000 annually

One Person Company (OPC)

• ROC Filing Fees: ₹500 to ₹1,500

• Audit Fees: ₹5,000 to ₹15,000 (audit is mandatory if turnover exceeds ₹2 crore)

• Tax Filing: ₹2,500 to ₹5,000

• Total Cost: ₹15,000 to ₹30,000 annually

Limited Liability Partnership (LLP)

• Annual Filing Fees (Form 11 & Form 8): ₹1,000 to ₹2,000

• Audit Fees (if applicable): ₹10,000 to ₹20,000 (audit required if turnover exceeds ₹40 lakh)

• Compliance Costs: ₹5,000 to ₹10,000 (for maintaining records, filing forms)

• Total Cost: ₹10,000 to ₹40,000 annually

Public Limited Company

• ROC Filing Fees: ₹5,000 to ₹25,000 (depending on capital)

• Auditor's Fees: ₹50,000 to ₹2,00,000

• Secretarial Compliance: ₹20,000 to ₹50,000

• Tax Filing & Other Compliances: ₹20,000 to ₹1,00,000

• Total Cost: ₹1,00,000 to ₹5,00,000 annually

Factors Affecting Compliance Costs:

• Size of the company (authorized capital and turnover)

• Type of industry

• Number of transactions and complexity of operations

• Geographical location (some professionals may charge differently depending on location)

These costs include professional fees for filing returns, audit fees, and other secretarial services, and can vary based on the service provider's expertise.

1. Financial Statements

• Balance Sheet

• Profit and Loss Account

• Cash Flow Statement

• Notes to Accounts

2. Director's Reports

• Director's Report

• Auditor's Report

• Board's Report

3. Annual Return

• Form MGT-7 (Annual Return)

4. Income Tax Returns

• Filed Income Tax Return (ITR)

• Tax Audit Report (if applicable)

5. Minutes of Meetings

• Minutes of Board Meetings

• Minutes of General Meetings

6. Registers

• Statutory Registers (Register of Members, Register of Directors, etc.)

7. Compliance Certificates

• Secretarial Compliance Certificate

• Auditor's Certificate

8. Form Filings

• Form AOC-4 (for filing financial statements)

• Form MGT-7 (for filing annual return)

• Other relevant forms based on the company's activities (e.g., Form ADT-1 for appointment of auditors)

9. Audit Reports

• Statutory Audit Report

• Internal Audit Report (if applicable)

10. Proof of Compliance

• Proof of payment of filing fees

• Copies of resolutions passed in meetings

These documents ensure that the company is compliant with regulatory requirements and help avoid penalties or legal issues.

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