Private Limited Company Compliance

Introduction

Private Limited Companies (Pvt Ltd) are highly preferred in India due to their limited liability, distinct legal identity, and relative ease in raising capital. However, to ensure transparency, good governance, and legal compliance, such companies must adhere to certain rules and regulatory requirements.

Key Features of a Private Limited Company

• Limited Liability: Shareholders’ financial obligations are only as much as the funds they put into the company.

• Separate Legal Entity: The company is treated as a separate legal business.

• Perpetual Succession: No matter who owns the company, it continues operating as usual.

• Minimum and Maximum Members: There must be 2 to 200 members in a Discord server.

Statutory Compliance Requirements

• Pre-Incorporation Compliance

1. Name Approval (SPICe+ Part A): You must get permission for your proposed name from the Ministry of Corporate Affairs.

2. Document Filing (SPICe+ Part B): MOA, AOA, PAN, TAN, and GST (if there are GST impacts) are all included in this section of document filing.

3. All directors need to have both a Director Identification Number (DIN) and a Digital Signature Certificate (DSC).

•  Post-Incorporation Compliance

1. Commencement of Business (INC-20A)

• Have to be filed within 180 days after a company is incorporated.

• Declaration of the completion of paid-up capital.

2. Board Meetings

• Thirty days after the incorporation of the company, a board meeting needs to happen.

• It is important that you have four meetings of the board each year, once every quarter.

3. Appointment of Auditor (Form ADT-1)

• Within 30 days after incorporation, auditors have to be appointed.

• The documents were processed with ROC.

Annual Compliance Requirements

• Financial Statements

1. Form AOC-4: After that, a company issues its balance sheet and profit and loss account in the format called AOC-4.

2. Due Date: The report has to be submitted within a month after the Annual General Meeting (AGM).

• Annual Return

1. Form MGT-7: Form MGT-7 contains details of the company’s shares, updates, and who its directors are.

2. Due Date: Date for their remuneration review should be no later than 60 days after the AGM.

• Director's Report

1. Directors offer a summary describing the company’s performance and what can be expected in the future.

• Annual General Meeting (AGM)

1. To be held within 6 months from the end of the financial year (latest by 30th September for companies following April–March fiscal).

Other Regular Compliance

• Director KYC

1. Form DIR-3 KYC: This form is to be filled annually for each director, provided they have a Director Identification Number (DIN).

2. Due Date: The due date for the filing is every year on 30th September.

• Income Tax Filing

1. The taxpayer has to file ITR by 31st October if their accounts do not require auditing, or by 30th November if an audit is required.

• TDS Returns

1. It is required for the company to give authorities a quarterly update on TDS.

• GST Returns (if registered)

1. Monthly, quarterly, or annually reports are required, depending on the activity of the firm.

Event-Based Compliance

Certain compliance depends on specific events:

Penalties for Non-Compliance

A person may face consequences when they do not fulfill the obligations set by law.

• You will be charged (₹100 per day) per form if you file your taxes late.

• Calculations of officer penalties can go from ₹10,000 to several lakhs.

• Strike-off may be considered if companies fail to meet expectations many times.

Best Practices to Ensure Compliance

• Make sure you have a compliance calendar.

• Contact a licensed and skilled Company Secretary (CS) or Chartered Accountant (CA) to advise you.

• You can work with InstabizFilings.

• Every so often conduct reviews within your organisation.

Conclusion

Compliance is essential for a Private Limited Company as it reflects strong management and builds trustworthiness. A compliant company earns investor confidence, avoids legal complications, and ensures smooth, uninterrupted operations.

Disclaimer

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