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Annual Compliances For Private Limited Company
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 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.
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 for Private Limited Company.
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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 a 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.
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 fulfilment of all mandatory compliances so as to waive off the penalties.
Outsourcing annual compliances for private limited company after private limited company registration also allows you to focus on the key areas of your business.
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 account of failures. Failure to file may also reduce the status of your business to default and levy huge penalties. Moreover, the company will also be declared ‘inoperational’ 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.
Annual Compliances for Private Limited Company
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Documents required for Annual Compliances for Private Limited Company
The documents requirement for Annual Compliances for Private Limited Company are:
- Â Â Certificate of Incorporation
- Â Â PAN Card of Directors
- Â Â MoA (Memorandum of Association) and AoA (Articles of Association) of the company
- Â Â Audited Financial Statements
- Â Â DSC (Digital Signature Certificate) of Directors
- Â Â Audit Report and Board Report
Annual Compliances for Private Limited Company
Businesses often make mistakes such as:
- Not Defining Needs Clearly: The Business fails to specify what services it needs, so it hires someone who does not have expertise in that area.
- Ignoring Firm Reputation: Do not research the firm’s track record and choose the wrong accounting services providers.
- Overlooking Cost vs. Value: Focusing solely on accounting services cost without considering the value provided by them.
Event-based Annual Compliances for Private Limited Company
Apart from annual compliances for private limited companies, there are event-based compliances that need to be compiled on the occasion of occurrence of an event. Here are specific instances of a few events:
- Change in the authorized capital or the paid-up capital of the private limited company (Form SH-7 and PAS-3 respectively)
- Allotment of new shares or transfer of new shares
- Offering loans to other companies
- Offering loans to directors of the company
- Appointment of managing or whole-time Director and their payment (to be filed with the RoC)
- When a bank account is opened or closed, or there is a change in the signatories of a bank account.
- If there is an appointment or change of the statutory auditors of the company
To conclude, annual compliance can make or break your business. It enhances credibility, brand loyalty and customer faith in your company. The cost of non-compliance always turns out to be more than that of compliance. Thus, you should consult a professional who may not only help you at every step of your business but also coordinate with you in fulfilling all the compliance requirements for your company while keeping you on the same page.
Anam Shaikh & Associates is a comprehensive consultancy company that offers company registration in Mumbai, with annual compliances, ROC filing and MCA filing effectively and professionally.
For more questions and queries, contact us:
Email:Â ca.anamshaikh@gmail.com
Call us: 076201 44726
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Frequently Asked Questions
Who all are eligible for Annual Filling/Compliance?
All types of Annual compliances for private limited company needs to do Annual Compliance every year
Is audited Financial Statement mandatory for annual filling for Private limited Company?
Audited Financial Statement are must for Annual compliance of all Private Limited Companies.
What is the due date for annual compliances for private limited company?
Annual Return is to be filled within 60 days of conducting AGM.
Which Forms are required to be filled in Annual Return?
There are multiple Forms required to be filled. For more details contact us.
Which Audit is mandatory for annual filing for Private Limited Company?
Statutory Audit under Companies Act 2013 is mandatory for Private limited Company Annual Compliance.
Which Company needs to do Statutory Audit?
Every Company is required to do Statutory Audit irrespective of Turnover, Share Capital, etc.