What are the Mandatory Compliance Requirements for Companies in India?
Posted on: 2017-01-30 06:03:42
First description you will discover about the economy of India is about its size and speed. Definitely, hailed as one of the largest and fastest-growing economies, India is poised to challenge the countries like China and the USA. Moreover, the Indian government after winning the 2014 elections has come up with various initiatives like “Make in India”, “Digital India” and “Swachh Bharat (Clean India)” that has raised the interests of domestic and international stakeholders.
As the Indian economy’s ship sets speedily on its voyage, there are millions of entrepreneurs who have thronged themselves in its progress. For that reason, there is an increase in the number of entrepreneurs with their private limited companies. Though private limited companies bring several advantages after their incorporation, there are also certain compliance requirements that need to meet in India. Obviously, flouting of any rules would bring the company in the court of law.
Mandatory compliances for private limited companies in India
Post registration, the company has to mandatorily comply with the following:
- Auditor appointment – A private limited company has to appoint an auditor to audit its accounts. The auditor should be a practicing chartered accountant in India. The board of directors of the company should appoint the auditor within the 30 days of the company’s incorporation or they could be appointed in the Extraordinary General Meeting (EGM) of the company within the 90 days of the company’s incorporation. Reappointment should happen in the consequent AGM or Annual General Meeting of the company.
- Filing annual returns – Many companies fall under Income Tax Officer’s net if they do not comply with this rule. Within the 60 days of the AGM, the company should file its annual return under the form MGT-7, which is also available at the www.mca.gov.in website. It should be filed within the financial year.
- Financial statements – There shall be board meetings held at least four times a year (minimum 2 times in case of startups or small companies). The board of directors would need to approve and sign the financial statements of the company. Next, the financial statements are to be filed with the Registrar of companies within 30 days of the AGM. The form AOC-4 is available at the mca.gov.in website for the same.
- Board of directors’ report - In a directors’ report format, the board of directors has to furnish the details of their individual directorship in other companies and that too every year. Quite a number of companies have directors who are also appointed in the same role of other companies.
- Statutory registers maintenance – A prerequisite for every company is to maintain the statutory registers of members, debenture holders, employee stock options, charges, shares and securities brought back, sweat equity shares, renewed and duplicate share certificate and a foreign register of debenture holders, members, security holders or beneficiaries who are residing outside India.
- Minutes of proceedings – General meetings, board of directors’ meetings should mandatorily cause minutes of the entire proceedings.
What happens to the company that fails to comply?
It becomes a punishable offense when a company fails to comply with the rules and regulations under the Companies Act. They levy fines on companies for non-compliance and charge additional fees if they do not meet the requirements within the specified time period.
It is recommended that the companies hire expert help for complete guidance.