ROC Annual Compliance – Private Limited Company

  • September 12, 2017

ANNUAL COMPLIANCE

FILING BASED COMPLIANCE

  • Section 92 (Annual Return)- Every Company shall prepare its Annual Return in Form MGT-7 within 60 days of holding Annual General Meeting.

Signing Provision- Annual Return shall be digitally signed by a Director and the Company Secretary; or where there is no Company Secretary by a Company secretary in Practice.

If paid up capital is more than Rs. 10 crore or turnover is more than Rs. 50 crore a copy of Form MGT-8 (Certificate by Practicing Professional) is required to be annexed in Form MGT-7.

An Extract of Annual Return (Form MGT-9) shall form part of board’s Report.

  • Section 137( Copy of financial Statements to be filed with Registrar)- A copy of financial statements, including CFS, if any along with all the necessary annexures such as-

-Auditor’s Report;

-Director’s Report along with Form MGT-9 (Extract of Annual Return),

-CSR Policy, if any

-Form AOC-1, Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures, if any

shall be filed with the Registrar in Form AOC-4 or Form AOC-4 XBRL as the case may be, within 30 days of the AGM.

Holding company is also required to file consolidated financial statements in Form AOC-4 CFS

  • Section 139 (Appointment of Auditor) – Every company shall appoint statutory auditor for a period of 5 years and intimate the registrar in Form ADT-1.
  • In the subsequent AGM shareholders will ratify the appointment of Auditor, hence no need to file Form ADT-1
  • Section 170 (Registers of directors and Key Managerial Personnel and their shareholding)- A Return containing particulars of appointment or any change in director and Key Managerial Personnel shall be filed with Registrar within thirty (30) days of appointment or change in Form DIR-12.
  • Section 148 (Central Government to specify audit of items of cost in respect of certain Companies) Cost audit is applicable on class of companies (http://www.mca.gov.in/Ministry/pdf/rules_2_30062014.pdf) as specified by the central Government. T Shirt Versace Pas Cher The Audit shall be conducted by a Cost Accountant in Practice who shall be appointed by Board on such remuneration as may be decided by board and ratified by shareholders subsequently.

Intimation of appointment of cost auditor by the company to Central Government be made in Form CRA-2

NON-FILING BASED COMPLIANCE

Following compliances are required to be done and kept as the records with the Company for future reference.

  • Sec 184 (1), Rule 9 Chapter XII (Disclosure of Interest by Directors)– Every Director shall disclose his interest in any company, body corporate, firms or other association of individuals by giving a notice in writing in Form MBP-1 in First meeting of BOD in each financial year and whenever there is any change in his interest or at the time of getting inducted as director on the Board.
  • Section 88 (Registers to be maintained)- Following registers are to be maintained by a private company-
  1. MGT-1-Register of members including details of shareholding and share transfer details;
  2. MGT-2- Register of Debenture holders/ other than security holders;
  3. Register of directors and Key Managerial Personnel ;
  4. MBP-2-Register of loans, guarantee, security and acquisition made by the company;
  5. MBP-3- Register of investments not held in its own name by the company;
  6. MBP-4-Contracts or agreements with any related party under section 188 or in which any director is concerned or interested under sub- section (2) of section 184;
  7. MBP-4(2)- Register of contracts with related party and contracts and Bodies etc.  in which directors are interested;
  8. Register of details of securities held by Directors and Key Management Personnel;
  9. CHG-7- Register of Charges
  • Section 139 (Appointment of Auditor) – Every company need to correspond with Auditor at the time of his appointment or ratification of his continuation. Usually the correspondence between the company and auditors is as under:

(a) At the time of appointment:

  • Letter by the company seeking consent, qualification and eligibility of the auditor;
  • Receipt of Consent to act as Auditor and Eligibility certificate from auditor;
  • Intimation to auditor after conclusion of AGM about his appointment and remuneration

(b) At the time of ratification:

  • Letter by the company seeking consent, qualification and eligibility of the auditor about his continuation as Statutory Auditor;
  • Receipt of Consent to act as Auditor and Eligibility certificate from auditor;
  • Intimation to auditor after conclusion of AGM about his ratification and remuneration
  • Section 134 (Director’s Report) – Private company is required to prepare its Director’s Report as per the provisions of section 134 of the Act.

Signing Provision- Board’s report and any annexures thereto shall be signed by the ‘Chairperson’ authorized by the board, and at lease by two directors where he is not authorized.

  • Section 101 & SS-II (Notice of General Meeting)- At least twenty-one(21) days notice of every general meeting shall be given to –
  1. Every member of the company, legal representative of any deceased member or the assignee of an insolvent member;
  2. The auditor of the company;
  3. Every director of the company

specifying the place, date, date and hour of the meeting and shall contain a statement of the business to be transacted at the meeting.

  • Section 136 (Right of the member to have copies of audited financial statement)- Company shall send to every member of the company copy of financial statement, including CFS, if any, auditor’s report, director’s report, not less than 21 days before the date of its Annual General Meeting.
  • Section 173 & SS-1 (Board Meetings)- Every Company shall hold at least four meetings of BOD every year in such a manner that not more than 120 days shall intervene between two consecutive meetings.
  1. Company shall hold at least one meeting in every calendar quarter.
  2. Notice in writing of every Meeting shall be given to every Director by hand or by speed post or by registered post or by courier or by facsimile or by e-mail or by any other electronic means.
  • Section 118 & Rule 25 of Chapter VII and SS-3 (Minutes of Proceedings of General Meeting, meeting of Board of Board of Directors and other meeting and resolution passed by postal ballot)- A distinct minute book shall be maintained for each type of meeting namely:-
  1. General meetings of the members;
  2. Meetings of creditors;
  3. Meetings of the board; and
  4. Meetings of each of the committees of the board
  • Minutes should begin with the number and type of the Meeting, name of the company, day, date, venue, time of commencement and conclusion.
  • Each item of business taken up at the Meeting should be appropriately numbered.
  • Minutes, once entered in the Minutes Book, should not be altered.
  • Minutes of all Meetings should be preserved permanently.
  • Section 148 (Central Government to specify audit of items of cost in respect of certain Companies) – Company need to correspond with cost auditor at the time of his appointment or ratification of his remuneration.  Usually the correspondence between the company and cost auditor is as under:

(a) At the time of appointment:

  • Letter by the company seeking consent, qualification and eligibility of the cost auditor;
  • Receipt of Consent to act as Auditor and Eligibility certificate from auditor;
  • Intimation to auditor after conclusion of board meeting about his appointment and remuneration

(b) At the time of ratification of remuneration by members:

  • Intimation to auditor after conclusion of meeting of members about ratification of his remuneration
  • ANNUAL COMPLIANCE NOT REQUIRED BY PRIVATE COMPANY
  • Section 121 (Report on AGM) – This section is not applicable on Private Companies and applicable only on Listed companies.
  • Section 204 (Secretarial Audit)- Private companies are not required to comply with the requirements of secretarial audit as Secretarial Audit is applicable on listed companies and public companies having paid up share capital of Rs.50 crore or more or turnover Rs. 250 crore or more.
  • Approval of Accounts by Board- Private Companies are not required to file Form MGT-14 in respect of Approval of accounts by board vide Notification dated 05 June, 2015.

SECTION 8 COMPANIES REGISTERD AS PRIVATE LIMITED COMPANY All the compliances are same in case of Section 8 Company except the followings:

  • Section 8 Companies should prepare Income and Expenditure Account instead of Profit and Loss Account as per clause (ii) of sub-section 40 of Section 2 of Companies Act, 2013
  • Section 8 company can call its Annual General Meeting by giving a fourteen days notice.

MASTER ALERTS-

While completing annual compliances, one should carefully go through the followings facts as each one of them may have serious repercussions in terms of penalties and lapses:

  • Subsidiary, Joint Venture and Associate Companies: While preparing Annual Filing Document Company should judiciously analyze its investment/ shareholding in other companies so as to determine the relationship as subsidiary, joint venture and associate companies.

Details of financial position of Subsidiary Company is required to be given in Form AOC-1 (Part-A)

Details of financial position of Joint Venture and Associate Companies is required to be given in Form AOC-1 (Part-B)

  • Holding Company: While preparing Annual documents care should be taken and details of Holding company is required to be mentioned wherever applicable.

Holding company is required to file consolidated financial statements in Form AOC-4 CFS

  • Related Party Transactions and their limits for next year: Disclosure regarding related party transaction undertaken during the year is required to be made in Form AOC-2.

For taking approval from shareholders for related party transaction to be undertaken in next year a resolution alongwith explanatory statement is required to be included in Notice of Annual General Meeting indicating name of related party, nature of relationship and amount of transaction.

  • Directors appointed during the year as Additional Directors: Directors who were appointed as additional directors during previous financial year deemed to have vacated their office at the Annual general Meeting held after their appointment, so their appointment need to be regularized by including the resolution of Regularization of Director in Notice of Annual General Meeting alongwith explanatory statement and approve the same by shareholders.

Form DIR-12 is required to be filed with registrar for Regularization of Additional Director.

Some Important definitions-

  • Associate- In relation to another company, means a company in which that other company has a significant influence, but which is not s subsidiary company of the company having such influence and includes a joint venture company
  • Subsidiary- Subsidiary company or subsidiary in relation to any other company (that is to say the holding company), means a company in which the holding company-
  1. Controls the composition of the Board of directors; or
  2. Exercises or controls more than one-half of the total share capital either at its own or together with one or more of its subsidiary companies.

FORSEEABLE FUTURE: Government of India is taking steps for ‘Ease of Doing Business’.This is very easy to predict that annual compliances will also reduce in the span of next two / three years. Entrepreneurs having private limited companies shall neither hurry to convert their existing companies into LLP nor to close down the entity using Simplified Exit Scheme.

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