Private Limited Company Registration in India is a preferred choice for entrepreneurs and startups due to benefits like limited liability, separate legal status, and better funding opportunities. However, after Company Registration, businesses must follow annual compliance under the Companies Act, 2013, Income Tax Act, and other laws. Non-compliance may lead to penalties, director disqualification, or even removal of the company’s name from the ROC. This blog highlights the key annual compliances for Pvt Ltd companies in India.
What Are Annual Compliances for a Pvt Ltd Company?
Annual compliance refers to the mandatory filings, returns, and disclosures that a company must submit to regulatory authorities every year. These are legal obligations to ensure transparency, accountability, and adherence to statutory requirements.
For a Private Limited Company, annual compliance typically involves filing returns with the Ministry of Corporate Affairs (MCA), maintaining statutory registers, and fulfilling income tax-related obligations.
Key Annual Compliances for Private Limited Companies
Let’s go through the most important annual compliances that every private limited company must fulfill:
- Board Meetings
- A minimum of four board meetings must be conducted every financial year, and the gap between two meetings should not exceed 120 days.
- For small companies, only two board meetings are required annually.
- Proper minutes of meetings must be recorded and maintained.
- Annual General Meeting (AGM)
- Private companies are generally exempt from holding an AGM unless specifically required by their Articles of Association.
- However, in companies where an AGM is mandatory, it must be held within six months of the end of the financial year.
- Filing of Financial Statements (Form AOC-4)
- Every company must file its balance sheet, profit & loss account, directors’ report, and auditor’s report with the ROC in Form AOC-4.
- The due date is within 30 days from the conclusion of the AGM.
- Filing of Annual Return (Form MGT-7)
- A company must file its annual return in Form MGT-7 within 60 days of the AGM.
- This return contains details of directors, shareholders, shareholding structure, and other statutory information.
- Director’s Report Preparation
The directors of the company must prepare a detailed report covering the company’s financial position, major activities, changes in shareholding, and other key information.
- Income Tax Return Filing
- Every private limited company must file its income tax return (ITR-6) every year, irrespective of profit or loss.
- The due date is generally September 30 for companies requiring an audit.
- Statutory Audit of Accounts
- All companies must appoint a statutory auditor within 30 days of incorporation.
- Annual financial statements must be audited by the company’s auditor before being filed with the ROC.
- Maintaining Statutory Registers
Companies are required to maintain statutory registers such as the Register of Members, Register of Directors, Register of Charges, and Register of Loans & Investments.
- Event-Based Compliance
Apart from regular annual compliances, certain events also require filings with the ROC. Examples include:
- Change in directors (Form DIR-12)
- Increase in authorized share capital (Form SH-7)
- Allotment of new shares (Form PAS-3)
- Change in registered office (Form INC-22)
Why Is Annual Compliance Important?
Fulfilling annual compliance obligations is not just a legal requirement but also brings several benefits:
- Avoiding Penalties: Non-compliance can attract heavy fines ranging from ₹50,000 to ₹5,00,000, depending on the nature of the default.
- Good Corporate Governance: Regular compliance ensures transparency and builds trust among stakeholders.
- Smooth Operations: Maintaining updated records helps in efficient management of the company.
- Funding Opportunities: Investors and banks prefer companies with a clean compliance record.
- Business Reputation: Compliance enhances the credibility of the business in the eyes of customers, vendors, and government authorities.
Penalties for Non-Compliance
Non-compliance with statutory requirements can lead to strict consequences, including:
- Monetary fines on the company and its directors.
- Disqualification of directors from holding office.
- Removal of the company’s name from the Registrar of Companies.
- Legal proceedings under the Companies Act, 2013.
- Therefore, timely compliance is critical to avoid unnecessary legal and financial troubles.
Conclusion
Starting a business with Private Limited Company Registration brings several advantages, but these benefits come with ongoing responsibilities. Every private limited company must adhere to its annual compliance obligations to ensure smooth operations and legal standing. Regular filing of financial statements, annual returns, income tax returns, and maintaining proper records are essential steps for long-term business sustainability.