Post Incorporation Compliance for Private Limited Company

Post incorporation compliance for Private Limited Company

The Government of India has been encouraging young entrepreneurs to set up their own business and contribute to the growth of economy and nation as a whole.

“Make in India” is one such initiative in the direction to promote start-ups and small businesses.

The Government has relaxed the registration process of private limited company incorporation to promote participation by small businesses.

However, incorporating a company is just a means to an end and not an end in itself.

Upon Incorporation, a company is registered under the Companies Act 2013 and is regulated by the Ministry of Corporate Affairs.

The Ministry of Corporate Affairs regulates and administers the Companies Act, 2013 along with rules and regulations made there under, through the office of the Registrar of Companies.

The Companies Act, 2013 has laid down series of mandatory compliances that all newly incorporated companies are required to give effect to. And non-compliance of which may result into heavy fines and penalties imposed upon the company and its officers in default.

Although these compliances may seem cumbersome but are very essential for the protection of stakeholder’s interests and comprehensive business growth. 

This Article lays down detailed post incorporation compliances mandatorily required to be undertaken by newly incorporated private limited company.

Obtaining incorporation certificate is the first step followed by a series of compliances.


Sr. No.

Particulars

Illustration

1

First Board Meeting

Every company shall hold the first meeting of the Board of Directors

  • Business must conduct its initial board meeting within 30 days after being set up.
  • Fine of Rs. 25,000 for failing to conduct this meeting.

2

Disclosure of interest by Directors

The first directors and every director appointed thereafter is required to disclose any interest that such director holds in other entities. Such declaration is to be made in form MBP-1 on or before the first board meeting.

  • Before the first board meeting, this statement must be made in form MBP-1.
  • Any director who fails to provide this information is liable to a penalty of Rs. 1,00,000.

3

Printing of Letterhead

Every newly incorporated company shall get the following printed on letterhead for all official communications and publications. 

  • Name of the Company
  • CIN
  • Registered office address
  • Contact details
  • e-mail
  • website.

4

Printing and Issue of Share Certificates

However private limited companies can voluntarily issue share certificates in dematerialised form. 

  • Within 2 months of the date of incorporation, share certificates must be printed in form SH-1 and given to the company's initial subscribers.

5

Appointment of first Auditor

  • Within 30 days of the company's incorporation, the board of directors must designate the first statutory auditor of the organisation.
  • ADT-1 form must be submitted within 15 days of the auditor's appointment.
  • Failure by the directors to appoint the first auditors, the shareholders shall appoint the first auditors in the Extra-ordinary general meeting within 90 days from the failure by the board of directors.
  • Such officer shall hold the office till the conclusion of the first Annual General meeting of the company.

6

Opening Bank Account

The Company is required to open a current account in the name of the company with any bank of its choice through which the business transactions of the company shall be conducted. The first subscribers of the company shall deposit the subscription money in such current account.

7

Filing Declaration of Commencement of Business

Every newly incorporated company shall conduct its business declaration.

  • Within 180 days of incorporation, submit form INC-20A to the registrar of corporations.

8

Obtaining licences and registrations (as applicable)

Before beginning its operations, the firm must also secure certain mandatory licences and registrations from various regulatory organisations in addition to the certificate of incorporation such as GST registration, obtaining Import Export Coderegistration under MSME, registration under Shops and Establishments Act etc.

9

First Financial Year

For every company that is incorporated on or after 1st of January of a year, it’s first financial year shall end on 31st March of the following financial year. And for every company incorporated between 1st of April and 31st December, the first financial year shall end on 31st March of the financial year in which it was incorporated.
 
Illustration:

  1. When the date of Incorporation is 01/01/2022. 

The first financial year will begin from

01/01/2022 and end on 31/03/2023.

  1. when the date of incorporation is anywhere between 01/04/2022 to 31/12/2022.

The first financial year will begin from DOI

and end on 31/03/2023.

10

Conducting the first annual general meeting

  • After the first financial year's end, the first AGM must be held within 9 months.
  • All subsequent AGMs must be held within 6 months of the year's end.
  • Every officer who fails to hold the AGM will be subject to a fine that can reach Rs. 1,00,000 for a continuous default Rs. 5,000 for each additional day that the default persists.
  • Further the Regional Director and the NCLT shall have the power to compound such offense.

11

Filing of Financial statements

  • The firm must submit its financial statement in form AOC-4 to the registrar of companies within 30 days from the end of the AGM.
  • Noncompliance fine of Rs. 10,000/- will be assessed.
  • Continued default will result in additional fines of Rs. 100 for each day that the failure persists, up to a maximum of Rs. 2,00,000 in the case of a firm and Rs. 50,000 in the case of an officer.

12

Filing of annual report

The firm must file its annual report in form MGT-7 or MGT-7A (as applicable) with the registrar of companies within 60 days of the conclusion of the AGM. The company and its officers in default will impose a fine of Rs. 10,000/- for noncompliance. Continued default shall result in an additional fine of Rs. 100 for each day that the failure persists, up to a maximum of Rs. 1,00,000 in the case of a firm and Rs. 50,000 in the case of an officer.

 

Here are the important form’s details.

Sr. No.

Form Name

Due Date / Status

1

Form MBP-1

On or before 1st Board Meeting i.e. within 30 days of incorporation.

2

Form SH-1

Within 2 months on incorporation

3

Form ADT-1

Within 15 days of appointment of Auditor

4

Form INC-20A

Within 180 days of Incorporation

5

Form AOC-4

Within 30 days of AGM

6

Form MGT-7/7A

Within 60 days of AGM

To file forms and access a variety of other services, please visit our website at www.myefilings.com

Subscribe to our Newsletter

    Proprietorship Registration