Tag: annual compliance checklist

What are the Compliances For a Private Limited Company (PLC) in India?

While company registration unlocks a world of possibilities for business in India, it also introduces the essential concept of compliance. In simpler terms, Compliances For a Private Limited Company refers to the company adhering to a set of established rules and regulations. In the context of Indian businesses, this means following the guidelines outlined in the Companies Act, 2013.  This act serves as the backbone for corporate governance, dictating everything from director qualifications and remuneration to the proper conduct of board and shareholder meetings.

One key aspect of compliance involves adhering to the regulations set forth by the Ministry of Corporate Affairs  (MCA).  This applies to all private limited companies, regardless of their size or turnover.  So, whether you’re a startup with a modest capital base or a well-established entity, annual compliance filings like annual returns are mandatory. Managing day-to-day business activities alongside navigating complex corporate laws can feel overwhelming. This article provides a foundational understanding of compliances for private limited companies in India.  

What is a Private Limited Company (PLC)?

A Private Limited Company (PLC) is a legal entity formed to operate a business, offering several key benefits to its founders.  A defining feature is limited liability, which protects shareholders’ personal assets from the company’s debts.  This means if the company encounters financial difficulties, creditors can only go after the company’s holdings, providing a safety net for shareholders.  Another key aspect is ownership structure.  Unlike publicly traded companies, shares in a PLC are not freely available for purchase on the stock market. Instead, ownership is restricted to a select group, typically founders, or private investors. This allows for more control over the company’s direction and decision-making processes, making PLCs suitable for entrepreneurs seeking to maintain a focused ownership structure.  It’s a popular option for startups, family-run businesses, and companies aiming for a more focused ownership structure. 

List of Important Compliances For a Private Limited Company (PLC) in India

While core compliance requirements remain constant for private limited companies (PLCs) in India, deadlines and procedures can evolve. This table summarizes key compliances along with deadlines specifically for 2025:

1) Incorporation Compliances

Incorporation compliances are the legal requirements a company must follow after it’s officially formed. This includes things like holding your first board meeting within 30 days, opening a company bank account, and getting any licenses or permits you need to operate. You’ll also need to appoint key people, keep track of important documents, and follow labor and tax laws. 

2) Director KYC & Disclosures

In India, keeping director information current is crucial. Directors must go through a KYC process (Know Your Customer) to verify their identity. Additionally, directors have annual disclosure obligations. They need to declare any directorships, partnerships, or significant shareholdings in other companies, along with details of their close relatives. These measures ensure transparency and accountability within Indian companies.

3) Financial Statements & Filings

Companies in India are required to maintain transparency through financial statements and filings. These statements, typically including a balance sheet, income statement, and cash flow statement, paint a clear picture of the company’s financial health, performance, and cash flow. They are filed electronically with the Ministry of Corporate Affairs (MCA) within a specific timeframe, usually Seven months after the financial year ends.

4) Meetings & Resolutions

Meetings are a cornerstone of corporate governance in India. Companies hold two main types of meetings: board meetings and general meetings. Board meetings, typically attended by directors, address operational issues, strategic planning, and approving financial statements. Resolutions, formal decisions made by vote at these meetings, guide the company’s direction. General meetings, including annual general meetings (AGMs), involve shareholders who vote on resolutions concerning matters like dividend payouts and board member appointments. Proper notice and record-keeping of both meetings and resolutions are crucial for ensuring transparency and legal compliance.

5) Tax Compliances

Maintaining tax compliance is essential for private limited companies in India. This involves filing annual income tax returns that reflect the company’s profits and tax liabilities based on its income bracket. Additionally, companies act as tax collectors by deducting tax at source (TDS) on specific payments like salaries or rent, depositing it with the government. Throughout the year, advance tax installments are also expected based on estimated annual income. Finally, companies exceeding a certain turnover threshold undergo mandatory annual tax audits to ensure the accuracy of their financial records and tax calculations. 

6) Other Compliances

There are other compliances involved as per the nature of business you conduct which may apply to the list of compliances.

Annual Compliance Checklist for a Private Limited Company

Below is a summarized Checklist for Annual Compliances of a Private Limited Company (PLC)

• Filing MSME Form 1 (Due by 30th April for the half year October to March and Due by 31st October for the half year April to September)
• Filing Return of Deposits (DPT-3) (Due by 30th June of every year)
• Holding Annual General Meeting (AGM) (Typically within 6 months of financial year-end)
• Filing Annual Financial Statements (AOC-4) (Due within 30 days of AGM)
• Filing Annual Return (MGT-7) (Due within 60 days of AGM)
• Holding Board Meetings during a Financial Year (At Least 4 meetings in a calendar year with a gap of not more than 120 days between 2 meetings)
• Filing Income Tax Return (ITR) (Due by September 30th as specified by Income Tax Department)
• Filing Tax Audit Report (if applicable) (Due within specified time frame after tax audit is conducted)
• Payment of Advance Tax (Quarterly throughout the financial year)
• Filing GST Returns (if applicable) (Frequency depends on turnover – monthly, quarterly, or annually)
• Filing TDS/TCS Returns (if applicable) (Quarterly with the Income Tax Department)
• Renewal of Licenses and Permits
• Employee-related compliances (ESI & PF) (For companies with employees)

Annual ROC Filings

Every year, private limited companies in India must file their annual accounts and returns with the Registrar of Companies (ROC). These documents disclose important details about the company, including its shareholders and directors.

Here’s a breakdown of the key forms involved:

• Form MGT-7 (Annual Return): This form details information about the company’s shareholders, directors, and other relevant details. It needs to be filed within 60 days of holding the annual general meeting (AGM).
• Form AOC-4 (Financial Statements): This form includes the company’s balance sheet, profit and loss account, and a director’s report. It needs to be filed with the ROC within 30 days of the AGM.

Annual General Meeting (AGM)

Private limited companies are required to hold an AGM at least once a year, within six months of the financial year’s closing. This meeting provides a platform for shareholders to:

• Approve financial statements: Shareholders vote on the company’s financial performance as presented in the annual accounts.
• Declare dividends: Dividends are a portion of the company’s profits distributed to shareholders. The AGM allows shareholders to vote on whether or not to declare dividends.
• Appoint or reappoint auditors: Independent auditors review the company’s financial statements and provide an objective opinion. The AGM allows shareholders to vote on the appointment or reappointment of auditors.
• Approve director compensation: Shareholders vote on the remuneration package for the company’s directors.

By law, the AGM must be held during business hours on a non-public holiday, either at the company’s registered office or within the city, town, or village where the office is located.

Board Meetings

Every private limited company must hold its first board meeting within 30 days of incorporation. Subsequently, board meetings should be held at least four times a year, with a gap of no more than three months between each meeting.

A minimum of two directors, or one-third of the total number of directors (whichever is higher), must be present at each board meeting. Discussions and decisions made during these meetings are documented in minutes, which are then stored for future reference at the company’s registered office.

Companies must also provide a seven-day notice to all directors regarding the date and purpose of each board meeting.

Event-Based Compliances for Private Limited Companies in India

In addition to annual filings, private limited companies in India must comply with various regulations triggered by specific events within the company. Here’s a breakdown of some key examples:

• Changes in Capital: Any increase or decrease in the company’s authorized capital or paid-up capital requires specific filings with the Registrar of Companies (ROC).
• Share Transactions: Issuing new shares, transferring existing shares, or any change in shareholding triggers compliance procedures.
• Loans and Advances: Granting loans to other companies or directors necessitates filing specific forms with the ROC.
• Directorial Changes: Appointment, resignation, or remuneration changes for managing directors or whole-time directors require timely filings.
• Banking Activities: Opening a new bank account, closing an existing one, or modifying signatories on a bank account all have specific compliance procedures.

• Creation, Modification or Satisfaction of Charges: Creation or modification or satisfaction of any charge on the property of the Company requires specific filings with the Registrar of Companies (ROC).
• Auditors: Appointing new statutory auditors or any changes in the existing auditor team require adherence to regulations and filings with the ROC.

Documents required for Online Private Limited Company(PLC) Compliance

Here are some essential documents required for online Private Limited Company (PLC) compliance in India:

• Director’s Identity and Address Proof: Passport or PAN Card copy for Indian Nationals and apostille/notarized Passport copy for Foreign Nationals (all self-attested)
• Director’s DIN (Director Identification Number)
• PAN Card of the Company
• Subscription Details and Share Allotment Proof
• Memorandum of Association (MOA)
• Articles of Association (AOA)
• Digital Signature Certificate (DSC) of Directors
• Proof of Registered Office Address (Rent Agreement, No Objection Certificate from Landlord)
• Form MGT-7 (Annual Return) (within 60 days of holding the AGM)
• Form AOC-4 (Financial Statements) (within 30 days of holding the AGM) – includes Balance Sheet, Profit & Loss Account, and Director’s Report
• Changes in shareholding or capital structure
• Appointment or removal of directors or auditors
• Loans or advances given to other companies or directors
• Opening or closing of bank accounts or changes in signatories
• Income Tax Return Documents (as per specific requirements)
• TDS/TCS Return filing documents (if applicable)