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Annual compliance is a legal requirement that covers the legal documentation, to avoid the legal penalties for each year. Watch this video and discover how to document annual compliance for your business, every year, to avoid legal penalties. To check out our services https://vakilsearch.com/company-maint...

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What are the annual compliance procedures that should be followed by the company?

1. All the private limited companies are governed by the Ministry of Corporate Affairs (MCA) through the Companies Act, 2013. So there is a set of annual compliance that has to be mandatorily followed by such companies and these can be very complex because they come with prescribed timelines and thresholds. So the complexity is so much that if a company does not stick to the prescribed timelines then they will have to pay a lot of penalties and it might also get their directors blacklisted for a short time.

2. Even though these compliance costs might be complex, following them will lead to a lot of great benefits for the organization as a whole. Let's say it increases the operational efficiency and thus more transparency and there's greater employee retention which boosts the growth of the organization completely.

Following are the annual compliance which would have to be followed by the private limited companies.

1. The first and foremost important compliance would be holding board meetings. So for post-incorporation for a newly incorporated company, the first board meeting will have to be held within 30 days from the date of incorporation so subsequently later on the companies can hold board meetings in a year, so will have to hold board meetings in a year. So which will mean, one board meeting per quarter? And the gap between two board meetings should not exceed 120 days.

2. So the second most important complaint would be the maintenance of minutes so what are minutes. minutes are basically a record of the Proceedings of the meeting since that is a very essential part of the documentation. So this will mean that they will have to be maintained permanently in the registered office in a neat and tidy manner.

3. Thirdly the most important honor the most important essential compliance that will have to be followed is the issuing of shares certificates to the subscribers of the Memorandum of Association (MOA) and this will have to be done within 60 days from the date of incorporation and the next compliance would be that every director in the first board meeting of The financial year they will have to disclose that interest in the various entities that they are interested in. If a director is you know he is a director in another company or he is a designated partner and another LLP.

So all this will have to disclose and form MBP 1. So after this, the most essential and the recent addition to the compliance part would be Form INC 20A. So for all companies which are incorporated on or after 2nd of November 2018 so they will be required to file Form INC 20A which will mean that only after filing this that the company can proceed to commence its business. So for this, a bank statement would be required from the company's side which reflects the beat-up capital amount as the closing balance and this amount would have flown from the individual shareholder’s account. So this will have to be filed within 180 days from the date of incorporation. Otherwise, directors and officers of the company will be liable to pay the penalty and after this annual general meeting for a newly incorporated company, the first annual general meeting will be held within nine months from the closure of the financial year.

Say a Company is incorporated on the 27th of December 2019, so the due date for the AGM of that company would be 31st of December 2020. And for an already existing company, the annual general meeting should be held within 6 months from the closure of the financial year. So after the AGM being held, three important files have to be filed, they are,

1. The first and foremost would be Form ADT 1 which should be for the appointment of the statutory auditors and this will be filed within 15 days from the date of AGM.

2. And the second form would be Form AOC 4 which should be filled with financial status so which should be a profit and loss account, your balance sheet will have to be filed within 30 days from the date of AGM.

3. Finally, Form NGT 7, where the annual returns of the company have to be filed within 60 days from the date of AGM. and finally, there is another statutory registration that will also have to comply with the company like GST filing, Provident funds, employee state insurance compliance, etc.