LLP Audit
April 20, 2020
Format of Resolution for Appointment of Auditor in LLP
April 21, 2020
15 Private Limited Company Annual Statutory Compliance
Even though a Private Limited Company well liked form of business in India, still the people who are actually running it, just ask them, they will tell you that running a Private Limited Company or in fact any company is not an easy task. For Private Limited company annual statutory compliances applicable other regular responsibilities like to handle financial liquidity pressure, business stress, Customer demand supply need, clients pushing up constantly for performance pressure to make it more better and that’s enough for a company to breeze. Here the entrepreneur skills comes into limelight how he manages his business challenges effectively. Regardless all these “day to day” challenges can somhow be managed by the entrepreneur, but the real challenge arises when the government emphasis continuously for Private Limited Company to accompany with Statutory Compliance every year which in turn if not complied shall attract monetary fines along with it. Thus, to have a constant watch dog on legal compliances, there is always a need to seek for professionals to guide the Company from time to time. The Ministry of Corporate Affairs (MCA) has already struk off more than 2.5 lakh Companies and disqualified more than 3 lakh directors in the year 2019 due to non-compliance due for longer periods. Private Limited Company Statutory compliance needs to be complied time to time in order to save the company from huge fines and penalties imposed by the MCA. Below is Private Limited compliance check list.
15 Private Limited Compliance Check List Dont Miss
A Private Limited company has to comply various statutory compliances under Companies Act, 2013 and Income tax Act, 1961. It is expected from every Private Limited company to comply with some yearly mandatory compliance under Companies Act, 2013 on regular basis to keep the business operate smoothly without penalties and fines. Mandatory Private Limited Compliances Can be divided in 3 parts.
- Private Limited Company ROC Filing
- Private Limited Company Statutory Audit
- Private Limited Company ITR Filing
Private Limited Compliances
1# First Board Meeting
A board meeting is a meeting of Board of Directors of the Company whereby they discus key agenda in the meeting. Every company is require to hold First Board Meeting within 30 days from the date of incorporation of the company.
Penalty: Company shall be levied with a penalty of Rs 25,000/- and Officer in default shall be levied with a penalty of Rs 5,000/-
2# Conduct of Minimum 4 Board Meeting Every Year
Under Companies Act, 2013, there is a requirement for minimum number of board meetings to be held every year by the board of directors of the company. As per the provisions of sec 173 of the Companies Act, 2013 minimum of 4 Board Meetings needs to be held every year with not more than 120 days gap between two meetings.
Penalty: Company shall be levied with a penalty of Rs 25,000/- and Officer in default shall be levied with a penalty of Rs 5,000/-
3# Disclosure of Interest by Directors
Every director at:
- First meeting in which he participates as director; or
- First meeting of Board in every FY; or
Whenever there is change in disclosures Shall disclose in Form MBP‐1 (along with list of relatives and concern of relatives in the Company as per RPT definition), his concern or interest in any company, body corporate, firm or other association of individuals (including shareholding interest)Penalty: The Director in default shall be punishable with imprisonment which may extend up to 1 year or With fine which may extend to a maximum of Rs 1 lakh or with both.
4# Appointment of First auditor
Every company should appoint an Auditor of the company for getting the financial accounts get Audited every year by such company. As per sec 139 (6) the First Auditor of the Company must be appointed within 30 days of incorporation.
Penalty: There is no penalty for non-appointment of First Auditor as it is not mandatory to file form ADT-1 in case of appointment of first Auditor. However you can appoint it within 90 days by conducting EOGM (Extra Ordinary General Meeting)
5# Appointment of Statutory Auditor
As per sec 139(1) of the Companies Act, 2013, statutory Auditor must be appointed for a term of 5 years by the Board of Directors in its 1st Annual general Meeting (AGM) who shall hold the office till the conclusion of 6th AGM.The company shall inform to concerned Registrar of Companies (ROC) within 15 days from the date of AGM. Penalty Maximum of 12 times of normal filling fees + normal filling fees.
Eg: If normal filling fees for a company having paid up capital of Rs 1,00,000 is Rs 300/- then the penalty shall be 3,600(12*300) + 300=3,900/-
6# Annual General meeting (AGM)
As per sec 96 of the Companies Act, 2013, every Company shall hold AGM yearly-
- within 6 months from the date of closure of financial year during business hours (10 am to 7 pm) on a day which is not a public holiday
- by giving 21 days of clear notice
- At the registered office of the company
Penalty: The Company and every officer of the company who is in default shall be punishable
- with fine which may extend to 1 lakh rupees and In case of continuing default, with a further fine which may extend to 5,000/- rupees for every day during which such default continues.
7# Filing of Annual Return (Form MGT-7)
Every Private Limited Company is required to file its Annual Return within 60 days of holding of Annual General Meeting. Annual Return will be for the period 1st April to 31st March-
Penalty: The penalty is Rs 100/- per day.
- Each key member of the company and who is in the default shall be deemed for paying the penalty of Rs. 50,000 and also the late fee of Rs. 100 per day if the default continues.
- The penalty is subject to a maximum of Rs. 5,00,000
8# Filing of Financial Statements (Form AOC-4)
Every Private Limited Company is required to file its Balance Sheet along with statement of Profit and Loss Account and Director Report in this form within 30 days of holding of Annual General Meeting in form AOC-4
Penalty – A penalty of Rs 100 per day on delay in filing Form AOC.
Apart from that, the penalty of Rs. 1000 per day of default is charged from the company which can go maximum up to Rs. 10,00,000.
9# DIN KYC of Directors of the company:
Every person who holds DIN/DPIN as on 31st March of the financial year, he has to submit Form DIR-3-KYC or DIR-3 KYC-WEB for the said financial year on or before 30th September of the immediate next financial year.
- eForm DIR-3 KYC is to be filed by an individual who holds DIN and is filing his KYC details for the first time or by the DIN holder who has already filed his KYC once in eform DIR-3 KYC but wants to update his details.
- Web service DIR-3-KYC-WEB is to be used by the DIN holder who has submitted DIR-3 KYC eform in the previous financial year and no update is required in his details.
Penalty: Rs, 5000/-
10# Disclosure of outstanding dues to MSME in form MSME-1:
Every Company having outstanding payments dues to micro and small enterprises and in case the payment of the same is pending beyond 45 days, then the Company has to furnish details as per the following timeline:
- For April to September by 31st October
- For October to March by 30th April
Penalty: Penalty states a fine up to Rs.25000 (Min) & Rs.3 lacs (max) and imprisonment of 6 months for directors or both.
11# Disclosure of Outstanding loan/amount in form DPT-3
All the Company having any outstanding loan/amount as on 31st March of every financial year has to furnish details and bifurcation of such outstanding amount irrespective of the fact whether such amount is falling under the definition of deposit or not by 30th June
Penalty: Not filing of Form DPT 3 within the given due dates shall attract a penalty of Rs 5,000 and Rs 500 per day in case of a continuing default, on the company and its officers in default.
12# Company Statutory Audit
Every Company shall prepare its Accounts and get the same audited by a Chartered Accountant at the end of the Financial Year compulsorily. The Auditor shall provide an Audit Report and the Audited Financial Statements for the purpose of filing it with the Registrar.
Penalty :
- A company shall be punishable with fine which shall be Rs. 25,000/- to Rs. 5,00,000/- and
- Every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to 1 year or with fine which shall not be less than Rs. 10,000/- but which may extend to Rs.1,00,000/-, or with both.
13# Proof of circulation of Notice through email or post
A notice of every meeting sent by directors should maintain a proof of circulation of Notice either through email or post and maintain the records in the registered office of the Company
14# Maintenance of statutory records:
It is mandatory as a post incorporation compliance for Sec 8 Company to maintain following statutory registers at the registered office of the company–
- MGT-1: Register of Members
- MGT-2: Register of Debenture holders Register and Index of Beneficial Owner
- MGT-3: Foreign Register of Members, Debenture holders, other security holders or beneficial owners residing outside India
- Form SH-2: Register of Renewed and Duplicate Share Certificate
- Form SH-3: Register of Sweat Equity Shares
- Form SH-6: Register of Employee Stock Options
- Form SH-10: Register of Shares or Securities Bought Back Register of Directors and KMPs Register of Deposits
- Form CHG-7 Register of Charges
- Form MBP-2: Register of Loans/Guarantee/Security and Acquisition by Company
- Form MBP-3: Register of Investments not held in its own name
- Form MBP-4: Register of Contracts or Arrangements in which Directors are interested
Penalty:Failure of the company to maintain statutory register could result in a fine of not less than Rs. 1 lakh, which may extend to Rs. 10 lakh.
15# Filling of Income Tax Returns:
Every company shall require to file Income Tax return annually if it is covered under
Penalty: If you file your ITR after the due date (31 August) but before 31 December, a penalty of Rs 5000 will be levied. For returns filed later than 31 December 2019, the penalty levied will be increased to Rs.10,000.
Conclusion:
It is damn clear from the above that heavy penalties & fines are imposed under Companies Act, 2013 and Income tax Act, 1961 for non-timely Private Limited Annual compliances of the said provisions or sections. Its director responsibility maintain shareholder trust by complying with Private Limited annual compliances. Failure to do so also invite for company closure by MCA.
