• Joel Dsouza

Company Management Compliance

Updated: Aug 20, 2021


Company Management Compliance | Importance of Corporate Compliance | what is corporate compliance | Registers that are mandatory to be maintained by a company

Being a registered entity, a limited company is treated as an artificial legal person in relation to regulatory compliance provisions. After registration, a company has to comply with the legal and regulatory requirements of various laws. The individual promoters/directors are required to ensure compliance of the provisions of respective acts and rules while conducting the business activities and regulatory procedures. Corporate compliance is an essential part of a corporate function, failing which stringent penalties are imposed on the company under the provisions of the Companies Act. While running a business, a company has to comply and adhere to various legal process and procedures as required under the Companies Act and rules. The compliance process in a company is ensured by way of meetings of directors and shareholders, maintenance of minutes, registers and records, appointment of a company secretary, maintenance of accounts and audit, filing of periodic and event-based returns with the Registrar of Companies. A. Meetings of Company 1. Board of Directors and Meetings Directors are appointed by shareholders and the day-to-day management of the company is vested with the Board of Directors. The Board of Directors manage the company subject to the provisions of Companies Act and Rules. The Board of Directors manage the company through decisions taken at their meetings by way of resolutions. The Board has to meet at least once every quarter; at least four meetings should be held every year. For every Board meeting, the minutes should be recorded and signed by the Chairman of the Board. 2. Shareholders and Meetings Shareholders are the ultimate owners of the company and thus they are the ultimate decision-making authority for matters such as appointment of directors, etc. Every year, the company has to convene an Annual General Meeting (AGM) of the shareholders for adopting the annual accounts and appointment of auditors for the following financial year. Any meetings of shareholders other than the AGM are called Extraordinary General Meetings (EGM). In case there is any item that requires shareholders approval and cannot be pushed to the next AGM, it is usually decided at an EGM of shareholders. Minutes of both the AGM and EGM of the company should also be recorded and kept signed by the Chairman of the Board. Though the day-to-day affairs are managed by the board of directors, there are certain decisions that require approval from the shareholders. Considering the requirements of majority for passing, resolutions can be classified into ordinary and special resolutions. a) Ordinary Resolution This is a resolution where the votes cast in favour of the resolution exceed votes cast against the resolution in any general meeting by members or proxies attending the meeting with voting rights. b) Special Resolution This is a resolution where the votes cast in favour of the resolution are not less than three times the number of votes cast against the resolution in a general meeting by members or proxies attended the meeting with voting rights. B. Minutes/Registers/Records and Common Seal A company is required to maintain and preserve a set of records as required under the Companies Act. The records and registers should be made available for inspection by directors/shareholders and regulatory authorities as and when required, subject to restrictions under the Act. To ensure timely compliance of requirements in a systematic manner, the following records, registers and stationery are required by a company: 1. Share Certificate Share certificate is the proof of shareholding in a company. The company has to issue share certificates to subscribers of memorandum on the receipt of subscription money as agreed in the Memorandum of Association and for all subsequent share allotments. Share certificates are required to be issued under the authority of board resolution with the common seal of the company and signed by two directors and an authorized signatory. Stamp duty is to be paid on each share certificate according to the respective state stamp rules. 2. Minutes Book The decision-taking process in a company happens through the Meetings of Board of Directors and Members. The minutes of these meetings are required to be recorded and serially numbered. Further, each page should be initialed and the last page should be dated and signed by the Chairman of Meetings as required under the Companies Act. 3. Statutory Registers The following are the important Registers that are mandatory to be maintained by a company

  1. Register of Members

  2. Register of Directors

  3. Register of Directors€™ Shareholding

  4. Register of Companies/Firms in which Directors have interest

  5. Register of Contacts in which Directors have interest

  6. Register of Charges

  7. Register of Investments not in the name of Company

  8. Register of Loans and Guarantees

  9. Register of Investments

  10. Register of Share Transfers

  11. Issue of share certificates

  12. Contracts and deeds to be executed by the company

C.Filing of Returns with office of Registrar of Companies (ROC) The compliance mechanism under the Companies Act mandates a company to file documents and returns with the office of the ROC from time to time. Compliance related filing of returns/documents with the office of the ROC can be broadly classified into: 1. Annual Statutory Compliances a. Annual Accounts Every company has to prepare financial accounts consisting of Balance Sheet and Profit and Loss account on a yearly basis duly audited by a Chartered Accountant. The same has to be discussed and approved during the Annual General Meeting (AGM) of the company. A copy of the Annual Accounts has to be filed with the ROC within 30 days from the AGM. b. Annual Returns Every company has to file returns with the ROC within 60 days of the AGM on a yearly basis. The return should contain particulars such as address of registered office, register of its members, register of its debenture holders, shares and debentures, indebtedness, members and debenture holders, past and present, and directors, managing directors, past and present. 2. Event-based/Process Compliances There are few instances that require the filing of returns with the ROC. They are of two types:

  1. Allotment of of Shares

  2. Increase Authorised Capital

  3. Creation/Modification/Satisfaction of Charges

  4. Change in Registered Office of the company

  5. Filing of certain resolutions passed by the board/General Meetings and Agreements signed the company

  6. Appointment of Directors/Managing Director and changes among them.

  7. Change of Company Name

  8. Conversion of Private Company to Public and vice versa

  9. Various approvals from the Government of India or State Government/ Regional Director/NCLT/ROC


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