Annual Compliance for Private Limited Company in India

For a Private Limited Company incorporated in India, "compliance" signifies adherence to the mandates, regulations, and requirements primarily outlined in the Companies Act, 2013. This is the primary law governing key areas like the appointment, qualifications, remuneration, and retirement of directors, as well as the procedures for conducting board and shareholder meetings.

Crucially, compliance with the regulations set forth by the Registrar of Companies (RoC) is obligatory for every private limited company, irrespective of its turnover or capital.

Compliance obligations for private limited companies can be categorized into two main areas:

• Registrar of Companies (RoC) Compliance: This encompasses all filings, disclosures, and adherence to regulations directly administered by the RoC.
• Non-Registrar Compliance: This category includes all other statutory and regulatory obligations that fall outside the direct purview of the RoC, such as tax compliance, labor laws, and industry-specific regulations.

Understanding the Importance of Staying Compliant

Staying compliant means consistently sticking to the laws, regulations, and ethical standards that apply to your business. It's essential for sidestepping legal troubles, safeguarding your reputation, and building trust with both customers and stakeholders.

• Avoiding Legal Issues: If you don't comply, you're looking at potential fines, penalties, lawsuits, and even criminal charges.
• Boosting Reputation and Trust Through Compliance: A strong compliance record is crucial for any business, serving as the bedrock for building trust and enhancing your company's image. It signals to customers, employees, investors, and the public that you are committed to responsible business practices. This commitment not only boosts your reputation but also attracts investment by showcasing a reliable and ethical operation.
• Optimizing Processes: Believe it or not, compliance can streamline how you manage your business, making things more efficient and cutting down on errors.
• Managing Risks: Effective compliance programs are key to identifying and softening potential risks, including financial and operational ones.
• Ensuring Financial Stability: When you comply with financial regulations, you're actively preventing fraud and ensuring your financial reports are accurate.
• Promoting Ethical Conduct: Compliance programs are excellent for encouraging ethical behavior and fostering a responsible work environment.
• investment.
• Long-term Sustainability: By consistently adhering to legal and ethical standards, businesses lay a strong foundation for lasting success.

Key Pillars of Annual Compliance Under the Companies Act, 2013

The Companies Act 2013 lays down several crucial annual compliance requirements for all registered companies in India. These are vital for ensuring transparency, accountability, and adherence to legal standards.

1. Board Meetings and Annual General Meeting (AGM): Companies must hold a minimum number (4) of Board meetings financial year, ensuring a specified gap (Maximum 120 days) between them.
2. Financial Statements and Annual Return: It's essential to prepare and file financial statements (like the balance sheet and profit and loss account) and the annual return (Form MGT-7) with the Registrar of Companies (RoC). Specifically, Form AOC-4 is used for filing financial statements.
3. Auditor Appointment and Audit: Companies need to appoint an auditor and file the appointment details using forms like ADT-1. Regular statutory audits of financial statements are also a must.
4. Related Party Transactions: Companies are required to comply with regulations concerning disclosures and approvals for related party transactions.
5. Director KYC and Disclosures: Directors must fulfill KYC requirements (e.g., using Form DIR-3 KYC) and disclose their interests in other companies (e.g., using Form MBP-1).
6. Event-Based Compliance: Companies must disclose material events as they occur. This includes changes in directorship, significant shifts in shareholding, and other notable transactions.

Types of Mandatory Compliance for a Private Limited Company

Compliance signifies adherence to established orders, rules, or requests. For a private limited company incorporated in India, it is imperative to comply with the Companies Act 2013. This includes fulfilling obligations to the Registrar of Companies (RoC) and is crucial for such entities in India.

• Compliance Related to the Registrar - ROC Compliance
• Compliance Beyond the Registrar's Purview - Non-Registrar Compliance

ROC Compliance for Private Limited Company

As previously stated, these are obligations that a company must fulfill by the regulations established by the Registrar of Companies (ROC) or an equivalent authority. They typically involve statutory filings and adherence to the provisions of the Companies Act.

• Annual Compliance: These encompass the regular, yearly filings and disclosures companies are required to make, including the submission of annual returns and financial statements.
• Event-Based Compliance: These are specific compliances that must be addressed as and when certain events transpire within the company, such as alterations in the company's management, share capital, or registered office.
• Other Compliances: This category includes a range of additional regulatory obligations that may not strictly fall under annual or event-based categories but are crucial for maintaining the company's legal standing, such as director KYC updates and the maintenance of statutory registers.

Non-Registrar Compliance

These regulatory obligations do not directly involve the ROC but are essential for lawful business operations. They may be governed by various other regulatory bodies and laws, depending on the nature of the business, its size, and the industry in which it operates.

• Payment of Periodic Tax Due: Regular payment of Goods and Services Tax (GST) liability, Tax Deducted at Source (TDS), Tax Collected at Source (TCS), Advance Tax, and Professional Tax (PTax).
• Filing of Periodic Returns:

• • Monthly/Quarterly/Annual GST Returns
  • Quarterly TDS Returns
  • Filing of Income Tax Returns
  • Filing of Tax Audit Report
  • Filing of half-yearly Employees' State Insurance Corporation (ESIC) returns
  • Filing of Provident Fund (PF) returns
  • Filing of professional tax (PTax) returns

• Regulatory Assessment and Reporting: Compliance with various regulatory assessments and reporting requirements under different acts of law, such as the Environment Protection Act, Competition Act, and Factory Act.

These regulatory obligations don't directly involve the RoC but are crucial for lawful business operations. They're often governed by various other regulatory bodies and laws, depending on the business's nature, size, and industry. These include:

1. Payment of Periodic Tax Dues: This involves the regular payment of Goods and Services Tax (GST) liability, Tax Deducted at Source (TDS), Tax Collected at Source (TCS), Advance Tax, and Professional Tax (PTax).
2. Filing of Periodic Returns: This covers:

• • Monthly/Quarterly/Annual GST Returns
  • Quarterly TDS Returns
  • Filing of Income Tax Returns
  • Filing of Tax Audit Report
  • Filing of half-yearly Employees' State Insurance Corporation (ESIC) returns
  • Filing of Provident Fund (PF) returns
  • Filing of professional tax (PTax) returns

3. Regulatory Assessment and Reporting: This refers to complying with various regulatory assessments and reporting requirements under different acts, such as the Environment Protection Act, Competition Act, and Factory Act.

Maintenance of Statutory Registers and Records

Statutory Registers refer to specific records maintained by a company concerning its shareholders, directors, and the various meetings conducted. These registers are separate from the regular accounting records that companies are also obligated to keep. While many companies prefer to maintain their statutory registers in a physical loose-leaf binder or bound book, they are permitted to keep them in any format, including electronic computer records.

1. Register of Deposits

Every company accepting deposits is required to maintain one or more registers at its registered office for deposits accepted and/or renewed. These registers must be preserved for eight years from the financial year in which the entry was made. Such a register must contain the following details for each depositor:

• Name, Permanent Account Number (PAN), and address of the depositors.
• Details of the guardian, in the case of minor depositors.
• Particulars of the nominee.
• Date and amount of each deposit.
• Deposit receipt number.
• Interest rate applicable.
• Duration of the deposit.
• Repayable date.
• The due date for interest payment.
• Payment date of interest due.
• Details concerning deposit insurance.
• Details of any charge or security created.

All entries made in this register must be authenticated by the company's director, secretary, or any other officer duly authorized for this purpose.

2. Register of Members

Every company is obligated to maintain the following registers concerning its members:

• A separate register of members for equity shares and preference shares.
• A register for debenture holders.
• A register for other security holders.

These registers must include an index of names. Furthermore, in the case of a company without share capital, the members' register must contain the following details for each member:

• Name, address, E-mail, PAN, Unique Identification Number (UIN), Corporate Identification Number (CIN), Occupation, Nationality, Father’s/Mother’s Name/Spouse’s Name.
• Date of commencement of membership.
• Date of cessation of membership.

3. Register of Directors and Key Managerial Personnel (KMP)

The Companies Act, 2013, mandates every company to maintain a register at its registered office containing particulars of its directors and Key Managerial Personnel (KMP). This register should include details of the securities held by them in the company, its subsidiaries, holding companies, associate companies, or any subsidiary of the company’s holding company. As per Rule 17 of the Companies (Appointment and Qualification of Directors) Rules, 2014, the following particulars shall be kept in this register at the company’s registered office:

• Director Identification Number (DIN).
• Name and surname.
• Any previous name or surname.
• Father’s name, mother’s name, and spouse’s name.
• Date of birth.
• Nationality (including the nationality of origin, if different).
• Residential address (both present and permanent).
• The date of the board resolution through which the appointment was made.
• Occupation.
• Date of appointment and reappointment.
• Date of cessation of office and the reasons thereof.

4. Register of Charges

A company must maintain a register of charges in Form No. CHG-7. This register must detail all charges registered with the Registrar on the company's assets, property, or undertakings, along with particulars of any acquired property subject to charges, and details of modifications or satisfaction of any charge. The register of charges must be preserved permanently at the company’s registered office.

5. Register of Renewed and Duplicate Share Certificates

Particulars of each share certificate issued in the following scenarios must be entered into a Register of Renewed and Duplicate Share Certificates, which is to be maintained in Form No. SH.2:

• In exchange for certificates that are consolidated or subdivided.
• In replacement of certificates that are mutilated, defaced, old, torn, worn out, decrepit, or where the cages on the reverse side for recording transfers are fully utilized.
• In place of certificates that are destroyed or lost.

In Form No. SH.2, companies must specify against the name of the person to whom a new certificate has been issued, the date of issue, the number of the certificate instead of which the new certificate was issued, and the required changes in the Register of Members by appropriate cross-references in the “Remarks” column. When maintaining this register, the following points must be kept in mind:

• The register must be permanently preserved and kept in the custody of the company’s Company Secretary or any other person authorized by the company’s Board.
• All entries made in this register must be authenticated by the company’s Company Secretary or such person authorized by the company’s Board in this regard.
• This register must be kept at the company’s registered office or at the place where the Register of Members is maintained.

6. Register of Employee Stock Options

A company must maintain the Register of Employee Stock Options in Form No. SH.6 and enter therein particulars of any option granted. This register must be kept at the company’s registered office or at such other premises as determined by the board. The entries made in this register must be authenticated by the company’s Company Secretary or such person as authorized by the company’s Board in this regard.

7. Register of Shares/Other Securities Bought Back

A company is required to maintain a register of shares and other securities bought back in Form SH-10. The details to be included are as follows:

• Date of passing the special resolution authorizing the buy-back of securities.
• Date of the Board’s approval.
• Number and price of shares or other securities authorized for buyback.
• Date of the opening and closing of the buy-back offer.
• Date on which the buy-back was completed.
• Description of the shares or other securities bought back by the company.

Staying compliant with tax regulations is crucial for Private Limited Companies in India. Here are the core requirements and their general due dates:

Income Tax

• Advance Tax: Pay in four installments throughout the financial year if the estimated tax is ₹10,000 or more.
• Income Tax Return (ITR-6) Filing:

• • October 31st (for tax audit cases).
  • November 30th (for transfer pricing cases).
  • Even zero-income companies must file.

• Tax Audit: Mandatory if turnover exceeds ₹1 crore (₹50 lakh for professionals).

• Due Date: September 30th.

• TDS/TCS:

• • Payment: By the 7th of the next month.
  • Quarterly Returns: July 31st, October 31st, January 31st, and May 31st.

Goods and Services Tax (GST)

• Registration: Mandatory if turnover exceeds ₹40 lakhs (goods) or ₹20 lakhs (services) in most states.
• GST Returns:

• • GSTR-1 (Outward Supplies): Monthly (11th) or Quarterly.
  • GSTR-3B (Summary): Monthly (20th) or Quarterly.
  • GSTR-9 (Annual Return): December 31st of the next financial year (if applicable).

• GST Payments: Typically by the 20th of the next month.

Companies Act, 2013 (Reporting with Tax Linkages)

• Annual General Meeting (AGM): By September 30th (for FY ending March 31st).
• Financial Statements (Form AOC-4): Within 30 days of AGM.
• Annual Return (Form MGT-7/MGT-7A): Within 60 days of AGM.
• Director KYC (DIR-3 KYC): Annually by September 30th.
• Return of Deposits (DPT-3): Annually by June 30th.

Event-Based Compliance for Private Limited Company

In addition to the annual filings, private limited companies are also subject to various other compliances that must be fulfilled upon the occurrence of specific events within the company.

• Any change in the authorized capital or the paid-up capital of the company.
• The allotment of new shares or the transfer of existing shares.
• The act of providing loans to other companies.
• The act of providing loans to directors.
• The appointment of a managing or whole-time Director, and details concerning their remuneration.
• The opening or closing of a bank account, or any alteration in the authorized signatories for a bank account.
• If there is an appointment or a change of the statutory auditors of the company.

For all such events, it is mandatory to file different forms with the Registrar of Companies (RoC) within a specific timeframe. Failure to adhere to these timelines may result in the imposition of additional fees or penalties.

Companies and Limited Liability Partnerships (LLPs) in India are mandated to fulfill annual filing obligations as stipulated by the Companies Act, 2013, and the Limited Liability Partnership Act, 2008, respectively.

RoC Filing Due Dates

Companies and LLPs must diligently observe and adhere to their compliance requirements within the prescribed due dates. Non-compliance or failure to meet these requirements will result in substantial penalties being levied.

The ROC compliance calendar for regular and annual filings during the year 2025-2026 is provided below:

Ensuring timely and accurate compliance for a Private Limited Company online requires a specific set of documents for annual filings.

1. Documents Related to Directors and Shareholders

• Identity Proof: A PAN Card is mandatory. Additionally, one of the following can be submitted: Passport, Driving License, Voter ID, or Aadhaar Card.
• Address Proof: Any one of the following can be utilized: Passport, Driving License, Voter ID, or Aadhaar Card.
• Passport-sized Photographs: Recent passport-sized photographs are required for all directors and shareholders.
• Director Identification Number (DIN): A DIN is a prerequisite for all individuals serving as directors.
• Digital Signature Certificate (DSC): A DSC is necessary for both directors and subscribers.
• Declaration by Directors and Subscribers: A formal declaration is required from all directors and subscribers.
• Foreign Nationals: For foreign nationals, a notarized or apostilled copy of the passport, along with other relevant identity and address proofs, is required.

2. Documents Related to the Company

• Memorandum of Association (MOA): This foundational document defines the company's objectives and the scope of its activities.
• Articles of Association (AOA): This document delineates the company's internal rules and regulations.
• Company Name Approval: Proof of approval for the selected company name is a necessary document.
• Registered Office Address Proof: Utility bills (such as electricity, water, or gas bills), a rent agreement, or a sale deed can serve as valid proof of the registered office address.
• No Objection Certificate: If the registered office is located on rented property, a No Objection Certificate (NOC) from the landlord is mandatory.
• Shareholding Details: Information detailing the shareholders and their respective contributions to the company's capital is required.

Here's a step-by-step process for annual compliance for a private limited company:

Step 1: Conduct the Board Meeting

The annual compliance process commences with a board meeting. The primary objectives are:

• To review and approve the audited financial statements for the consolidated entity for the relevant financial year, along with the draft of the Board Report.
• To formally schedule the date for the Annual General Meeting (AGM).

Step 2: Prepare Financial Statements

To generate the final reports, the company must prepare the balance sheet, profit and loss account, and cash flow statement.

• Ensure that all financial statements strictly adhere to India’s accounting standards.

Step 3: Organise the Shareholders' Annual General Meeting (AGM)

The company is obligated to inform all shareholders and directors of the AGM at least 21 days in advance.

• Present the current audited financial statements, the board report, and any other crucial resolutions for consideration and approval by the shareholders.

Step 4: File Form AOC-4 (Financial Statements)

• Access the Ministry of Corporate Affairs (MCA) website.
• Download Form AOC-4, which is used to provide detailed financial statement information about the company.
• Attach the board report, audited financial statements, the auditor's report, and any other necessary relevant documents.
• Complete this form, remit the prescribed filing fees, and submit the form within 30 days of the conclusion of the AGM.

Step 5: File Form MGT-7 (Annual Return)

• Access Form MGT-7 on the MCA portal.
• Provide essential details such as:
  • Shareholding pattern
  • Information about directors and key managerial personnel
  • Overview of company activities during the financial year
• Attach all relevant documents and submit the form within 60 days of the AGM.

Step 6: File Income Tax Return

• Utilize Form ITR-6 for attaching the company’s income tax return.
• It is critical to accurately calculate income, deductions, and applicable taxes.
• The return must be filed before the stipulated due date to avoid any penalties.

Step 7: Director KYC Compliance (DIR-3 KYC)

Every director is required to update their Know Your Customer (KYC) information annually.

• Visit the MCA website and complete the DIR-3 KYC form.
• Ensure the form is completed before its due date; otherwise, a penalty of INR 5,000 per director will be levied.

Step 8: Audit of Accounts

• Engage a qualified Chartered Accountant (CA) to conduct an audit of the company’s financial statements.
• The audit report is a mandatory annexure to the copies of the financial statements submitted in Form AOC-4.

Step 9: Maintain Statutory Registers and Records

• Diligently update all statutory registers, including the register of members, directors, charges, and loans.
• These records must be preserved at the company’s registered office for potential inspection.

Step 10: Compliance Certificate from a Professional

• Obtain a compliance certificate from a practicing Chartered Accountant, Company Secretary, or Certified Management Accountant.
• This step is mandatory specifically for companies with a paid-up capital exceeding INR 10 crores or a turnover exceeding INR 50 crores.

The cost of annual compliance for a private limited company in India can vary significantly, typically ranging from ₹10,000 to ₹1,00,000 per year, and potentially even higher for larger or more complex businesses.

Factors Affecting Compliance Costs

• Company Size and Turnover: Larger companies with higher turnover generally face more intricate compliance requirements, which in turn lead to higher associated costs.
• Nature of Business Activities: Companies operating in highly regulated industries or those that necessitate specific licenses or permits may incur additional compliance expenses due to sector-specific rules.
• Complexity of Operations: Businesses engaged in a high volume of transactions, possessing complex financial structures, or involved in international operations typically demand more extensive compliance efforts and thus higher costs.
• Services Used: The overall cost of compliance can also be influenced by whether the company handles these tasks internally with in-house resources or opts to outsource them to a professional service provider.

Government Fees

• MCA Filing Fees: These are nominal charges incurred for submitting various forms and documents to the MCA, such as AOC-4 and MGT-7.
• RoC Filing Fees: These specific fees are levied for the annual filings made with the Registrar of Companies.
• Stamp Duty: This is a state-specific charge imposed on the incorporation documents, namely the Memorandum of Association (MoA) and Articles of Association (AoA).
• DIN and DSC Fees: Costs associated with obtaining Director Identification Numbers (DINs) and Digital Signature Certificates (DSCs) are also considered government fees.

Professional Charges

• Statutory Audit Fees: These fees cover the mandatory annual audit of the company's financial statements conducted by a qualified auditor.
• Income Tax Return Filing: Fees for the preparation and submission of the company's income tax returns.
• Company Secretary Services: Charges for services such as drafting resolutions, preparing meeting minutes, and managing other secretarial compliance matters.
• Tax Consultant Fees: Fees for expert advice and services related to tax compliance and planning.
• Legal Advisor Fees: Costs for obtaining legal counsel and representation when required.
• GST Filing Services: Fees for services related to Goods and Services Tax (GST) registration, return filing, and other applicable GST compliance.
• Other Compliance Costs: This category may include expenses for specialized audits such as cost audits, internal audits, secretarial audits, and other specific compliance requirements based on the company's nature and size.
• Late Filing Penalties: Additional charges are incurred for missing the prescribed deadlines for various filings, which can be substantial and significantly increase the overall compliance cost.

Non-compliance with established regulations, laws, or internal policies can result in a spectrum of adverse consequences for both businesses and individuals. These repercussions can manifest as financial penalties, including fines and legal fees, alongside significant damage to reputation, disruptions to operations, and in severe instances, even legal action or imprisonment.

• Financial Penalties: Businesses may encounter substantial fines, accrued interest on unpaid taxes, and considerable legal costs stemming from investigations or lawsuits.
• Legal Actions: A failure to comply can precipitate civil lawsuits, the imposition of criminal charges, and in grave cases, even lead to imprisonment.
• Reputational Damage: Non-adherence can gravely tarnish a company's reputation, resulting in a loss of customer trust, a decline in market value, and increased difficulty in attracting investors.
• Operational Disruptions: Non-compliance has the potential to interrupt normal business operations, causing delays, inflating costs, and possibly leading to a loss of market access.
• Loss of Market Access: Regulatory bodies possess the authority to revoke licenses, permits, or certifications, thereby directly impacting a business's capacity to operate within specific markets.
• Individual Liability: In certain circumstances, individuals, particularly company directors, can be held personally accountable for non-compliance, facing potential financial penalties or even imprisonment.
• Loss of Productivity and Employee Morale: Non-compliance can contribute to a decrease in employee morale and overall productivity, often due to heightened stress, uncertainty, and potential operational disturbances.