Corporate ABC (Accounting, Bookkeeping & Compliance) Package
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Annual Compliance - an Overview
All companies in India are governed by the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013. Under the act, every company, post-incorporation, has to fulfil many mandatory legal obligations. These compliance requirements are complex, with each falling on different due dates, and failure to meet them in a timely manner is likely to negatively impact a company (including heavy fines of up to Rs. 1 lakh a year or the companies and their directors getting blacklisted). You should maintain a public record which consists of the company’s information, called the annual returns of the company, which will be available in the Companies Register. Companies are required to update the annual returns regularly.
Benefits of Annual Compliance
Fosters best compliance practices
Ensures higher employee retentions
Better governance of information
Improves operation performance
Filing Annual Compliance - a Detailed Process
The following are the mandatory compliances that most companies have to fulfil. At Vakilsearch our expert chartered accountants, accounting and taxation professionals, and company secretaries will take care of all your compliance requirements. We offer the best-in-class legal consultation for your company. Our team will cover the following compliance requirements as mandated by the Ministry of Corporate Affairs.
1. Facilitation of Meetings of Board of Directors:
The first meeting has to be conducted within 30 days of incorporating a business after which four meetings shall be held every quarter in a calendar year. There should not be more than 120 days between two consecutive meetings.
2. Preparation of the Minutes of Proceedings of Meeting:
Every company needs to file its minutes of the meetings and they shall be preserved permanently to add value in case of any dispute. The meeting minutes are to be maintained at the registered office.
3. Issuance of Share Certificates:
The company is required to issue share certificate to the subscribers of the memorandum within 60 days of incorporation.
4. Filing of Disclosures of Directors’ Interests and Declarations of Disqualification:
In the first board meeting, all the directors are required to make disclosures about their interests in other business entities.
5. Filing Declarations of Commencement of Business with the RoC:
This has to be done upon registration of the company. Form INC 20A mandatorily needs to be filed within 180 days of incorporation.
6. Facilitation of Annual General Meetings:
A company shall conduct at least one AGM each year. The first AGM shall be held within nine months from the closing of the first financial year of the company. In other cases, it shall be within six months from the closing of the financial year. For example, if a company is incorporated on or before 31 December 2018, the First AGM must be conducted within 9 months from the date of closing of the first financial year ( 31.12.2018 - 31.03.2019), that is, by 31 December 2019. On the other hand, if a company is incorporated on or after 1 January 2019, the first AGM is to be conducted within 15 months, i.e., by 31 December 2020.
7. Annual company returns need to be filed with the RoC within 60 days of the conclusion of the AGM.
8. Quarterly compliance:
Every company has to hold a minimum of four meetings of its board of directors, that is, at least one board meeting every quarter of the calendar year.
9. Statutory registrations:
All statutory registrations like GST, PF, ESI, IEC, etc. must be completed.
FAQs on Corporate ABC (Accounting, Bookkeeping & Compliance) Package
Yes, every company irrespective of the number of transactions has to get the compliance filings done. However, the process will be much simpler.
Balance sheet and Annual Returns have to be filed once a year. In addition, companies have to file Form 3 if there is Return of Allotment, Form No INC-22. If there is a change in the Registered Office; Form No DIR-12 for Change of Directors; etc.
According to the Companies Act, Board Meetings can be conducted even outside of India. If required, Directors can participate through video conferencing or other audiovisual elements, provided there is a prior notification. The minutes of proceedings shall be duly recorded. However, there are certain matters restricted by the Act to be convened through a Video Conference Meeting.