Annual Compliance Checklist for Private Limited Company – Companies Act 2013

Ensuring compliance with the Companies Act 2013 is essential for the seamless operation of a Private Limited Company. An annual compliance checklist serves as a comprehensive guide, outlining the statutory requirements and obligations that must be met by such entities. This checklist covers all the important things a company needs to do to follow the rules and stay in good standing with the government. It includes deadlines and tasks like sharing financial information, holding meetings, following rules about how the company is run, and sending required documents to the government. Using this checklist helps the company stay honest and trustworthy in the business world by making sure it follows all the rules.
The annual compliance for private limited company is a necessary investment to ensure adherence to legal requirements, maintain transparency, and uphold corporate governance standards.

Importance of Compliance with Companies Act 2013

The importance of compliance checklist for private limited company under companies act, 2013 can be understood by following points:- 

• Legal Obligation: Mandatory Requirement: The Companies Act 2013 is the primary legislation governing the incorporation, functioning, management, and dissolution of companies in India. Compliance with its provisions is legally mandatory for all companies, ensuring adherence to the law of the land.

• Corporate Governance: Ensuring Transparency: Compliance fosters transparency and accountability in the company’s operations. It mandates proper record-keeping, disclosure, and reporting, thereby enhancing corporate governance standards.

• Protection of Stakeholders: Safeguarding Investor Interests: Compliance helps protect the interests of various stakeholders, including shareholders, creditors, employees, and the public, by ensuring fair and transparent business practices.

• Risk Mitigation: Minimizing Legal and Financial Risks: Non-compliance can lead to legal consequences, penalties, fines, or even potential dissolution of the company. Adhering to the Act mitigates such risks, maintaining the company’s reputation and financial stability.

• Access to Capital and Markets: Access to Funding: Compliance with regulatory requirements improves a company’s credibility and attractiveness to potential investors, facilitating easier access to funding and capital markets.

• Enhancing Business Credibility: Building Trust: Compliance demonstrates a commitment to ethical business practices and regulatory standards, fostering trust among customers, suppliers, and partners.

Annual Compliance Checklist

Certainly! Here’s a comprehensive annual compliance checklist for a Private Limited Company under the Companies Act 2013 in India. Please note that this is a general guideline and might need customization based on specific circumstances:

Financial Compliance:

The financial compliance checklist for a private limited company are following 

• Statutory Audit: Conduct an annual statutory audit by a qualified auditor and file the audit report with RoC.

• Companies Act and ROC Compliance:

• Conduct Board Meetings: Ensure that the minimum number of board meetings (at least 4 in a year) is held and not more than 120 days shall intervene between two consecutive meetings of the Board as per the requirement of Section 173 of the Companies Act, 2013.
• Approve Financial Statements: Approve the financial statements including the balance sheet, profit and loss account, etc.
• Approve Board Report: Approve the Board report of the company for the year under review.
• Approve Annual Accounts: Approve the audited annual accounts and appointment of auditors.
• Approve Related Party Transactions: Review and approve related party transactions, if any.
• Filing Form ADT-1: File form for the Appointment of Auditor, if applicable, within 15 days from the date of AGM.
• Filing Financial Statements (Form AOC-4): File the financial statements along with the auditor’s report and Board Report within 30 days from the date of AGM.
• Filing Annual Return (Form MGT-7): File the annual return with the Registrar of Companies (RoC) within 60 days from the date of Annual General Meeting (AGM).

Tax Compliance:

The tax compliance checklist for a private limited company is following

• Income Tax Return (ITR): File income tax returns on time i.e, usually by April 15th each year. 
• GST Return (if applicable): File Goods and Services Tax returns regularly if the company is registered under GST. File Goods and Services Tax returns monthly by the 20th of the following month, or annually by the 31st of December, if the company is registered under GST in India.
• TDS Compliance: Ensure timely deposit of Tax Deducted at Source (TDS) and file TDS returns.
• Advance Tax Payments: Pay advance tax as per the schedule. Pay advance tax in four installments during the financial year: 15% by June 15th, 45% by September 15th, 75% by December 15th, and 100% by March 15th.

Statutory Compliance:

The statutory compliance checklist for a private limited company is following:- 

• Maintain Statutory Registers: Ensure that statutory registers such as the Register of Members, Register of Directors, etc., are updated regularly.
• Director’s Disclosure: Obtain annual disclosures from directors regarding their interests in other entities or companies.
• Compliance with Companies Act: Ensure compliance with various provisions of the Companies Act 2013, rules made thereunder and amendments thereof.

Other Compliance:

• Employee Related Compliance: Comply with labor laws, Provident Fund (PF), Employee State Insurance (ESI), etc.
• ESOP Compliance (if applicable): Ensure compliance with Employee Stock Option Plans (ESOPs).
• Secretarial Compliance: Comply with the provisions related to appointment and resignation of directors, issue and transfer of shares, wherever applicable 
• Board Evaluation: Conduct an annual evaluation of the performance of the Board of Directors.

Miscellaneous:

• Annual General Meeting (AGM): Hold an AGM within six months from the end of financial year i.e. on or before 30th September as per the provisions of Section 96 of Companies Act 2013.
• Maintain Books of Accounts: Maintain proper books of accounts as per accounting standards.
• Ensure Data Security: Ensure data security measures are in place as per the relevant laws.

Cost of Annual Compliance for Private Limited Company?

The private company compliance checklist involves certain costs which vary based on factors like size, industry, and outsourcing. Usually, it covers fees for things like yearly checks by auditors, filing reports, legal help, fees to the government office, and software expenses. The costs can change depending on how complicated following the rules is, ranging from around ₹20,000 to ₹1,00,000 or more every year. Getting outside help might cost more, but it makes sure everything is done right and on time, avoiding fines or legal problems.

Conclusion

In conclusion, the annual compliance for a private limited company is a necessary investment to ensure adherence to legal requirements, maintain transparency, and uphold corporate governance standards. Spending money on professional services and following the rules is important for any company, no matter its size or how complicated it is. Doing things on time not only avoids fines and legal problems but also makes the company more trustworthy to everyone involved. This helps the company grow and be successful in the long run, all while playing by the rules.