Post Incorporation Compliances for Companies

Once a company has merged, there is a set of compliance procedures that must be completed to maintain compliance with the Companies Act, 2013. All Corporate Companies are required to adhere to the applicable provisions and in the commencement of the Company’s business operations. Therefore, those who assemble the company must be aware of the company’s compliance requirements after incorporation. All compliance with the law after submission is required by the company such as compliance with official register, share certificates, the appointment of auditor, bank account opening, and so on. This article provides an insight into the post-incorporation compliances for companies.

Key Abstract

Compliance is required by law, and every company incorporated under the Companies Act, 2013 or the prior Companies Act, 1956 must adhere to the legislation’s conditions. Noncompliance impedes a company’s ability to operate, and defaulters are typically subjected to monetary fines or jail for a certain length of time. Companies must adhere to the Act’s schedules and standards in order to preserve their good reputation and avoid fines.

Before we shall move upon discussing the post incorporation Compliances, let us first understand about the gist of the Compliances under the Companies Act, 2013.

Compliances as per Companies Act, 2013

The Companies Act, 2013, must be followed by any company formed in India.

• The appointment, qualification, compensation, and retirement of company directors are all governed by the Companies Act, 2013.
• Aspects such as the conduct of Board Meetings and Shareholder Meetings.
• The preparation and presentation of annual financial statements, as well as the continuing maintenance of accounting records.

A private company must comply with two types of regulations.

• Mandatory Compliances: Every private company, regardless of its status, is required to follow the same set of rules.
• Event-based Compliances: Event-based Compliances are triggered when a Company comes across a certain Event while conducting its business. Only the companies that are responsible for such situations are required to comply.

Want to get your Compliance Done? Get your Annual Compliances, ROC LLP Annual Filing, XBRL Filing filed through the Legal Window.

Post-incorporation Compliances

The requirements for compliance with a company’s submissions in terms of the Companies Act, 2013 are:

First Board Meeting within 30 days from the incorporation date

Under the provisions of the Companies Act, 2013 and the level of the secretariat as issued by ICSI, the Company must hold its first Board Meeting within 30 days of the merger of the Company. This meeting was held to discuss the relevant aspects, such as the discussion of the Company’s incorporation certificate as issued by the ROC, the company’s potential performance, and other company-specific merits.

Director’s Interest Disclosure and announcement of disqualification

In terms of Section 184 of the Companies Act, 2013, the first directors of a company must disclose their interests to the company at a board of directors and the board will discuss the same and approach the ROC in this regard if necessary and keep the same record in the company register.

This compliance is very important because it will help the company to easily identify related party transactions.

Appointment of First Auditor

In terms of Section 139 of the Companies Act, 2013, the Company must appoint the company’s first auditor to hold office until the company’s first Annual General Meeting. If the board is unable to appoint the first auditor of the Company the auditor shall be appointed at a general meeting of the Company within the next 90 days from the date of establishment of the Company.

Registered office

In terms of section 12 of the Companies Act, 2013, the Company must have its registered office within 30 days from the date of its inception.

Letterhead and statutory registers

According to the Companies Act, 2013, which is effective from 1 April, letters and other correspondence also require a certain format for certain items to be specified:

• Company Name
• The address of its registered office
• Company CIN (corporate identity number)
• Phone numbers
• Fax number, email id,
• Website, if available in all business letters, credit titles, notices letter paper, and other official publications also.

Registers must be kept up to date and must be kept at the Registered Company Office.

Company Bank Account

There should be a bank account in the company name to keep track of all transactions for the company’s stakeholders. The following documents are required to open a bank account:

• Certificate of support and Memorandum and Articles of Association.
• Proof of identity of all Directors, Authorized Signatories PAN Card of Director.
• Proof of the address of the registered office of the company.
• Board of Directors’ to open an account.
• A copy of the PAN letter allotment.
• Issuance of Share Certificate

In terms of section 56 of the Companies Act, 2013, the Company must issue share certificates to all registrars of the Company within 60 days from the date of incorporation. The certificate must contain the following:

• Sharing certificate number
• Share face value
• Number of shares purchased
• Name of the subscriber
• Received amount
• The type of stock that fits in with preference or equity.

• Securities allotment

Under the provisions of the Companies Act of 2013, the Company must assign shares to its subscribers within 60 days from the date of incorporation of the company in respect of the Memorandum of Association.

Books of Account

In terms of section 128 of the Companies Act 2013, every company must keep proper accounting records that represent a sound and accurate view of corporate affairs.

Yearly compliance

The compliance requirements for the year are:

• Modification of director report
• Holding an annual general meeting
• An official audit of accounts
• Annual return submission
• Minimum of four board meetings with a 120-day interval between two consecutive board meetings.
• Non-compliance

If the Company fails to comply with the requirements of the Companies Act, 2013 then the Company and any other defaulting officer will be fined for further failure to pay. If there is a delay in any filling, additional charges will have to be paid, which are increasing as the period of non-compliance increases.

Some Important Post-Incorporation Compliance for company

Here are a few important post-incorporation requirements:

• After obtaining the incorporation certificate, the company becomes a separate legal entity.
• As soon as the company obtains its incorporation certificate, one of the directors must issue a notice for the company’s first board meeting at least seven days in advance.

• The Company’s board of directors is obliged to appoint its first auditor at the first board meeting within 30 days of formation, and every Director of the Company must state his or her concern or interest in the other Companies on Form MBP-1. Furthermore, if a Director’s interests change, he must disclose the change at the next Board meeting as well as in the annual disclosure, which must be presented at the first board meeting of the fiscal year.
• The Company shall have a registered office on and after the 15th (fifteenth) day of its creation, capable of receiving and acknowledging any official communications and notices issued to it. Form INC-22 must be filed within 30 days of incorporation to validate the registered office.
• Outside its registered office, the company must have a name board that includes its name, Company Identification Number, registered office address, phone number and e-mail address, fax number, and website URL, if any. Other information in point 3 must be printed on billheads, business communications, and other official paperwork and publications that move through the corporation.
• As soon as the company is founded, it must get a PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number). These are the basic requirements for opening a bank account in India.

Final words

Today where every company is bound by the legal framework, compliance with corporate laws is a very important and essential requirement to avoid financial and non-financial penalties. Also, there are many other compliance requirements that a company must comply with under the Companies Act and various other laws that may apply to the Company’s business model.