Starting a business in India is not just about having a good idea and investing money. After registering the company (especially a private limited company) under Companies Act, 2013, the owners and managerial personnel of the company must adhere to all the legal rules regularly. These rules are part of the Companies Act, 2013.

If a company fails to follow these rules, the company and its management may have to pay heavy penalties. In serious cases, directors can be disqualified, and the company can even be liquidated.

Let’s understand the main compliance requirements in simple terms.

1. Work to Be Done After Incorporation of Company

After the incorporation of a private limited company, some important tasks must be completed within a fixed time:
• Appointment of first auditor within 30 days of incorporation through board meeting.
• File a declaration to start business through Form INC-20A.
• Issue share certificates to shareholders within 60 days.
• Directors must disclose their interest in other businesses by filing Form MBP-1.
These steps are necessary to legally start the operations of the company.

2. Board Meetings

A private limited company must conduct regular board meetings:
• First board meeting within 30 days of incorporation.
• At least 4 board meetings every year.
• Proper records of minutes of meetings must be maintained.
These meetings are important for making decisions, and proper maintenance of records is necessary for future inspections and audits.

3. Annual General Meeting (AGM)

Every company must conduct one Annual General Meeting (AGM) every year:
• It must be held within 6 months from the end of the financial year.
• The first AGM of the company can be held within 9 months from the end of the first financial year, i.e., the financial year in which the company was incorporated.
In the AGM, the company approves financial statements, appoints auditors, and declares dividend (if any).

4. Annual Filing with ROC

Every year, companies must submit certain forms to the Registrar of Companies (ROC):
• Form AOC-4 – for financial statements
• Form MGT-7 or MGT-7A – for annual return
Late filing of such forms will lead the company to pay extra fees and penalties. So timely filing of forms is very important.

5. Maintaining Important Company Records

Every company must maintain important registers such as:
• Register of members (shareholders).
• Register of directors and key managerial personnel.
• Register of charges (loans, etc).
These records must be kept at the registered office of the company and update regularly.

6. Appointment of Auditor and Audit of Financial Statements

Every company shall:
• Appoint a statutory auditor for one tenure of 5 years or two tenures of 5 years, as the case may be.
• File Form ADT-1 after the auditor’s appointment.
• Conduct an audit of financial statements every year.
The auditor checks the company’s financial as well as non-financial information and gives an audit report. This ensures transparency and builds trust between the company and its stakeholders.

7. Event-based compliance

Key changes in the company require immediate filing with ROC, such as:
• Change in directors
• Change in registered office
• Increase in authorized capital
• Allotment or transfer of shares
Each change has a specific form and time limit. Delays can result in penalties.

Conclusion

Company law compliance is not a one-time task; rather, it is an ongoing responsibility. After registering a private limited company, business owners and management must regularly follow legal requirements. Proper compliance with the law results in avoiding penalties and builds trust with its stakeholders.

Written by
Shrey Singh
Articled Clerk