Annual Compliance Process & Checklist

Annual Compliance Process & Checklist

When compared to Private Limited Companies, Public Limited Enterprises in India are required to prepare the most annual compliances each year. 

A handful of provisions must be met by the listed companies in both the public and private sectors that generate the highest level of periodic and yearly compliances each fiscal year. 

This blog will provide accurate information about company compliance filings for any listed company in India.

The amended Companies Act (2013) has made the annual company compliance required by a limited company more stringent and comprehensive, while the policies and legislative executions associated with SEBI, RBI, FEMA, and others have become more methodical and dynamic.

As a result, companies that are particularly listed in the index are now more concerned than ever about ensuring annual company compliance as well as tax-related compliance. 

We must be clear that these statutes and legal enforcements have strict policies of hefty penalties, monetary loss, and sometimes even worse (incarceration) if companies fail to file timely compliances.

Annual Compliances For Public Limited Company

Section 2(71) of the Companies Act defines an annual compliances for Public Limited Company. A public limited company is a company that sells shares to the general public and has limited liability. 

A company that is a subsidiary of annual compliance for public limited company is treated as a public company for the purposes of this Act, even if the subsidiary's articles state otherwise. 

Classification: Listed Organization: A Listed Company is one that has its shares listed on a recognised stock exchange, as defined in Section 2(52) of the Companies Act, 2013. 

People can buy and sell shares of the Listed Company via the platform of a recognised stock exchange.

It is recognised as a listed company because it obtained its capital after being listed on a recognised stock exchange through an IPO. 

Unlisted Company: The Companies Act of 2013 makes no mention of an unlisted company. It can be either a Public Limited Company or a Private Limited Company. 

As the name implies, no shares of unlisted companies are available for investment to the general public.

Specifics on Registrar-Related Company Compliances in India

ADT-1 (Appointment of Auditor) E-Form: 

Within one month, startups must appoint their first auditor. 

Following that, shareholders must substantiate this enforcement in the first AGM (Annual General Meeting), after which they must file E-Form ADT-1.

The filing date must not be detected more than 15 days after the first Annual General Meeting.

Holding AGM: 

The Company's first AGM must be scheduled within 9 months of the end of the first fiscal year. 

Following that, the Annual General Meeting must always be held in the first half of the fiscal year. 

The MCA never permits a gap of more than 15 months between consecutive AGMs.

Holding a Board Meeting: The startup's first Board meeting must be held within one month of incorporation. 

The next meeting cannot take place before 120 days have passed.

List of E-Forms that must be submitted:

The official declaration of the start of a business (INC-20A): 

The startup must file this e-form within 180 days of the venture's incorporation date.

Financial statement set (AOC-4): 

The details include the Directors' Report, balance sheet, and P&L account statements. 

All statements must be filed within 30 days of the conclusion of an AGM.

Appointment or discontinuation of Directors (DIR-12): 

If applicable, the specifications of appointment/discontinuation of Company Directors must be filed within 30 days of the highlighted event, accompanied by their letter of consent approving their acceptance of appointment/resignation.

Annual Return for a Small Business (MGT-7A): 

This e-form must be submitted within 60 days of the Annual General Meeting.

Resolution with the Ministry of Corporate Affairs (MGT-14): 

To successfully pass a Board Resolution, the particulars of the institutional resolutions declared in previous Board meetings must be filed. 

This act must be completed within one month of the most recent Board meeting.

Director's KYC application (DIR -3 KYC):

Each Director must file KYC with the DIN assigned to them before or on March 31st of each year. 

This activity must not be left unattended after September 30th of each year.

Return of Deposits (DPT-3):

 There is no exemption for startup companies from filing this return. 

This must be completed by June 30 of each year. 

This annual company compliance report includes information on outstanding loans or deposits obtained by the corporate organisation. 

Directors' report: Section 134 of the Companies Act (2013) requires the Directors' Report to be filed, which includes all relevant information about the company. 

The Board's Chairperson has authenticated this report. 

It should be noted that at least two Directors must authorise this person.

Accounts and Statutory Registers: Statutory registers such as the Register of Directors/members/agreements and contracts/loans/beneficial parties/details of Board assembly/minutes of other meetings; financial statements; books of accounts; ROC file, all of which must be updated and maintained regularly for future implications.

Distribution of P&L accounts and other related documents: This must be done among the venture members. 

Authenticated financial statements, as well as the Abridged Director's Report and the auditor's reports, must be delivered to each stakeholder within three weeks of the AGM's start date.

Similar statutory legal requirements compel such startups to learn about periodic tax filing sessions in addition to several other returns and accountancy book maintenance following the Income Tax Act and other relevant statutes, if applicable.

The business category determines company compliance, the types of services or products it offers, net borrowings, turnover volume, net worth, and so on. It cannot be the same for all startups in India.

Non-Registrar Company Compliance in India for Start-ups

Payment of periodic payments (GST amounts, TCS, TDS payment, Prix and Advance tax)

Filing periodic returns entails:

  • Annual, quarterly, and monthly GST
  • TDS Refunds (quarterly filing)
  • Advance tax evaluation (as per Section 208)
  • IT Returns Filing
  • Filing of Professional Tax Returns
  • Filing of PF Returns
  • Forms 3CB and 3CA are used to file tax audit reports.
  • ESIC Return Filing (half-yearly)
  • Regulatory reporting and evaluation of various Acts, such as the Factory Act, the Competition Act, the Environment Protection Act of 1986, and so on.

What exactly is Annual Compliance for LLP?

To maintain compliance and avoid the heavy penalty for non-compliance, an LLP (Limited Liability Partnership) company in India must file the annual return within 60 days of the end of the fiscal year. 

It is also required to file a Statement of Accounts and Solvency within 30 days of the end of the fiscal year. 

Annual compliance for LLP and other tax-related returns. 

Failure to do so will result in severe penalties or your LLP being added to the ROC's list of defaulters.

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Benefits

The following are the benefits of annual compliance for LLP:

  • City
  • By registering, you
  • MCA penalties are not applicable.
  • Keep a close eye on your expenses and earnings.
  • Transparency in business transactions
  • Increased market credibility
  • Avoid being on the ROC's defaulter list.

FAQs

1. What is included in an Annual Return?

It consists of specific details specified in Part I of Schedule V, and the information is filed based on the company's current position. 

The following information is required to be included in the Annual Filing:

  • The registered address
  • Its membership registry
  • The list of debenture holders
  • Its common stock and debentures
  • Its members and debenture holders from the beginning to the present
  • Its directors and managing directors were initially appointed, and as of today.

2. What is the purpose of Annual Compliance?

Filing an annual return reflects the Company's position and the gradual transitions that the Company has undergone. 

It is reflective; 

Company capital structure based on master data 

It is also mentioned if there is a change in the directorship. 

The transfer of securities is also mentioned until the date of the Annual General Meeting.

3. Who is responsible for filing the Annual Return?

Any of the Company's directors may file the Annual Return, but it must be signed by both the Company's directors and the Manager or Company Secretary. 

There are times when there is no Manager/CS in a company; in such cases, both directors must sign.

4. What are the Annual Compliances for Private Limited Company?

If an Income Tax Return is required, it must be filed in addition to the Annual Return. 

The following documents must be filed with ROC on an annual basis annual compliance for private limited company;

  • Form 23AC, Balance-Sheet, is to be filed.
  • Form 23ACA, Profit and Loss Account
  • The Annual Return Form 20B must be filed if the company has stock.
  • The Compliance Certificate Form 66 must be submitted if the paid-up capital is between Rs. 10 lakhs and Rs. 2 crores.

5. What are the ramifications of failing to file an annual report?

If a company fails to file an annual return, it is considered a failure on the part of all officers, shareholders, and the company. 

A penalty of up to Rs. 500 is levied for each day the default remains unresolved.

6. What are the requirements for a Foreign Subsidiary's Annual Filing in India?

Because a foreign subsidiary in India is typically a Private Limited Company, the annual compliance for private limited company must file the Annual Corporate Filing for a Private Limited Company.

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