COMPLIANCE

Overview-

v Download Guide

v Overseas Incorporation

v Benefits

v Checklist

v Steps

v Private Limited Company Compliance

v Requirements

v Types

v Document Requirement

Documents Required for Annual Filing of Company

• Incorporation Certificate

1.       PAN Card

2.       Certificate of Incorporation and

3.       MOA – AOA of Private Company

• Audited Financial Statements
• An independent auditor must audit financial Statements 
• Audit Report & Board Report
• Independent Auditor's report and Board report must be concerned
• DSC of Director
• An accurate and active DSC of one of the directors must be provided and presented.

Overview of Annual Compliance for Private Company

A Private Company is a legal entity and enjoys a separate identity from its directors. It requires controlling its active status through the regular filing with the Ministry of Corporate Affairs (MCA). Every private company must file an annual return and audited financial reports with MCA for every fiscal year. The Registrar of Companies filing is necessary irrespective of the turnover, whether it is zero or in crores. Whether a single business is undertaken or none, annual compliances for private limited are compulsory for every certified company.

Both the forms are applied to report the activities and financial data for the concerned Financial Year. The due terms for the company's annual filing are based on the time of the Annual General Meeting. The perpetual failure may lead to the elimination of the company's name from the register of companies, including the incompetence of directors. Also, it has been noticed that MCA has actively taken bold measures to deal with any such failures. The compliances relevant to the company could be segregated into two sections Mandatory Compliances and Event-Based Compliances.

Benefits of Annual Compliance

Greater Company's Credibility:-   Compliance with the law is the fundamental requirement for any company—the date of the company's annual return filing is displayed on the MCA portal. The government tenders, loan approval or for other purposes, the regularity in the compliance is an important criterion for measuring the credibility of a company. The regularity in compliance also increases the business's credibility, attracts more customers and helps in obtaining the government tenders and loan approval. 

Attract more Investors:-   The main focus points with regard to the investors are financial records and compliances. Before investing in any company, the investors first look into the regularity of filing the annual returns on the MCA portal. Investors are always inclined to favour the companies with regular compliance. Thus, for a private company to attract more investors, it is important to file annual compliance regularly. 

Maintain the Active status of a company and avoid penalties:-  It is important for a private company to file annual compliances on a regular basis to avoid penalties. Failure to file the annual compliance can also reduce the status of the company's business. The company may also be disclosed as defunct or removed from the ROC. The concerned directors are also excluded and debarred from their further appointment. Since July 2018, a supplementary fee of ₹100 for each day of delay has been levied till the date of filing.

Mandatory Compliances for an LLP (Limited Liability Partnership)

All LLPs registered with the Ministry of Corporate Affairs need to file Annual Returns and Statement of Accounts for every Financial Year. It is mandatory for a LLP to file a return irrespective of whether it has done any business. There are three LLP mandatory compliances to be followed:

·        Filing of Annual Return

·        Filing of Statement of the Accounts or Financial Statements

·        Filing of Income Tax Returns

LLP mandatory compliances – Filing LLP Annual Return

Annual Return or Form 11 is a summary of an LLP’s Partners. It is also an indication of whether there is any change in the management. Every LLP is required to file Annual Return in Form 11 to the Registrar within 60 days from the closure of a financial year. That is, the Annual Return has to be filed on or before 30th May every year.

Form 11 or Annual Return is applicable to those LLP’s which were registered till 30th September 2017. For LLPs registered after 1st October 2017, the return can be filed in the year 2023.

Filing Annual Accounts or Statement of Accounts or P&L and Balance Sheet

All LLPs are required to maintain their Books of Accounts in Double Entry System. They also need to prepare a Statement of Solvency (Accounts) every year ending on 31st March. For this purpose, LLP Form 8 should be filed with the Registrar of Companies on or before 30th October every year.

Form 8 or Annual Statements is applicable to the LLPs registered till 30th September 2017. For LLPs registered after 1st October 2017, the Annual Statements can be filed in 2019.

It should be noted that LLPs whose annual turnover exceeds Rs. 40 lakh or whose contribution exceeds Rs. 25 lakh are required to get their accounts audited by a qualified Chartered Accountant mandatorily.

*An Audit of accounts is mandatory under the Income Tax Act when the annual turnover of LLP is more than one hundred lakh rupees.

Change in Object Clause

MOA - Memorandum of Association

The Memorandum of Association (MOA) of any Company is the foundation of any company which is being incorporated. MOA is the constitution of a Company, and it defines the scope of powers and rights within which a Company operates. Provisions of Law prevail in case there is any conflict between the Companies Act and Clauses in Memorandum.

Objects are the part of the Memorandum that defines the objectives of the Company for which it is being formed. The Company cannot operate beyond its object clause. In any scenario, no company can act against the provisions of its Memorandum, and if it does so, such transaction will be ultra vires and hence void. If the Company enters into a contract, arrangement or agreement with any third party, such Memorandum is used as a public document.

Memorandum of Association must be made as per the format given in the Table A-F of schedule I of the Companies Act 2013. The following Tables are used for different kinds of companies depending on their status such as:

Table A -   MOA of Companies limited by shares.

Table B -   MOA of the Companies is limited by a guarantee and has no share capital.

Table C -  MOA of the Companies is limited by guarantee but has a share capital.

Table D-  MOA of the Unlimited Companies.

Table E -  MOA of the Unlimited Companies and having a share capital.

Overview of Section 8 Company Compliance

The Companies Act, 2013 has made it mandatory for all the Section 8 Company Companies to adhere to Section 8 Compliance with the MCA (Ministry of Corporate Affairs).

The purpose of forming Section 8 Company is to promote, encourage, and nourish activities related to art, science, sports, commerce, charitable activities, etc. Section 8 Company can be categorized as a Non-Governmental Organization. These companies enjoy the liberty of being treated as ‘Limited Company’, though, word ‘Limited’ is not added at the end of their names. Concisely, Section 8 companies work in the direction of promoting needy communities and sectors in India. These Companies are not liable to give income or dividend to its members.

Benefits of Section 8 Company Compliance

• Gives company a better credibility
• Protects the company from any legal trouble
• Help the company in circumventing penalties
• Work in the direction of forming trust amongst the customers

Documents Required for Annual Compliances of Section 8 Company

• Memorandum of Association
• Article of Association
• DSC
• Certificate of Incorporation

List of mandatory Section 8 company compliances

Appointment of Auditor

It is compulsory for a Section 8 company to appoint an auditor to take care of their financial recordings every year.

Maintaining Registers: Maintaining statutory records in registers is expected from Section 8 companies. These registers are maintained on a year basis and the purpose of these registers is to check how the company has performed annually. Information related to members, loans, charges and investment is provided in the register.

Report. The purpose of preparing a Director’s Report is to give shareholders a preview of the financial position of the company and the scope of its business. The signed ‘minutes of meetings’ is required to be maintained at the Registered Office.

Income Tax Return Filing: Section 8 company are required to file for Income Tax Returns on or before 30th September of the next fiscal year. In order to give complete overview of the company’s income it is essential to file for Income Tax return. But if the company is registered under Section 12A and 80G it can avail the benefit of tax exemption.

Conduct Board Meeting: Board meeting of every company should be held twice a year in case of small companies. The gap between the two meetings should not be more than 90 days.

Conduct Annual General Meeting: Annual General Meeting of the Section 8 Company should be held yearly on or before 30th September. It is necessary for all the directors, members, and auditors to attend the meeting. They should be notified regarding the meeting by giving not less than 21days notice. Form MGT-15 is used to submit the report of Annual General Meeting. The report must be submitted within 30 days of conducting the meeting.

Filing of Financial Return with RoC; E-form AOC-4 is used to file the copy of financial statements. It is filed within 30 days from the date on which the annual general meeting is held.

Filing of Annual Return with RoC: Form MGT-7 is used to file the annual return of the company. Annual return is filed within 60 days from the conclusion of the Annual General Meeting. Where at whatever year no Annual General Meeting is held, the yearly return ought to be recorded inside sixty days from the days on which the yearly General Meeting ought to have been held that is 30 September. It ought to be connected with the announcement referencing the explanations behind not holding the Annual General Meeting.

Service Details:

Definition of Nidhi Company as per Companies Act, 2013

As per the provisions of Section 406(1) of the Companies Act, 2013, the Nidhi Company is ‘A company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only for their mutual benefit.”

Nidhi Company is the perfect type of company for those who want to start a business with minimum capital investment.

Nidhi Company Registration in India

Nidhi Company is registered under the provisions prescribed in the Companies Act, 2013. The only objective of forming a Nidhi Company is to cultivate the habit of thrift and savings amongst its members. The minimum capital requirement to start a Nidhi Company is Rs.10 lakh (Increased via Nidhi (Amendment) Rules, 2022. Since Nidhi Company is registered as a Public Limited Company and must have “Nidhi Limited” as the last words of its name.

Compliances of a Nidhi Company

Compliance Requirements under Nidhi Companies are divided into three parts:

• First is pre-incorporation Compliances,
• The second is Post –Incorporation compliance
• The third is Event-based Compliances.

 Pre-Incorporation compliances of Nidhi Company

Every Nidhi Company has to follow some mandatory compliance to obtain Nidhi Company Registration. The necessary compliances to be followed are mentioned below:

• A minimum of seven members is needed to start a Nidhi Company, out of which three members must be the Directors of the Company.
• The company must have the suffix “Nidhi Limited” in its name and the company must be a Public Company.
• Minor, Body Corporate and a Trust cannot be admitted as members of Nidhi.
• The minimum paid-up share capital must be Rs. 5 lakh.
• Nidhi Company cannot open branches if it has not earned any profit after tax for consecutive three financial years. 
• The rate of interest on the loan shall not exceed 7.5% above the highest rate of interest offered on deposits.
• The company cannot issue preference shares, in the case where such shares have been issued by the company before the commencement of the Act, the same shall be redeemed.
• The primary objective of the company must be to inculcate the habit of savings in its members.

Post –Incorporation Compliances of Nidhi Company

Post Incorporation of Nidhi Company compliance is divided into two:

• General Compliance
• Annual Compliance

General Compliance

Within one year of incorporation, a Nidhi company must satisfy the following conditions:

• The number of members should increase to at least 200 within one year of its incorporation.
• The Net owned funds must be Rs. 20 lakhs (Modified via Nidhi (Amendment) Rules, 2022
• The net owned funds and the deposits shall be in a ratio not exceeding 1: 20 that is Net Owned Funds: Deposits = 1:20.
• Unencumbered term deposits should be not less than 10 % of the outstanding deposits as specified in Rule 14 of Nidhi Rules 2014.
• The Nidhi Company needs to Maintain Books of Accounts, the statutory Registers.
• The Nidhi Company needs to Convene Statutory Meetings.

Note: Net owned funds are the aggregate of paid-up capital and free reserves reduced by the accumulated and intangible assets as appearing in the last balance sheet

Additional Information:

• Item Code: 007
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• Delivery Time: 5 Days
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