Why is Annual Compliance Required for Private Limited Company
Annual Compliance Required for Private limited company have various benefits as well as advantages and it is required that these companies prove that they are worthy of all these advantages given to them. For this reason, each company is required to abide by some annual compliances. The rules regarding these compliances are given under the Company’s act of 2013.
Following are the Common Annual Compliances of the private limited company:
- Appointment of Auditor
Appointing an auditor is a mandatory step in every incorporated company. They may be public or private limited companies. The Company’s act of 2013 has provided that the company is required to appoint an auditor within the period of 1 month time right from the date of incorporation. This auditor can be appointed for a time period of 5 years at once.
- Statutory Audit of Financial Statements
Every private limited company requires to prepare its accounts for each financial year and it is rather mandatory for them to get audited. The supposed auditor must provide with an audit report for the audited financial statements because they are needed to be filed with the ROC.
- Annual returns
Each registered incorporated company in India must file its annual return with the form MGT 7 within the time period of 60 days of the annual general meeting. This annual return will be calculated in a financial year, meaning from April 1st to March 31st.
- Filing of Financial Statements
The statement of the profile, balance sheets as well as the evidence of loss in the account and the mandatory director’s report required to be filed by every private limited company in a time period of 30 days of the conduction of annual general meeting with the ROC in the form AOC – 4.
- Holding of AGM
An Annual general meetingis a compulsorily required to be held annually in terms of every calendar year. However, it could be required to be held at every 6 months time from the day of closing of the financial year. Also, the rule under the act suggests that the annual general meeting must not be held on the public holidays.
- Meeting of Board of Directors
Just how the annual general meetings are important, the board meetings are essential too for a private limited company. The 1st board meeting of any private limited company is supposed to be conducted within a time period of 30 days from the date of incorporation. A minimum of 4 board meetings are required to be held during the time period of a year. Also the time intervals between each meeting must not be exceeding the time period of 120 days.
However, there is an exception when it comes to small start-ups of a private limited company. And this exception is that instead of 4 board meetings they are allowed to conduct a minimum of 2 board meetings.
A notice for the board meeting must be sent to each director of your respective private limited company at least 7 days prior to the date of conduction of the meeting.
Under the Company’s act of 2013, it’s provided that a director’s report is required to be prepared for mentioning all the information that’s needed under the section – 134. Also, each director of the private limited company is under an obligation for providing details about entire directorships that has been held in other companies each year. This has to be in writing and in the prescribed format.
The Company’s Act, 2013 provides that a Directors’ Report is required to be prepared to mention all the information that is required under Section 134. Also, every director is under an obligation to provide the details about all the directorships held in other companies every year. This is required to be made in writing and in a prescribed format.
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