Compliance overview for private limited companies

Private Limited Company:

Private Limited Company is defined under Section 2(68) of the Companies Act, 2013 . It Means  a company which by its articles :

(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred:

Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:

Provided further that-

(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased,

- shall not be included in the number of members; and

(iii) prohibits any invitation to the public to subscribe for any securities of the company;

Kindly note that: Minimum Paid up Share Capital criteria is omitted.

An overview of Key Compliance requirements:

1. Meeting of Board of Directors:

First Meeting of Board of Directors is required to be held within 30 days of Incorporation of Company and thereafter 4 meetings are required to be held in every financial year.

Gap between two Board  meetings: should not be more than 120 days.

Notice of Board meeting must be send before 7 days of meeting to every director by way of physical or through e-mail.

Kindly Note that: In First Board meeting, Company has to approve pre-incorporation expenses, authorize  directors for issuing share certificate, signing the ROC Forms, and bank account opening, appoint first auditor of the company etc.

2. Issuing of Share Certificate:

The Company is required to issue Share Certificates to the subscribers of memorandum within 60 days of Incorporation of Company.

3. Filling of Disclosure of interest by Directors:

a)  MBP-1 [Pursuant to section 184 (1) and rule 9(1) of Companies (Meetings of Board and its Powers) Rules, 2014

Director of every company are required to give disclosures about their interest in any other business entity in first Board Meeting in which they participate as a Director and thereafter in First Board Meeting of every financial year in FORM MBP-1 to the Company.

b) DIR-8 Pursuant to Section 164(2) and rule 14(1) of Companies (Appointment and Qualification of Directors) Rules, 2014Every director shall inform to the company concerned about his disqualification under section 164 (2), if any, in Form DIR-8 before he is appointed or re-appointed.

4. Annual General Meeting:

A company may hold its first annual general meeting, within a period of nine months from the date of closing of the first financial year of the company and in any other case, within a period of six months, from the date of closing of the financial year.

Registrar may, for any special reason, extend the time within which any annual general meeting, other than the first annual general meeting, shall be held, by a period not exceeding three months

Meeting must be held not later than 6 months from close of financial year.

5. Minutes of proceedings of Meeting of Board of Directors, General Meeting:

It is mandatory for every company to cause minutes of the proceedings of every meeting of Board of Directors, General meeting within 30 days of conclusion of meeting concerned. Minutes shall be preserved permanently and shall act as evidentially value in case of any dispute.

(Follow instructions as mentioned under revised SS-1 and SS-2)

6. Compliance with respect to Secretarial Standards:

a) SS-1 (SECRETARIAL STANDARD ON MEETINGS OF THE BOARD OF DIRECTORS)
b) SS-2 (SECRETARIAL STANDARD ON GENERAL MEETINGS)

7. Approval and Signing of Financial Statements:

The financial statement, including consolidated financial statement, if any, shall be approved by the Board of Directors before they are signed on behalf of the Board by the chairperson of the company where he is authorized by the Board or by two directors out of which one shall be managing director, if any, and the Chief Executive Officer, the Chief Financial Officer and the company secretary of the company, wherever they are appointed, or in the case of One Person Company, only by one director, for submission to the auditor for his report thereon.

8. Report by Board of Directors:

Every Company has to prepare a board report which shall include:

Details as mentioned under Section 134(3) of the Companies Act, 2013. Briefly includes: state of the company, operations during the year, net profit, dividend declaration and its compliance with a set of financial, accounting and corporate social responsibility standards contains etc.

9. Event Based Compliances:

• Receipt of share application money
• Allotment of shares
• Transfer of shares
• Appointment/Resignation of directors
• Appointment of Managing Director/ Whole Time Director
• Executing agreement with related parties
• Change in the Bank signatories
• Change in the statutory auditors

Overview of MCA - ROC Compliances:

ROC Annual Filings: