OneClick Business Solutions

One Click Business Solutions is one of the leading legal firms in India, that is registered under the Companies Act, 2013 & our Corporate Identity Number is U74999DL2019PTC362211.

Get Annual Compliance for private Limited Easy & Quick

Through OneClick - India’s leading legal technology firm trusted by over thousand entrepreneurs.

  • Fast-track your registration process.
  • Help you stay in compliance with Indian law.
  • Keep you informed of any law changes.
  • A dedicated business specialist.

Get Free Quote

Annual Compliance For Private Limited

Annual Compliance for Private Limited

In India, a Private Limited Company (PLC) is a popular choice among entrepreneurs due to its separate legal entity, limited liability for shareholders, and ease of raising capital. However, with these advantages come certain legal obligations. Annual compliance is one of the most important responsibilities that a Private Limited Company must fulfill to maintain its active status and avoid penalties. These compliances ensure that the company adheres to the laws set by the Ministry of Corporate Affairs (MCA) and remains transparent in its operations.

Failing to comply with the annual requirements can lead to severe consequences, including fines, disqualification of directors, and even the company being struck off the register. Hence, it is crucial for Private Limited Companies to stay up-to-date with their annual compliance obligations.

Requirements of Annual Compliance for Private Limited

The following are the key annual compliance requirements for a Private Limited Company in India:

  1. Annual Return (Form MGT-7):
    • Every Private Limited Company must file its annual return in Form MGT-7 within 60 days from the date of the Annual General Meeting (AGM). This return provides a summary of the company’s shareholding structure, changes in directorship, and other relevant details.
  2. Financial Statements (Form AOC-4):
    • The company is required to file its financial statements, including the Balance Sheet, Profit & Loss Account, and Director’s Report, in Form AOC-4 within 30 days of the AGM.
  3. Income Tax Return:
    • A Private Limited Company must file its Income Tax Return for the financial year by 30th September, provided its accounts are subject to audit. For companies not requiring an audit, the deadline is 31st July.
  4. Board Meetings:
    • A minimum of four board meetings must be held each year, with a gap of not more than 120 days between two consecutive meetings.
  5. Annual General Meeting (AGM):
    • Every Private Limited Company must hold its AGM within six months from the end of the financial year. The first AGM must be held within nine months from the date of incorporation.
  6. Director’s Report:
    • The Director’s Report is an essential document that must be attached to the financial statements. It should provide details about the company’s performance, risk management, and other significant activities.
  7. Statutory Audit:
    • The accounts of a Private Limited Company must be audited by a Chartered Accountant every financial year, irrespective of the company’s turnover or capital.

Why Choose to Make Annual Compliance for Private Limited?

  1. Legal Standing:
    • Ensuring timely annual compliance helps maintain the company’s legal standing. Non-compliance can lead to penalties and the company’s name being struck off from the MCA’s register.
  2. Business Credibility:
    • Regular compliance demonstrates the company’s commitment to transparency, enhancing its credibility with clients, investors, and other stakeholders.
  3. Avoid Penalties:
    • The MCA imposes fines for non-compliance, which can accumulate over time. Meeting annual compliance deadlines helps avoid unnecessary financial burdens.
  4. Ease of Future Transactions:
    • Complying with annual requirements ensures that the company’s records are up-to-date, making it easier to obtain loans, attract investors, or enter into contracts.
  5. Director Protection:
    • Annual compliance protects the directors from disqualification and personal liability, ensuring that the company operates within legal boundaries.
  6. Tax Benefits:
    • Regular compliance, including timely filing of tax returns, ensures that the company avails itself of all possible tax benefits and avoids penalties.
  7.  

Documents Required for Annual Compliance for Private Limited

The following documents are typically required to fulfill the annual compliance requirements for a Private Limited Company in India:

  1. For Annual Return (Form MGT-7):
    • List of Shareholders
    • Details of Directors and Key Managerial Personnel
    • Registered Office Address
  2. For Financial Statements (Form AOC-4):
    • Audited Balance Sheet
    • Profit & Loss Account
    • Director’s Report
    • Auditor’s Report
  3. For Income Tax Return:
    • Company’s Financial Statements
    • Tax Audit Report (if applicable)
    • Bank Statements
    • GST Returns (if applicable)
  4. For Board Meetings and AGM:
    • Minutes of Board Meetings
    • Minutes of AGM
    • Notice and Agenda of Meetings
  5. For Statutory Audit:
    • Books of Accounts
    • Financial Statements
    • Compliance Certificates
  6. For Director’s Report:
    • Details of the Company’s Performance
    • Risk Management Policies
    • Future Plans and Strategies

Conclusion

Annual compliance is a vital aspect of managing a Private Limited Company in India. By adhering to these obligations, companies not only ensure their legal standing but also build trust with stakeholders, avoid penalties, and secure long-term success. Understanding the requirements, preparing the necessary documents, and adhering to deadlines can help Private Limited Companies maintain smooth operations and achieve their business goals. Whether you are a new company or an established one, staying compliant is essential for sustainable growth.

Have questions about Annual Compliance for Private Limited.

What are the consequences of non-compliance with annual filing requirements for a Private Limited Company?

Non-compliance can lead to penalties ranging from ₹100 per day per form, disqualification of directors, and the company being struck off the MCA register. Continuous non-compliance can also result in criminal prosecution.

Is it mandatory for all Private Limited Companies to have their accounts audited?

Yes, every Private Limited Company, regardless of its turnover, must have its accounts audited by a Chartered Accountant annually.

Can a Private Limited Company file its annual returns after the due date?

Yes, a company can file its annual returns after the due date, but it will incur late filing fees and penalties as prescribed by the MCA.

What is Form MGT-7 in annual compliance?

Form MGT-7 is an annual return that Private Limited Companies must file to report details about their shareholding structure, directors, and other company-related information.

What is the penalty for non-filing of Form AOC-4 and Form MGT-7?

The penalty for non-filing of Form AOC-4 and Form MGT-7 is ₹100 per day per form until the filing is completed, with no upper limit on the penalty.

Is it necessary to hold an Annual General Meeting (AGM) for a Private Limited Company?

Yes, it is mandatory for every Private Limited Company to hold an AGM within six months of the end of the financial year. The first AGM should be held within nine months of incorporation.

Are there additional compliances for Private Limited Companies apart from annual filings?

Yes, depending on the business operations, a Private Limited Company may need to comply with GST filings, TDS returns, and other statutory requirements.

Can a disqualified director be reinstated after the company becomes compliant?

Yes, a disqualified director can be reinstated if the company complies with its obligations and files the necessary documents, along with paying any applicable penalties.

What is the importance of a Director’s Report in annual compliance?

The Director’s Report is a statutory requirement that provides insights into the company’s financial health, performance, and future plans. It is essential for transparency and accountability.

Get Free Quote