POST INCORPORATION COMPLIANCES/ACTIVITIES FOR A PRIVATE LIMITED COMPANY On incorporation, a Private Limited Company is a Separate Legal Entity and has to comply with the provisions of various Laws which it attracts during the course of its business. Jotted below are some of the major compliances/activities under various Acts which the Company is required to take up subsequent to its incorporation. (I) COMPLIANCES/ACTIVITIES UNDER COMPANIES ACT, 1956: (1) Stationery & Stamps The Company should make ready its Common Seal, Letter Heads, Stamps, Name Board, Sign Board, etc. The Name Board with the Name of the Company and its Registered Office address in letters easily legible should be affixed outside the place of business at a prominent position. It should have its name engraved in legible characters on its common seal. Its entire business letters, bill heads, letter paper, notices and other official publications should have its name and registered office address. Also print few copies of Memorandum & Articles of Association. (2)Subscription The subscription amount as mentioned in the Memorandum of Association should be brought into the Company within one month from the date of incorporation. (3) Common Seal Page 1 of 10
It is an iron seal name of the Company engraved on it. A Company may, in writing under its common seal, empower any person, either generally or in respect of any specified maters, as its attorney, to execute deeds on its behalf in any place either in or outside India. A deed signed by such an attorney on behalf of the Company and under his seal where sealing is required, shall bind the Company and have the same effect as if it where under its common seal. The common seal is required to be used on share certificates, bonds, debentures and other formal contracts, power of attorney, etc. to authenticate them. It should also be adopted by the directors in first Board Meeting. (4) First Board Meeting Within Thirty (30) days of incorporation of the Company, Board of Directors Meeting has to be conducted. Frequency of Meetings: There should be at least four Board Meetings in a year having one Board Meeting in every quarter of the year. As per Secretarial Standard on Meetings of the Board of Directors (SS-1) maximum interval between two Meetings should not exceed 120 days. Minimum Attendance: The quorum of a Board Meeting shall be one third of its total strength of the Board or two directors, whichever is higher. The following business may be transacted at the meeting:- (i) Election of Chairman One of the Directors may be elected as Chairman for all the Meetings of the Company or Chairman may be appointed for each Meeting. (ii) Certificate of incorporation The Certificate issued by Registrar of Companies may be noted. Page 2 of 10
(iii) Memorandum & Articles of Association To take note of the Memorandum & Articles of Association as registered. (iv) Constitution of Board of Directors Directors named in the Articles of Association shall be the First Directors. There may be induction of new directors also on requirement. (v) Taking note of interest of Directors The notices received from Directors of their interests in other Companies may be kept before the Board. (vi) Appointment of First Auditors - The first auditors should be appointed by the Board of Directors within one month of the date of registration of the Company. If not, they shall be elected in the General Meeting (vii) Bankers & Bank Account Authorisation has to be given to open a Bank Account in the Company s name for its day to day operations. (viii) Financial Year of the Company The first financial year commences from the date of incorporation till the end of following March/June/December, etc., as per the decision taken. The second and subsequent commences from 1 st April/1 st July/1 st January to 31 st March/30 th June/31 st December. (ix) Share Certificates Have to be issued to those persons who have subscribed the Memorandum of Association. Company may also allot further shares to existing members or may make new members and issue share certificates accordingly. Share Certificates should be signed by at least two directors and one authorized signatory. It should be stamped properly. Common Seal has to be affixed on it. (x) Common Seal The Agreements entered into by the Company, the share certificates, bonds, debentures and other formal contracts should possess Common Seal on them for authentication. Board should adopt such Common Seal. Page 3 of 10
(xi) Registered Office The Board should take note of the location of the Registered Office of the Company. This is the place from where it carries on its operations. Usually the Statutory Books and Registers are kept at the Registered Office of the Company. (xii) Preliminary Contracts and Expenses To approve preliminary contracts and expenses. (5) Opening of Bank Accounts To carry on with the operations of the Company Bank Accounts need to be opened. (6) Filings The Company requires filing certain returns/forms with the Registrar of Companies under whose jurisdiction it was incorporated. Such filings are of two kinds (a) Periodical They need to be filed periodically irrespective of occurrence of any event. Examples:- Balance sheet and Profti & Loss Account Annual Return Compliance Certificate (b) Event based They need to be filed on occurrence of certain event Examples:- These are to be filed within 30 days from the date of event. (i) Form 2 Return of Allotment when shares are allotted. (ii) Form 5 when there is change in Authorised Capital (iii) Form 8 when there is Creation/Modification of Charge on the assets of the Company (iv)form 18 when there is a Change of Registered Office Page 4 of 10
(v) Form 32 when there is a Change in composition of Board of Directors either by appointment or resignation (7) Appointment of Statutory Auditors The first auditors should be appointed by the Board of Directors within one month of the date of registration of the Company. If not, they shall be elected in the General Meeting. (8)Statutory Books & Registers A Company should maintain statutory books and registers listed below. Non-maintenance of these registers attracts penal provisions of the relevant sections of the Act. Most of these registers are also required to be made available for inspection to any member / debenture holder and, in some cases, to other persons as well, during business hours. Subject to such other restrictions as the company may impose by its articles or in general meeting, not less then two hours in each working day must be allowed for inspection. Such Statutory books and registers should be kept at the Registered Office of the Company, if not Members approval with 3/4 th majority is required to keep them at any other place within the city in which Registered Office is located. S.No. Particulars of Register/Book Section / Rule 1. Register of investments in 49(7) shares/securities not held in its name 2. Register of fixed deposits 58A 3. Copy of every instruments creating any 136 charge requiring registration 4. Register of charges 143(1) 5. Register of members 150(1) 6. Index of members ( if a company has more than 50 members ) 151(1) Page 5 of 10
7. Register of debenture holders 152(1) 8. Index of debenture holders ( if a 152(2) company has more than 50 debenture holders ) 9. Copies of all annual returns prepared 193 under section 159 / 160 10. Minutes of board of directors and 193 committees thereof 11. Minutes of proceedings of general 193 meetings 12. Books of account and other cost records 209 13. Proper books of account relating to transactions effected at branch office 209 (9) Annual General Meeting Apart from the other Meetings of Members of the Company, there should be one Meeting which shall be held in each year called Annual General meeting (AGM - shareholder's meeting). In such a meeting Annual Accounts are adopted by the Members of the Company, Auditors are re-appointed, vacancy due to rotational retirement of directors is filled, Dividend is declared and any other special business as per the notice may be transacted. The First Annual General Meeting should be held within Eighteen (18) months from the date of incorporation. The second and subsequent AGMs shall be held within earliest of the following:- Six months from the close of the financial year Fifteen months from the date of last AGM End of the calendar year Page 6 of 10
(10) Drafting Minutes The minutes of the proceedings of all the Meetings should be recorded within Thirty (30) days from the conclusion of the concerned Meeting. The pages/leaves in the book/register kept for the purpose should be consecutively numbered. Each page should be initialed and last page should be signed and dated by the following In case of Board of Directors Meeting by the Chairman of the concerned Meeting or the Chairman of the succeeding Meeting. In case of General Meeting by the Chairman of the concerned Meeting, within Thirty (30) days from the conclusion of the concerned Meeting or in the event of death or inability of that Chairman within the said period, by a director duly authorized by the Board for the purpose. (II) REGISTRATIONS/APPROVALS UNDER OTHER LAWS: 1. Obtaining Permanent Account Number (PAN), Tax Deduction Account Number (TAN), Import Export Code (IEC) Why PAN? Permanent Account Number (PAN) is a ten digit unique alpha numeric code issue by the Income Tax Department. It is mandatory to quote PAN on return of income and all correspondence with Income Tax Department. Further, it is compulsory to quote PAN on all documents pertaining to financial transactions such as sale and purchase of immovable property, motor vehicle or payments in cash, of amounts exceeding Rs.25,000/-to hotels and restaurants or in connection with travel to any foreign country. It is also mandatory to mention PAN for obtaining a telephone or cellular telephone connection. Likewise, PAN has to be mentioned for making a time deposit exceeding Rs.50,000/- with a Page 7 of 10
Bank or Post Office or depositing cash of Rs.50,000/- or more in a Bank. Why TAN? Tax Deduction and Collection Account Number (TAN) is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting or collecting tax. It is compulsory to quote TAN in TDS/TCS return (including any e- TDS/TCS return), any TDS/TCS payment challan and TDS/TCS certificates. TDS/TCS returns will not be received if TAN is not quoted and challans for TDS/TCS payments will not be accepted by banks. Failure to apply for TAN or not quoting the same in the specified documents attracts a penalty of Rs. 10,000/- Why IEC? No export or import shall be made by any person without an Importer-Exporter Code (IEC) Number unless specifically exempted. 2. Registration under Sales Tax/Value Added Tax, Shops & Establishment Act, Labour Laws (If the number of employees exceed 20). 3. Provident Fund registration (If the number of employees exceed 20) - The Employees Provident Funds and Miscellaneous Provisions Act, provides for compulsory contributory fund for the future of an employee after his retirement or for his dependents in case of his early death. 4. Profession Tax Registration Employer is liable to pay Profession Tax on behalf of its employees earning a salary of Rs.5,000/- or more per month. Such Employers shall be liable for registration. 5. Registration under Export Promotion Schemes such as SEZ, EOU, STPI, EHTP. 6. Registration of trade mark, copy rights and other intellectual property rights Page 8 of 10
7. In case of Foreign Investment, intimation to Reserve Bank of India and FIPB approvals, if required. (III) OTHERS: 1. Enter into contracts such as Employment Contract, Lease, Service Agreements, Vendor Agreements, etc. 2. Annual and other mandatory Filings S.No. What to File When to File 1. Form 20B Annual Within 60 days from the date of Annual Return General Meeting (AGM) or if AGM is 2. Form 23AC- Balancesheet 3. Form 23ACA Profit & Loss Account 4. Form 66 Secretarial Compliance Certificate 5. Form ITR 6 - Income Tax Return 6. Form 26Q, 24Q Quarterly TDS Returns 7. Half yearly Service Tax Return 8. Form V Profession Tax not held from the due date of AGM. Within 30 days from the date of Annual General Meeting (AGM) or if AGM is not held from the due date of AGM. Within 30 days from the date of Annual General Meeting (AGM) or if AGM is not held from the due date of AGM. Within 30 days from the date of Annual General Meeting (AGM) or if AGM is not held from the due date of AGM. On or before 31 st October of the succeeding year Before 15 th of the succeeding month of the previous quarter On or before 20 th October and 30 th March Before 15 th of the succeeding month. Page 9 of 10
3. Mandatory Audits Statutory Audit under Section 227 of the Companies Act, 1956 Secretarial Audit if paid-up capital exceeds Rs.2 Crores Internal Audit if paid-up capital and reserves exceeds Rs.50 Lakhs or turnover exceeds Rs.5 Crores for 3 consecutive years, as per CARO, 2003. Tax Audit under Section 44B of Income Tax Act, 1961 if the gross turnover exceeds Rs.40 Lakhs. ******** Page 10 of 10