Understanding Compliances for Private Limited Companies: A Comprehensive Guide

Annual compliances for private limited company can feel overwhelming for many business owners. Navigating legal requirements, deadlines, and filings can be confusing and stressful. This blog breaks down the key compliances to help you stay on track with ease. 

Read on to stay compliant and stress-free!

Benefits of Compliance for Private Limited Company

Staying compliant isn’t just about following the law—it has great advantages too! Here’s why compliance is beneficial for your private limited company:

• Builds Trust: When your company stays compliant, it instills confidence in investors. They are more likely to trust and invest in businesses that follow the rules, knowing their money is in safe hands.
• Enhances Credibility: A company that consistently meets legal requirements appears professional. Compliance enhances your reputation in the industry, making clients and partners feel secure doing business with you.
• Avoids Penalties: Missing compliance deadlines can lead to hefty fines and legal trouble. By staying on top of your obligations, you avoid unnecessary costs and headaches down the road.
• Smooth Operations: Regulatory issues can disrupt your business if not handled properly. Compliance ensures your operations flow smoothly without sudden shutdowns or delays caused by legal challenges.
• Access to Funding: Compliant companies are more attractive to banks and investors. If you’re looking for loans or funding, compliance boosts your chances of getting approved without hiccups.
• Good Standing: Keeping your company compliant keeps you in the good books of regulatory authorities. This not only helps avoid scrutiny but also sets your business up for long-term success.

Types of Compliances for Private Limited Company

Private limited companies must follow certain compliances. These include annual filings, event-based obligations, and other key requirements. Let’s simplify this by breaking it down: 

• Annual Compliance: Each year, your company needs to file forms like DPT-3, AOC-4, and MGT-7. Other tasks include submitting income tax returns, conducting an annual audit, and preparing the directors' report. These filings ensure your company stays on track with regulatory bodies.
• Event-Based Compliance: Certain events trigger specific filings. For example, starting your business requires INC-20A. Appointing or changing directors means filing DIR-12. Appointing auditors needs form ADT-1. These keep your company’s records updated and compliant.
• Other Compliances: You’ll need to hold board meetings and annual general meetings (AGMs) regularly. Preparing a detailed directors' report is also essential. These tasks maintain transparency and keep your company in good standing.

Documents Required for Compliances for Private Limited Company

To stay compliant, certain documents are needed at every step. Here’s a list of what you’ll need to have ready for different compliance filings.

• Directors' KYC documents
• Shareholders’ list and details
• Financial statements for the year
• Income tax returns and audit reports
• Board meeting minutes and resolutions
• Auditor appointment letter and other forms
• Incorporation certificate and business details

Annual Compliances

Staying on top of annual compliances is essential for your private limited company. Let’s explore the key filings, their timelines, and the consequences of missing them.

Given below is a list of compliances for a private limited company:

DPT-3 Filings

DPT-3 is required to report any outstanding loans or deposits that a private limited company holds. This filing ensures transparency with the Ministry of Corporate Affairs (MCA) regarding your company’s financial liabilities. Whether the loans or deposits are secured or unsecured, they must be reported in this form. Failure to submit DPT-3 can attract penalties, making it important for companies to stay compliant and keep their financial obligations in check

• Timeline: Must be filed by June 30 each year.
• Penalty for Non-Compliance: Rs. 5,000 per day for delay.

AOC-4

AOC-4 is the filing of your company’s financial statements, including the balance sheet, profit and loss account, and any other related documents. This ensures that your company’s financial health is transparent to regulatory authorities and stakeholders. The filing needs to be completed annually after the Annual General Meeting (AGM) and submitted to the MCA. It’s a key compliance that reflects your company’s financial integrity.

• Timeline: Must be filed within 30 days of the AGM.
• Penalty for Non-Compliance: Rs. 100 per day for delay.

MGT-7

MGT-7 is the annual return that captures comprehensive details about the company. This includes shareholder information, changes in the board, shareholding patterns, and other relevant corporate details. Filing this form annually keeps the company’s records updated with the MCA. It also ensures that stakeholders have access to accurate information about the company’s structure.

• Timeline: Must be filed within 60 days of the AGM.
• Penalty for Non-Compliance: Rs. 100 per day for delay.

DIR KYC

DIR KYC is an annual requirement where every director of the company must submit their KYC details. This includes address proof, identity proof, and personal contact details. The purpose of this compliance is to keep the MCA's database of directors up to date and to ensure that only verified individuals hold directorial positions in companies.

• Timeline: Must be filed by September 30 each year.
• Penalty for Non-Compliance: Rs. 5,000 per director for failure to comply.

Statutory Audit

A statutory audit is a mandatory audit of a company’s financial records conducted by an independent auditor. The audit ensures that the financial statements are accurate and comply with regulatory standards. This process safeguards against any discrepancies in financial reporting and helps maintain the trust of investors and stakeholders.

• Timeline: Must be completed before filing AOC-4.
• Penalty for Non-Compliance: Leads to significant fines and potential legal consequences.

Directors’ Report

The Directors’ Report provides an overview of your company’s activities during the financial year. It includes details on the company’s operations, future prospects, changes in the board of directors, and other key highlights. The report is shared with shareholders and must be presented at the AGM. It is crucial for maintaining transparency and accountability.

• Timeline: Must be prepared and approved before the AGM.
• Penalty for Non-Compliance: Penalties apply if not prepared and presented on time.

Income Tax Filing

Income tax filing is the annual process where your company submits its income and taxes paid to the government. This filing ensures that your company is fulfilling its tax obligations under the Income Tax Act. Any income earned during the financial year is reported, and the applicable taxes are paid. Filing on time avoids interest and penalties on outstanding taxes.

• Timeline: Must be filed by September 30 each year.
• Penalty for Non-Compliance: Interest on tax payable, plus fines.

MSME Form-1

MSME Form-1 is a compliance form required for companies dealing with Micro, Small, and Medium Enterprises (MSMEs). The form captures details about payments to MSMEs and ensures that small businesses receive timely payments. It helps maintain a fair business environment and supports the growth of MSMEs by ensuring they are paid on time by larger companies.

• Timeline: Must be filed every six months.
• Penalty for Non-Compliance: Penalties and fines apply for non-compliance.

Event-Based Compliance for Private Limited Companies

Event-based compliances are triggered by specific actions or changes in your company. Let’s break down the key event-based compliances that you need to be aware of.

INC-20A: Declaration for Commencement of Business

INC-20A is a mandatory declaration that confirms the commencement of business operations. Once the company is incorporated and before beginning any business activity, this form must be filed with the MCA. It is essential to ensure that the company’s legal status is active and operations are in compliance with the law.

• Timeline: Must be filed within 180 days from the date of incorporation.
• Penalty for Non-Compliance: Rs. 50,000 for the company and Rs. 1,000 per day for directors.

Appointment of Auditor and Filing E-form ADT-1

Every private limited company must appoint an auditor within 30 days of incorporation. The appointment is filed using E-form ADT-1. The auditor ensures that the company’s financial records are accurate and compliant with the law. This step is essential for maintaining transparency and accountability in your financial reporting.

• Timeline: Must be filed within 15 days of the appointment of the auditor.
• Penalty for Non-Compliance: Rs. 300 per month for late filing; potential additional penalties.

DIR-12: Appointment/Resignation of Directors

DIR-12 is required whenever there is a change in the board of directors, such as the appointment or resignation of a director. This form keeps the MCA updated on who is responsible for managing the company. It is important to maintain accurate records of your board’s structure.

• Timeline: Must be filed within 30 days of the change.
• Penalty for Non-Compliance: Rs. 300 per day for delay, plus additional fines.

MGT-14: Filing of Board Resolutions

MGT-14 is used to file certain board resolutions with the MCA, such as resolutions for changes in share capital or the appointment of a new director. This form ensures that significant decisions made by the board are officially recorded and recognized by the authorities.

• Timeline: Must be filed within 30 days of passing the resolution.
• Penalty for Non-Compliance: Rs. 100 per day for delay, plus additional fines.

Other Compliances

Aside from annual and event-based filings, companies must also follow certain ongoing requirements like holding meetings regularly to ensure transparency and good governance.

Annual General Meeting

The Annual General Meeting (AGM) is a mandatory yearly gathering where shareholders discuss the company’s performance, approve financial statements, and make key decisions. It’s a critical part of corporate governance and ensures that shareholders are kept informed and involved in the company’s direction.

• Timeline: Must be held within six months of the financial year’s end, but not more than 15 months after the last AGM.
• Penalty for Non-Compliance: Rs. 1,00,000 for the company and up to Rs. 5,000 per day for default.

Board Meeting

Board meetings are essential to discuss the company’s operations, strategies, and compliance matters. These meetings provide a platform for directors to make decisions on critical business issues and ensure the smooth running of the company. Regular meetings are necessary for maintaining transparency in management and decision-making.

• Timeline: Must be held at least four times a year, with a maximum gap of 120 days between two meetings.
• Penalty for Non-Compliance: Rs. 25,000 for the company, plus fines for each defaulting officer.

Calendar for Pvt Ltd Company Compliance

Compliance	Due Date	Penalty
DPT-3 Filings	June 30 each year	Rs. 5,000 per day for delay
AOC-4	Within 30 days of AGM	Rs. 100 per day for delay
MGT-7	Within 60 days of AGM	Rs. 100 per day for delay
DIR KYC	September 30 each year	Rs. 5,000 per director for failure to comply
Statutory Audit	Before filing AOC-4	Fines and potential legal consequences
Directors’ Report	Before the AGM	Penalties apply for non-compliance
Income Tax Filing	September 30 each year	Interest on tax payable, plus fines
MSME Form-1	Every six months	Penalties and fines apply
INC-20A	Within 180 days of incorporation	Rs. 50,000 for the company and Rs. 1,000 per day for directors
Appointment of Auditor (ADT-1)	Within 15 days of auditor appointment	Rs. 300 per month for late filing; additional penalties possible
DIR-12	Within 30 days of change	Rs. 300 per day for delay, plus additional fines
MGT-14	Within 30 days of resolution	Rs. 100 per day for delay, plus additional fines
Annual General Meeting	Within six months of financial year’s end	Rs. 1,00,000 for the company and Rs. 5,000 per day for default
Board Meeting	At least four times a year	Rs. 25,000 for the company, plus fines for each officer

Conclusion

Private Limited Company compliance are vital to ensure smooth operations and legal security. Meeting these requirements keeps your business safe from penalties and builds credibility. Stay proactive and compliant to help your company grow without unnecessary hurdles. 

FAQs

Q. What is the ROC compliance for private limited company?

Given below are some important ROC compliances for a private limited company:

1. Board Meeting of Private Limited Company
2. Annual General Meeting or AGM of Private Limited Company
3. Declaration of Interest by the Directors
4. Filing of Tax and Annual Returns of the Company
5. Maintain Statutory Registers
6. Directors KYC
7. Commencement of Business