Benefits Of Private Limited Company Compliance
No Minimum Paid-up Capital Required:
There is no minimum paid-up capital required for private limited companies registration in India, so companies can register as long as the authorized share capital is Rs. 1, 00,000 or more.
Separate Legal Entity:
A private limited company has a separate legal entity. That means it is recognized as a stand-alone entity with its own assets and liabilities. A company or corporation can sue and be sued in its own name. Management and ownership are separate, and managers are responsible for the company's debts.
Limited Liability:
A private limited company has limited liability of its members. This implies that the member’s personal properties will not be used to pay off the debts of the company due to losses. Members are liable only for debts up to the value of their shareholding.
Funding Easier:
Fundraising becomes much easier for private limited companies compared to sole proprietorships or partnerships. Angel Investors and Venture Capitalists Generally Invest in Private Limited or Pubic Limited Companies.
Perpetual Existence:
Compliance for a private limited company in India, has perpetual succession, maintaining its presence indefinitely unless formally dissolved by law. Annual compliance for private limited companies, gives the convenience of a separate legal entity, so the visibility of the company will not change, no matter how many founders, directors, or members come and go.
Foreign Direct Investment (FDI):
100% foreign direct investment (FDI) is permitted in private limited companies, allowing foreign individuals or entities to invest directly in the company. FDI is capable of embodying the growth of the company.
Credibility:
A private limited company must register its financial statements and details of incorporation with the Ministry of Corporate Affairs (MCA) and such information is publicly available on the MCA website. Such transparency fosters the credibility of the company as investors, financial institutions, and clients can readily verify the company’s data before entering into business relationships.
One-Time Compliance Requirements For Private Limited Companies:
After incorporation, a compliance for a private limited company has to undergo some one-time compliance. These are essential to ensure the proper establishment and functioning of the company.
Forms/ROC Compliance For Private Limited Company:
Declaration of Commencement of Business (Form: INC-20A): This form is to be filed by the companies having a share capital. It is filed to declare that the subscribers to the memorandum are paid their full share value. This document needs to be filed within 180 days of incorporation.
First Auditor Appointment (Form: ADT-1):
Every company shall within 30 days from the date of Registration appointed its first auditor. Subsequent auditors have to be appointed within 15 days of the annual general meeting.
Pvt ltd Company Compliance:
First board meeting within 30 days of incorporation: A private limited company registration is required to conduct its first board meeting within 30 days of incorporation. The Meeting: Matters at a first annual general meeting include opening a company bank account, issuing share certificates, appointing first auditor, and other business details.
Establishing Company Bank Account:
A bank account to receive share capital from shareholders should be opened and to make daily transactions.
Issuance of Share Certificates:
Share certificates to shareholders must be issued within 2 months of incorporation usually in Form SH-1. The certificates must be signed by the company secretary, if one exists, otherwise two directors must sign the certificates.
Any Necessary Registration under Other Laws:
In addition to getting registered under the Companies Act, a private limited company needs to obtain necessary registrations and licenses under other applicable laws.
Print and Show Name and Address:
Company Letterhead and Documents Should contain name, address, CIN, contact number, email ID and web address for the private company registration in India. The name and address of the business must be displayed outside the premises and on hoardings and signboards.
Annual Compliances For Private Limited Company In India Are:
As per the provision of Companies Act, 2013, private limited companies have to file several forms and returns every year. They also have to follow Income Tax Act 1961.
ROC Compliance for Private Limited Companies:
Annual Financial Statements (Form: AOC-4): Within 30 days from the date of holding annual general meeting. (Only in case of listed company) if only 5 crore paid-up share capital is exceeded or turnover mentioned in the company is exceeded 100 crore hen the financial statement shall also be filled in XBRL format.
Annual Return (Filling on) (Form: MGT-7A/MGT-7):
To be filed in 60 days from the date of AGM. For this, companies above certain financial thresholds are required to get a Form MGT-8 certificate from a practicing company secretary.
Form: MBP-1:
(Disclosure of Interest by the Director to the Company) to be disclosed in the first board meeting of each financial year.
Filing of FORM: DIR-3 KYC (Director KYC):
- Due on or before 30th September every year. Return of Deposits (Form: DPT-3): to be filed on or before 30th June every year
- If auditor reappointed within 15 days from AGM filed (Form : ADT-1) and on appointing new auditor within 30days from EGM filed (Form: ADT-1)
Statement Of Unpaid And Unclaimed Amounts (Form: IEPF-2):
To be filed within 60 days of AGM or its Due date for the annual compliance for a private limited company.
Disclosure of Substantial Beneficial Owner:
- Within 30 days of receiving Form BEN-1 Common Reporting Standards.
- Vendors not paid on account of MSME (Form: MSME-1): Half yearly.
Meetings & Maintenance of Minutes:
Annual General Meetings (AGM), board meetings, creditors meetings, and committee meetings should be held as per the provisions of the Companies Act, 2013. Minutes have to be kept for all of these meetings.
Statutory Registers:
The company has to maintain various registers concerning members, shares, investment, and contracts.
DIN of the directors:
Each director must have a DIN which is a unique number issued by the government of India for identification of the individual directors of the market.
Statutory Audit:
In every financial year, a company needs to get its accounts audited by a Chartered Accountant or a firm of Chartered Accountants.
Filing of Income Tax Return:
Each private company registration in India is obligated to file its income tax return under Form ITR 6 till 31st October of each year.
Advance Tax Payment:
Any company whose tax liability is projected to be at least Rs. 10,000 for a financial year, needs to make an advance tax payment as per the different due dates.
Event Based Compliances:
Required under conditions, thresholds, or certain events. These comprise alteration in registered office, transfer of shares, alteration of name of the company, registration of charge, etc.
CSR Compliance:
CSR mandated to spend 2% on limited company (that cross specified financial thresholds) of average net profit of the previous three years in CSR activities along with the annual compliance for a private limited company.
Internal Audit:
Firms with an annual revenue of Rs. 200 crores or high loans are required to appoint an internal auditor.
The secretarial audit:
Every listed company including the newly listed one and any other company having paid up share capital of Rs. 10 crores or more or public company having paid up share capital of Rs. 5 crores or more and also companies with outstanding loans or borrowings of Rs. 100 crores or more are required to get a secretarial audit done and shall require to annex a secretarial audit report to the board report on their annual compliance for a private limited company.
Income Tax Audit and Audit Report:
If the company's turnover is more than Rs. 1 crore for business and Rs. 50 lakhs for the profession, mandatory tax audit applies.
Event Based Compliances:
TDS Return Filing, TDS Deposit, GST Return Filing, GST Deposit, Professional Tax Return Filing (if any), Provident Fund Deposit, etc.
Proprietorship Registration