What is Annual Compliance for Private Limited Company?
Annual compliance refers to the mandatory legal requirements that every private limited company must fulfill each financial year. These requirements are prescribed under the Companies Act, 2013, and various other regulatory frameworks to ensure transparency, accountability, and proper governance.
Non-compliance with these requirements can result in severe penalties, prosecution of directors, and even striking off the company's name from the registrar. Therefore, it's crucial for every private limited company to maintain proper compliance throughout the year.
Important: Annual compliance is not optional but a legal obligation for all private limited companies operating in India.
Mandatory Annual Filings with ROC
Every private limited company must file the following documents with the Registrar of Companies (ROC) annually:
1. Annual Return (Form MGT-7)
- Due Date: Within 60 days from the date of AGM
- Contents: Company details, shareholding pattern, director details, etc.
- Filing Fee: ₹350 (for companies with paid-up capital up to ₹10 lakh)
- Penalty: ₹100 per day of delay
2. Financial Statements (Form AOC-4)
- Due Date: Within 30 days from the date of AGM
- Contents: Balance Sheet, Profit & Loss Account, Cash Flow Statement
- Filing Fee: ₹350 (for small companies)
- Penalty: ₹100 per day of delay
3. Board's Report
- Due Date: Filed along with Financial Statements
- Contents: Business overview, financial performance, director responsibilities
- Requirements: Must be signed by Chairman and Managing Director
4. Auditor's Report
- Due Date: Filed along with Financial Statements
- Requirements: Statutory audit by qualified Chartered Accountant
- Contents: Opinion on financial statements and internal controls
Board Meetings Compliance
Board meetings are essential for company governance and decision-making. Here are the mandatory requirements:
Frequency Requirements
- Minimum 4 board meetings per financial year
- At least one meeting in each quarter
- Maximum gap of 120 days between two consecutive meetings
- Additional meetings as required for important decisions
Meeting Procedures
- Proper notice of at least 7 days to all directors
- Quorum of at least 1/3rd of total directors or 2 directors, whichever is higher
- Maintain detailed minutes of proceedings
- Circulation of draft minutes within 15 days
- Confirmation of minutes in the next meeting
Key Agenda Items
- Approval of quarterly/annual financial results
- Appointment and remuneration of key personnel
- Declaration of dividends
- Borrowing and investment decisions
- Related party transactions approval
- Compliance certificates review
Annual General Meeting (AGM) Requirements
Every private limited company must conduct an Annual General Meeting within prescribed timelines:
AGM Timeline
- First AGM: Within 18 months of incorporation
- Subsequent AGMs: Within 6 months of financial year end
- Gap between two AGMs: Not more than 15 months
- Notice period: Minimum 21 days to all members
Mandatory AGM Business
- Adoption of audited financial statements
- Declaration of dividend (if applicable)
- Appointment/reappointment of directors
- Appointment/reappointment of auditors
- Fixation of auditor's remuneration
- Board's report consideration
AGM Documentation
- AGM notice with proper agenda
- Annual report including financial statements
- Attendance register
- Minutes of meeting
- Resolutions passed
- Voting results (if applicable)
ROC Filings & Important Deadlines
Here's a comprehensive timeline of important ROC filing deadlines throughout the year:
| Filing | Due Date | Penalty (per day) |
|---|---|---|
| AGM | September 30 | ₹25,000 - ₹5,00,000 |
| AOC-4 (Financial Statements) | October 30 | ₹100 per day |
| MGT-7 (Annual Return) | November 30 | ₹100 per day |
| ADT-1 (Auditor Appointment) | 30 days from appointment | ₹100 per day |
Income Tax Compliance for Private Limited Companies
Apart from ROC compliance, private limited companies must also comply with income tax requirements:
Annual Income Tax Filings
- ITR Filing: Due date September 30 (for companies)
- Tax Audit Report: If turnover exceeds prescribed limits
- Transfer Pricing Documentation: For specified domestic transactions
- Country-by-Country Report: For multinational groups
Quarterly Compliances
- TDS returns filing (quarterly)
- Advance tax payments (quarterly)
- GST returns filing (monthly/quarterly)
- PF and ESI returns (monthly)
Record Keeping
- Maintain books of accounts for minimum 8 years
- Digital records and backup maintenance
- Supporting documents for all transactions
- Compliance certificates and acknowledgments
Penalties for Non-Compliance
Non-compliance with annual requirements can result in significant penalties and legal consequences:
Company Penalties
- Late filing fees: ₹100 to ₹500 per day
- AGM non-compliance: ₹25,000 to ₹5,00,000
- Prosecution for continued default
- Striking off from ROC register
- Disqualification from benefits
Director Penalties
- Personal fines: ₹5,000 to ₹1,00,000
- Imprisonment up to 6 months
- Director disqualification
- Liability for company debts
- Restriction on future appointments
Warning: Repeated non-compliance can lead to criminal prosecution and permanent disqualification of directors.
Annual Compliance Checklist
Use this comprehensive checklist to ensure your company meets all annual compliance requirements:
Q1 (April - June)
- Board Meeting
- TDS Return Filing
- Advance Tax Payment
- GST Returns
- PF/ESI Returns
- Annual Return (if due)
Q2 (July - September)
- Board Meeting
- AGM Preparation
- Financial Statements Finalization
- AGM Conduct
- ITR Filing
- Statutory Audit Completion
Q3 (October - December)
- AOC-4 Filing
- MGT-7 Filing
- Board Meeting
- Half-yearly compliances
- Director KYC update
- Advance tax payment
Q4 (January - March)
- Board Meeting
- Final tax payment
- Books closure preparation
- Auditor appointment
- Next year planning
- Compliance review
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