The Companies Act, has mandated for every company whether Private Company, Public Limited Company, One person Company, Section-8 Company incorporated under the provisions of the Companies Act, 2013/1956 Act to file its audited Financial Statements and Annual Return annually in various e-forms along with the necessary documents with the respective Registrar of Companies irrespective of the turnover, capital, transactions done etc. The Annual filing is done to report the activities carried out during the Financial Year.
Companies are required to file the documents electronically on the Ministry of Corporate Affairs (MCA) portal. The filings need to be made in the prescribed e-Forms, which can be accessed and submitted online.
Annual General Meeting (AGM): Every company is required to hold an AGM within six months from the end of the financial year
The AGM is a meeting where shareholders discuss the company’s financial statements, elect directors, and make important decisions.
Financial Statements: Companies must prepare financial statements, including the balance sheet, profit and loss statement, cash flow statement, and statement of changes in equity, for the previous financial year. These statements should be audited by a qualified Chartered Accountant. The Reporting is to be done in eForm AOC-4 within 30 Days of Annual General Meeting
Director’s Report: The Director’s Report provides an overview of the company’s activities, financial performance, future plans, and other relevant information. It is prepared by the directors and should be attached to the financial statements.
Annual Return: The annual return is a comprehensive document that provides details about the company’s shareholders, directors, share capital, indebtedness, and other relevant information. The Reporting is to be done in eForm MGT-7/MGT-7A within 60 Days of Annual General Meeting It should be filed within 60 days of the AGM.
Auditor Appointment: Companies are required to appoint an auditor for a period of Five Consecutive Financial Years.
Compliance Certificate (MGT-8): Certain categories of companies, such as those with a paid-up capital of Rs. 10 crore or more, Listed Entities and Companies having Turnover 50 crore or more need to obtain a compliance certificate from a practicing Company Secretary. This certificate certifies the company’s compliance with various provisions of the Companies Act.
Form 20A is a declaration that needs to be filed by the directors of the company at the time of the commencement of the business. It should be verified by a Company Secretary (CS)orChartered Accountant (CA) or a Cost Accountant in practice.
Introduction
As per the Companies (Amendment) Ordinance 2018, there is a requirement for all the companies registered on or after 2 November 2018 to file a certificate of commencement of business. Form 20A is a declaration filed by the directors within 180 days of the date of incorporation of the company. This is one of the most important compliances to follow as the penalties for non-filing is extremely high.
Companies which are not required to file Form 20A
The following companies are not required to file form 20A:
The time period for filing Form 20A
Every company required to file form 20A shall file the same within 180 days of its incorporation.
Requirement and procedure
A certificate of business commencement has to be obtained within 180 days from the date of incorporation and an eForm has to be filed with the concerned ROC (Registrar of Companies) regarding the same. A declaration under section 10A from the directors has to be provided in the form of a Board Resolution in the eForm itself. In addition to this, a proof of deposit of the paid-up share capital by the subscribers also needs to be attached in the eForm. If a company pursues objects requiring registration or approval from any sectoral regulators such as The Reserve Bank of India and Securities and Exchange Board of India etc, then it shall obtain such registration or approval along with the attached declaration. The eForm has to be verified and certified by a practising professional before filing with the ROC (Registrar of Companies).
Penalties for Default
The penalties for non-compliance are very high which has been done intentionally so as to curb out the number of shell companies incorporated. Following are the penalties for non-compliance:
| Nominal Share Capital | Applicable Fees in (Rs.) |
| Where share capital is less than 1,00,000 | 200 |
| 1,00,000 or above but not exceeding 4,99,999 | 300 |
| 5,00,000 or above but not exceeding 24,99,999 | 400 |
| 25,00,000 or above but not exceeding 99,99,999 | 500 |
| 1,00,00,000 or above | 600 |
Fee for filing eForm for companies having no share capital:
In this case, the fees applicable is only Rs 200.
| Nominal Share Capital | Applicable Fees in (Rs.) |
| Up to 30 days | 2 times of normal fees |
| Above 30 but not exceeding 60 days | 4 times of normal fees |
| Above 60 days but not exceeding 90 days | 6 times of normal fees |
| Above 90 days but not exceeding 180 days | 10 times of normal fees |
| Above 180 days | 12 times of normal fees |
DIR-3 KYC (Know Your Customer) is a process mandated by the Ministry of Corporate Affairs (MCA) in India for updating and verifying the details of Directors of a company. It is aimed at maintaining an updated database of active directors and ensuring transparency and accountability in corporate governance.
Who has to file eForm DIR-3 KYC?
Things to keep in mind while filing e-Form DIR-3 KYC
Documents required for DIR-3 KYC
For filing your DIR 3 -KYC form, you’ll need the following documents:
Apart from the items mentioned above, please keep the following things ready:
In case a director who is supposed to file the e-Form does not file it by 30th September on MCA 21 portal, the department will mark the DIN of such director as ‘Deactivated due to Non-filing of DIR-3 KYC’. If the director wishes to re-activate his DIN in future by filing the missed out eForm DIR-3 KYC, he can do so after paying a late fee of Rs 5,000. This fee would be payable on or after 30th September of the year in which the eForm DIR-3 is to be filed. This form needs to be filed annually by the directors.
XBRL (eXtensible Business Reporting Language) filing refers to the submission of financial statements and other business information in XBRL format. XBRL is an open, standardized language designed for the electronic communication and exchange of business and financial data. It enables companies to structure and tag their financial statements and other reports, making the information machine-readable and easily accessible for analysis and comparison.
XBRL filing is mandatory for certain categories of companies in India, as per the requirements of the Ministry of Corporate Affairs (MCA). The following entities are required to file their financial statements in XBRL format:
XBRL filing involves the following steps:
Preparation of XBRL Instance Document: The financial statements and related data need to be converted into the XBRL format. Companies can use XBRL software tools or engage professionals with expertise in XBRL tagging to prepare the XBRL instance document.
Validating the XBRL Instance Document: The prepared XBRL instance document needs to be validated to ensure compliance with the XBRL taxonomy and MCA requirements. Validation checks help identify any errors or inconsistencies in the tagging
Generation of XBRL Zip File: Once the XBRL instance document is validated, it needs to be compressed into a ZIP file format for submission.
Filing on MCA Portal: The XBRL Zip file is then uploaded and submitted through the MCA portal (www.mca.gov.in) using the appropriate e-Form, such as AOC-4 XBRL or CFS XBRL, depending on the nature of the filing
It’s important to note that XBRL filing is specific to the financial statements and reports required by the MCA. Other annual ROC filings, such as the Director’s Report and Annual Return, are typically submitted in PDF or other prescribed formats.
Minutes of Meetings:
Minutes are recorded for board meetings, general meetings (such as Annual General Meeting, Extra Ordinary General Meeting), and committee meetings. These minutes document the decisions taken, resolutions passed, discussions held, and any other significant matters addressed during the meetings.
Resolutions and Agreements:
Copies of resolutions passed by the board of directors or shareholders, such as approving financial statements, issuing shares, entering into contracts, or appointing auditors, are maintained as part of the secretarial records. Important agreements, such as shareholder agreements or partnership agreements, are also documented.
Compliance Records:
Records related to compliance with legal and regulatory requirements, such as filings with authorities, licenses, permits, and any notices or correspondence exchanged with regulatory bodies, are maintained.
Statutory Registers:
Companies are required to maintain various statutory registers, such as the register of members, register of directors and key managerial personnel, register of loans, investments, and contracts, etc under the Provision of Companies Ct, 2013. These registers should be regularly updated. These registers contain important information about the company, its shareholders, directors, and other relevant details. Here are some common statutory registers:
Register of Members: This register contains details of the company’s shareholders, including their names, addresses, shareholdings, and any transfers or changes in ownership. It also records the date of allotment of shares to the members.
Register of Directors and Key Managerial Personnel (KMP): This register records the particulars of the company’s directors, including their names, addresses, qualifications, date of appointment, cessation, and any other relevant details. It also includes the details of KMP, such as the company secretary, CEO, CFO, etc.
Register of Charges: This register maintains the details of charges created by the company on its assets, such as mortgages, debentures, or loans secured by the company’s properties. It includes information about the nature of the charge, the date of creation, the amount secured, and details of the charge holder.
Register of Loans, Investments, and Guarantees: This register records the loans given, investments made, and guarantees provided by the company. It includes details of the parties involved, the purpose of the transaction, the terms and conditions, and other relevant information.
Register of Contracts or Arrangements in Which Directors are Interested:This register maintains the details of contracts, arrangements, or transactions in which the company’s directors have a direct or indirect interest. It includes information about the nature of the transaction, the director’s interest, the terms, and other relevant particulars
Register of Related Party Transactions: This register records the details of transactions entered into by the company with its related parties, such as subsidiaries, associates, directors, or key managerial personnel. It includes information about the nature of the transaction, the parties involved, the terms, and other relevant details.
Register of Debenture Holders: This register maintains the details of the company’s debenture holders, including their names, addresses, debenture holdings, and any transfers or changes in ownership.
Whether Audit is Mandatory of All LLPs
LLP whose turnover does not exceed, in any financial year, 40 lakh rupees or whose contribution does not exceed 25 lakh rupees is not required to get its accounts audited. However, if the partners of such Limited Liability Partnership Firm decide to get the accounts of such LLP audited, the accounts shall be audited in accordance with such rules.
Auditor’s Report: LLPs that exceed certain thresholds in terms of turnover or contribution are required to get their accounts audited by a qualified Chartered Accountant. The audited financial statements, including the auditor’s report, should be attached to Form 8.
Documents Required
Change in Designated Partners/Partners of LLP
Designated Partners/Partners in LLP can be appointed or removed any time after complying the proper provisions of the LLP Act. However, person intending to act as Designated Partner of the LLP must have a DPIN/DIN. Every change in composition of partner or designated partner of the LLP is to be intimated to ROC. Form 4 is required to file for appointment and Resignation of Designated Partners/Partners and in Form LLP-3 for Change in Agreement with the Concerned ROC.
Documents Required
Change in Director as per Companies Act 2013:
we understand that the composition of directors in a company may change over time due to various reasons, including resignations, retirements, or new appointments. As per the Companies Act 2013, it is essential for companies to follow specific procedures and comply with legal requirements when making changes to the directorship.
An overview of the process and requirements for a change in director as per the Companies Act 2013.
Resignation of Director: When a director decides to resign from their position, the following steps are involved:
The director will submit Form DIR – 11 along with the prescribed fees including a copy of his notice of resignation and the detailed reasons for the same to the Registrar of Companies (“RoC”) in less than 30 days from the date of resignation.
Step 1: Eligibility and Qualification of Auditors: Before appointing an auditor, it is essential to ensure that the individual or audit firm meets the eligibility criteria as specified in the Companies Act, 2013. The act mandates that the auditor must be a practicing Chartered Accountant or a firm of Chartered Accountants. Additionally, the auditor must not be disqualified under any provisions of the act.
Step 2: First Auditor Appointment: For a newly incorporated company, the first auditor must be appointed within 30 days from the date of incorporation. The appointment is made by the Board of Directors. The first auditor holds office until the conclusion of the first Annual General Meeting (AGM) of the company.
Step 3: Subsequent Auditor Appointment: After the first auditor, subsequent auditors are appointed at the AGM. The appointment of subsequent auditors is made by the shareholders of the company. The auditors appointed at the AGM hold office until the conclusion of the next AGM.
Step 4: Rotation of Auditors: The Companies Act, 2013 introduced the concept of mandatory auditor rotation to enhance independence and objectivity. Certain companies are required to rotate their auditors after the maximum term specified in the act. The rotation period is generally five consecutive years for individual auditors and ten consecutive years for audit firms.
Step 5: Consent and Eligibility Certificate: Before appointing an auditor, the proposed auditor must provide written consent for the appointment. They should also furnish an eligibility certificate confirming their eligibility and compliance with the criteria specified under the Companies Act, 2013.
Step 6: Intimation to Registrar of Companies (RoC): Once the auditor is appointed, the company must intimate the appointment to the Registrar of Companies (RoC) within 15 days of the appointment. This is typically done by filing the necessary forms and documents, such as Form ADT-1, with the RoC.
Step 7: Compliance and Reporting: The appointed auditor is responsible for conducting audits and preparing audit reports in compliance with the provisions of the Companies Act, 2013. They are required to report on the financial statements of the company and provide their opinion on their accuracy and compliance with accounting standards.
Conclusion: The appointment of an auditor is a critical process that ensures transparency, accountability, and trust in a company’s financial reporting. By following the guidelines laid out in the Companies Act, 2013, companies can effectively appoint qualified auditors and meet the legal requirements. It is advisable for companies to engage with professional advisors to ensure compliance with the act and to navigate any complexities that may arise during the appointment process. A well-appointed auditor strengthens corporate governance, enhances investor confidence, and contributes to the long-term success of the company.
Change in Object:
Object clause mentioned in Memorandum of Association of a company explains–
A company may want to change its main object or the ancillary objects. To get this done a company has to follow these steps:
The compliances for change of registered office of a company within the local limits of the same city, village or town are as follows:
The documents to be attached with Form INC-22 are:
Compliances for Change of Office Outside the City Under the Same ROC:
The compliances for change of registered office of a company outside the local limits of the city or town where it is situated but under the jurisdiction of the same ROC are as follows:
Change in Share Capital:
Closure of Business
Closure of Company
Sometimes a situation arise in the business and it seems more difficult to carry on the business due to its bad financial health, market shrinkage, product quality degradation, inability to compete with the brands and technology etc. In such a situation it is better to wrap up the business instead of trying to survive as survival may result in adding extra cost and unnecessary financial burden on the Company.
The closure of a company under the Companies Act 2013 in India can be done through various methods, depending on the circumstances but the easiest, fastest and cost effective method to close a Company is to opt for Fast track exit scheme and striking off a Company.
A company can apply for strike off under Section 248 of the Companies Act 2013 if it meets the prescribed criteria. The criteria include:
If the Registrar of Companies (RoC) is satisfied with the application, the company’s name is struck off from the register and it ceases to exist.
Documents required for Striking Off:
Closure of LLP
Sometimes a situation arise in business that it may not seems easy to carry on the business or Limited Liability Partnership (LLP), which has not started business activity since its incorporation or which has terminated/stopped carrying on its business for a period of one year or more, can apply to the Registrar for its closure and also for removal of its name from the Register of the LLPs.
Under the Limited Liability Partnership (LLP) Act 2008 in India, an LLP can be closed through the process of winding-up. There are two methods of winding-up an LLP:
Voluntary Winding-Up: This method is initiated by the partners of the LLP when they decide to close the LLP voluntarily.
Compulsory Winding-Up: This method is initiated by the National Company Law Tribunal (NCLT) under certain circumstances. The NCLT may order the winding-up of an LLP if:
The LLP has acted against the interests of sovereignty and integrity of India.
The LLP has not commenced its business within one year of incorporation.
The LLP has not carried on any business for two consecutive years.
The number of partners of the LLP has fallen below the statutory minimum.
The affairs of the LLP are being conducted in a fraudulent manner.
In compulsory winding-up, the NCLT appoints an Official Liquidator to wind up the affairs of the LLP, realize its assets, settle its liabilities, and distribute any remaining assets among the partners.
During the winding-up process, the LLP must comply with various legal requirements, including filing necessary documents, settling liabilities, and notifying the Registrar of LLPs about the closure.
