By Dr. Aanchal Dua

You have just launched your business and completed the incorporation process for your private limited company in India. While the initial excitement is understandable, it is important to recognize that this is merely the beginning of your journey. Much like setting a sail, ensuring your company remains on course involves several essential steps. Beyond registration, there are critical post-incorporation compliance requirements that must be met to maintain your company’s good standing with regulatory authorities. These requirements, set by the Companies Act, 2013 and other applicable laws, ensure that your business remains in good standing with regulatory authorities. Failing to comply can lead to penalties, legal challenges, and even the closure of your company. Here’s a handy guide to help you navigate through the essential post-incorporation compliance steps.

Issuing Share Certificates: Once your company is incorporated, the very first task is to issue share certificates to the shareholders. According to Section 56 of the Companies Act, 2013, these certificates serve as proof of ownership and must be issued within 60 days of incorporation. Make sure they are properly stamped and signed by the directors and reflect the company’s share capital as stated in the Memorandum of Association (MoA).

Conducting the First Board Meeting: Your company’s first board meeting needs to happen within 30 days of incorporation, as per Section 173 of the Companies Act, 2013. This meeting is crucial for setting the groundwork for the company’s operations. Key items on the agenda include appointing the first statutory auditor, disclosing interests by directors, and setting up statutory registers like the Register of Members and Register of Directors.

Appointing the First Auditor: A private limited company must appoint its first auditor within 30 days of incorporation, as mandated by Section 139 of the Companies Act, 2013. This auditor will serve until the conclusion of the first Annual General Meeting (AGM), so it’s a critical step for ensuring your financial activities are properly reviewed and reported.

Filing Declaration for Commencement of Business: If your company was incorporated after November 2019, you need to file a declaration for the commencement of business using Form INC-20A, in line with Section 10A of the Companies Act, 2013. This declaration confirms that the subscribers to the MoA have paid the value of the shares they agreed to take. Not filing this form can result in penalties or even the company being struck off the register.

Opening a Bank Account: With incorporation completed, it’s time to open a current bank account in the company’s name. This account will be used to deposit the initial share capital and handle business transactions. You’ll need a valid Certificate of Incorporation (COI) and PAN card to get this done.

Maintaining Statutory Registers and Records: Section 88 of the Companies Act, 2013 requires maintaining several statutory registers at your company’s registered office. These include details of shareholders, directors, and Key Managerial Personnel (KMP), as well as records of any charges on the company’s assets and loans or investments made. Keeping these records up-to-date is essential for transparency and compliance.

Holding Regular Board Meetings: As per Section 173 of the Companies Act, 2013, your company must hold at least four board meetings each financial year, with a gap of no more than 120 days between meetings. Documenting the minutes of these meetings is crucial for maintaining official records and ensuring proper governance.

Filing Financial Statements and Annual Return: Every year, you need to file your financial statements and annual return with the Ministry of Corporate Affairs (MCA). Section 137 and Section 92 of the Companies Act, 2013 outline the deadlines for filing the balance sheet, profit and loss account, and details about shareholders and directors. Ensure these are filed within 30 and 60 days of the AGM, respectively.

Holding Annual General Meeting (AGM): Section 96 of the Companies Act, 2013 requires you to hold an AGM each year. The AGM must be held within six months from the end of the financial year, but not later than 15 months from the date of the previous AGM. During the AGM, you’ll present the financial statements, declare dividends (if applicable), and appoint or reappoint directors.

Managing Tax-Related Compliance: Your company’s tax obligations include filing income tax returns by September 30th of the assessment year and managing Tax Deducted at Source (TDS) on payments such as salaries and rent. For companies with a turnover exceeding certain limits or engaging in interstate transactions, GST registration and regular returns are also required. Compliance with Section 192, Section 194 of the Income Tax Act, and Section 22 of the GST Act is crucial.

Event-Based Compliance: Apart from regular filings, be aware of event-based compliance requirements. These include changes in directors (Section 170), allotment of shares (Section 39), changes in the registered office (Section 12), and creation or modification of charges (Section 77).

Complying with Labour Laws (If Applicable): If your company employs staff, you need to comply with various labour laws, including Provident Fund (PF), Employee State Insurance (ESI), Professional Tax, and Gratuity. These regulations ensure that employees receive their entitled benefits and protections.

Maintaining Books of Accounts: Under Section 128 of the Companies Act, 2013, maintaining accurate books of accounts is mandatory. These records should reflect all financial transactions and be kept at the registered office for inspection by directors and auditors.

Secretarial Compliance (If Applicable): For companies with higher paid-up capital or turnover, compliance with secretarial standards issued by the Institute of Company Secretaries of India (ICSI) is necessary. These standards cover the conduct of board meetings, general meetings, and maintenance of minute books.

Conclusion 

Compliance isn’t just about avoiding penalties or legal trouble; it’s also about building trust with stakeholders, enhancing your company’s reputation, and positioning your business for sustainable growth. These tasks can seem overwhelming, especially for new business owners who are already juggling multiple responsibilities. However, with the right guidance and resources, navigating these requirements can become much more manageable.

Not sure where to begin? 

If you’re feeling uncertain about where to start with your post-incorporation compliance, you’re not alone. Many business owners face this challenge. Begin by identifying the specific compliance obligations for your business type and industry, then create a structured plan to address each one. 

The self-paced course on “Incorporation, Registration, and Conversion” at EBC Learning could be your perfect guide. This course walks you through the entire incorporation process for various types of companies and equips you with the know-how to handle all the A-Z activities and compliances involved. With these insights, you’ll have everything you need to ensure your company’s success and stability from day one. Why wait? Let’s start learning today!