A private limited company is a popular business structure in which the company is owned by shareholders and run by directors. Compliance refers to the company’s adherence to the laws and regulations governing its operations. Private limited companies in India are required to comply with various annual compliance requirements with the Registrar of Companies (ROC) under the Companies Act, 2013. Here are the mandatory ROC annual compliance requirements for a private limited company:

Here are some advantages, disadvantages, and procedures related to compliance for a private limited company:

  • Limited liability: Shareholders are only liable for the amount of their investment, and their personal assets are protected from the company’s debts and losses.
  • Separate legal entity: A private limited company is a separate legal entity from its owners, which means it can enter into contracts, own property, and sue or be sued in its own name.
  • Credibility: A private limited company has a more professional image than a sole proprietorship or partnership, which can make it easier to attract investors or customers.
  • Compliance requirements: A private limited company is subject to more legal and regulatory requirements than other types of businesses, which can be time-consuming and expensive to comply with.
  • Limited control: Shareholders have limited control over the company’s operations, as the directors are responsible for managing the day-to-day affairs of the company.
  • Costly to set up: Setting up a private limited company can be more expensive than other business structures due to the need for legal documentation and registration fees.
Mandatory Annual Compliance –

Annual General Meeting (AGM): Every private limited company is required to hold an AGM within six months from the end of its financial year. The AGM must be conducted to approve the financial statements, declare dividends, and appoint or re-appoint directors.

Financial Statements: A private limited company must prepare and file its financial statements with the ROC. The financial statements include the balance sheet, profit and loss account, and cash flow statement. The financial statements must be audited by a qualified auditor.

Annual Return: Every private limited company is required to file an annual return with the ROC within 60 days from the date of the AGM. The annual return contains details such as the company’s registered office address, details of directors and shareholders, share capital, and indebtedness.

Board Meetings: A private limited company must hold at least four board meetings in a financial year, with a maximum gap of 120 days between two consecutive board meetings. The board meetings must be conducted to review the company’s operations, approve financial statements, and make important business decisions.

Directorship: The directors of the company must comply with the provisions of the Companies Act, 2013, including their appointment, resignation, and other legal requirements.

Income Tax Returns: Every private limited company is required to file its income tax returns on or before the due date as per the Income Tax Act, 1961.

Compliance Procedure:
  1. Company Registration: The first step in compliance is to register the private limited company with the Registrar of Companies (ROC). This involves submitting the company’s articles of association, memorandum of association, and other relevant documents.
  2. Obtaining Permits and Licenses: The company must obtain all necessary permits and licenses required for its operations. This may include trade licenses, tax registrations, and environmental permits.
  3. Statutory Audit: A private limited company must conduct an annual statutory audit of its accounts by a qualified auditor.
  4. Annual Returns: The company must file an annual return with the ROC, which includes information such as the company’s financial statements, shareholding structure, and directors’ details.
  5. Compliance with Tax Laws: The company must comply with all tax laws and regulations, including filing tax returns and paying taxes on time.
  6. Board Meetings: The directors of the company must hold regular board meetings and keep minutes of the meetings.
  7. Shareholder Meetings: The company must hold annual general meetings of shareholders to discuss important matters such as the company’s financial statements and dividend distribution.

In summary, compliance is a crucial aspect of running a private limited company. While there are advantages to this business structure, it is important to be aware of the compliance requirements and procedures involved. Failing to comply with legal and regulatory requirements can result in penalties and fines, which can be costly for the company and its owners.