The Companies Act, 2013, governs the functioning and operations of companies in India. Private companies, being significant contributors to the economy, must comply with various legal and statutory requirements to maintain transparency, accountability, and good corporate governance. This guide provides an overview of essential compliance obligations for private companies under the Companies Act, 2013, enabling them to operate within the legal framework and build trust among stakeholders.
Below are the key compliance requirements that private companies must fulfill under the Companies Act, 2013:
1. Director Identification Number (DIN): Every director must obtain a DIN from the Ministry of Corporate Affairs (MCA) before being appointed as a director of the company.
2. Digital Signature Certificate (DSC): Directors and key personnel must possess a valid DSC for filing electronic documents with the Registrar of Companies (ROC).
The Memorandum of Association (MOA) and Articles of Association (AOA) are vital documents that define the company's objectives, rules, and regulations. Private companies must ensure these documents are well-drafted and compliant with the law.
Private companies are required to maintain various statutory registers and records, including:
1. Register of Members: It contains details of shareholders, their shareholdings, and changes in share ownership.
2. Register of Directors and Key Managerial Personnel: It records the particulars of directors and key personnel, including their appointments and resignations.
3. Minutes Book: It includes the minutes of board meetings and general meetings, documenting the proceedings and decisions taken.
4. Register of Charges: It contains information on the company's charges and mortgages on its assets.
1. Annual Return (Form MGT-7): Private companies must file their annual return within 60 days from the date of the Annual General Meeting (AGM).
2. Financial Statements (Form AOC-4): Companies are required to file their financial statements along with the Directors' Report and Auditor's Report within 30 days from the date of the AGM.
1. Minimum Number of Meetings: Private companies must hold at least four board meetings in a calendar year, with a maximum gap of 120 days between two consecutive meetings.
2. Quorum: The quorum for board meetings must be either two directors or one-third of the total strength of the board, whichever is higher.
3. Board Resolutions: Key decisions taken by the board must be recorded as board resolutions and maintained as part of the company's records.
1. Appointment of Auditors: Private companies must appoint an auditor within 30 days from the date of incorporation. Subsequent auditors are appointed at AGMs.
2. Auditor Rotation: Companies are required to rotate their auditors every five consecutive years.
Private companies must ensure compliance with share transfer and issuance procedures as specified under the Companies Act, 2013.
Any transactions between the company and its related parties must be disclosed and approved as per the provisions of the Companies Act, 2013.
Private companies must comply with all procedural requirements related to the convening and conducting of board meetings and general meetings.
Private companies must hold an AGM every year within six months from the end of the financial year.
If a private company declares dividends, it must comply with the provisions of the Companies Act, 2013, and ensure timely dividend payments and shareholder approvals.
Private companies must prepare and disclose the Director's Report, including financial disclosures and other necessary information.
Private companies must file various forms and documents with the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA) as per the prescribed timelines.
Private companies meeting certain financial criteria must comply with CSR provisions as outlined in the Companies Act, 2013.
Compliance with the Companies Act, 2013, is essential for private companies to operate legally and responsibly. By understanding and fulfilling the necessary statutory obligations, maintaining proper records, and adhering to best practices, private companies can build credibility and trust among stakeholders. Engaging professional advice and staying updated with regulatory changes can further ensure smooth and compliant operations for private companies.