We have listed down various Necessary Compliances for Company (Private Limited) in the Companies Act 2013.
The MCA recently launched the LLP Settlement Scheme, in 2020 to provide relief to LLPs during the COVID-19 outbreak. This scheme includes a one-time waiver of penalties for non-compliance with certain requirements and an extension of filing deadlines to allow LLPs to make a fresh start. Additionally, proposed changes in the Companies (Amendment) Bill, 2020, include the removal of CSR committee requirements for companies with a CSR spending obligation of up to ₹ 50 lakhs, and the ability for companies to carry forward excess CSR spending from one year to the next.
Running a business in India can be a complex process for many new companies. Compliance requirements for small businesses can be extensive and tedious. In this article, we’ll explore the key compliances for company requirements under the Companies Act, of 2013.
Compliance Requirements under the Companies Act
Companies incorporated in India are primarily regulated by the Companies Act, of 2013. The Act specifies various provisions regarding qualifications and appointments of directors, the retirement of directors, remuneration and removal of directors, conducting board and shareholders meetings, passing of resolutions, related party transactions, maintenance of books of accounts, and preparation and presentation of annual accounts.
Once the incorporation formalities are complete and a certificate is issued, the company is recognized as a legal entity separate from its members. Both private and public companies must adhere to certain post-incorporation requirements. Most of these responsibilities are typically taken care of in the first board meeting following the incorporation. It is important to stay informed and keep up with the regular and periodic work that needs to be done to ensure compliance with the Companies Act.
For starters, as soon as the incorporation is completed, within 30 days one of the directors of the company must schedule and hold the first board meeting, giving at least seven days’ notice. The company must also display its name board outside the registered office address, with its name, registered office address, Company Identification Number, email ID, phone number (which is now mandatory), website address, and fax number if applicable. These details must also be printed on all business letters, billheads, and other official documents and publications of the company.
It is also important to obtain a PAN and TAN for the company shortly after incorporation as these are required to open a bank account. The company must also hold regular board meetings throughout the calendar year and ensure that minutes of the meetings are prepared and kept in a permanent file or folder until the company is dissolved.
These minutes must be prepared within 30 days of the meeting. The company must also issue share certificates to all shareholders, and all details regarding this must be recorded in the allotment register. The company is also required to file and maintain its balance sheet, profit and loss account, auditor’s report, and annual return every financial year before the due date with the Registrar of Companies.
In addition to the above compliance requirements, there may be instances where the company is required to inform the Registrar of Companies of certain changes or appointments, such as changes in directors or their removal.
The Companies Act, 2013 also includes provisions for Corporate Social Responsibility (CSR) activities, which companies must undertake in the financial year if they meet certain criteria.
It is important to note that compliance with rules and regulations is an ongoing responsibility for a company and not a one-time task.
Requirements under the Labor and Employment Legislation
Businesses running production lines and/or factories must also comply with other statutes such as the Employees’ State Insurance Act, 1948; the Maternity Benefits Act, 1961; the Industrial Disputes Act, 1948; The Contract Labor (Regulation and Abolition) Act, 1970; the Trade Union Act, 1926; the Equal Remuneration Act, 1976; the Payment of Gratuity Act, 1972; the Workmen’s Compensation Act, 1923’ the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, etc.
These laws govern issues such as working time and conditions of employment for workers, minimum wages and remuneration, rights and obligations of trade unions, employee insurance, maternity benefits, employment retrenchment, payment of gratuity/provident fund, payment of bonuses, and regulations of employment contracts.
It is the company’s responsibility to ensure compliance with these various statutes and to develop and implement policies accordingly.
Requirements under Environmental Law
Environmental and pollution control matters are governed by various statutes such as the Environment (Protection) Act, 1986; the Water (Prevention and Control of Pollution) Act, 1974; the Air (Prevention and Control of Pollution) Act, 1981; Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008; the Manufacture, Storage and Import of Hazardous Chemicals Rules, 1989; the Indian Forest Act, 1927; the Forest (Conservation) Act, 1980; the National Environment Tribunal Act, 1995; the Public Liability Insurance Act, 1991, etc.
Tax and stamp duty
Taxation and stamp duty are important considerations for businesses operating in India. The country’s federal tax structure is managed by the central government, state government, and local regulatory officials. The taxes imposed on businesses can be broadly categorized into three types: Direct Tax, Indirect Tax, and Levies on Transactions.
Direct Tax includes taxes such as income tax, wealth tax, dividend distribution tax, minimum alternate tax (MAT), and share buy-back tax. Indirect Tax includes taxes such as VAT/CST, Service Tax, Excise Duty, Customs Duty, Entry Tax, and R&D Cess. Levies on Transactions include taxes such as stamp duty, securities transaction tax, and commodity transaction tax.
It is the responsibility of companies registered in India to pay their taxes and stamp duty for business transactions that take place during the financial year. Failure to do so can result in penalties and the impounding of business-related documents.
In India, businesses are subject to a variety of compliance requirements under various laws and regulations, including the Companies Act 2013, the Employees’ State Insurance Act, 1948, the Environment (Protection) Act, 1986, and various tax laws. It is important for companies to understand and adhere to these requirements in order to avoid penalties and legal issues. Additionally, businesses should stay up-to-date on any changes or updates to these laws in order to ensure continued compliance. To ensure compliance, businesses may seek assistance from legal professionals or accounting services of the Start-Up Kro Team.