Overview
A company is a legal entity formed under the Companies Act, 2013 (in India) to conduct business activities. It has a separate legal identity, meaning it can own property, incur debts, and enter into contracts independent of its shareholders or directors.
Types of Companies
- Private Limited Company (Pvt Ltd): Owned by private individuals; limited to 200 shareholders.
- Public Limited Company: Can offer shares to the public; no upper limit on shareholders.
- One Person Company (OPC): A single-owner company.
- Section 8 Company: Non-profit organizations with charitable objectives.
- Limited Liability Partnership (LLP): Combines the benefits of a partnership and a corporate structure.
Registration of Companies
Company registration involves legally establishing the company with the Registrar of Companies (ROC) under the Ministry of Corporate Affairs (MCA).
Steps for Registration:
- Choose the Business Type: Decide on the company structure (e.g., Pvt Ltd, LLP).
- Obtain Digital Signature Certificate (DSC): Required for directors.
- Apply for Director Identification Number (DIN): Unique ID for directors.
- Reserve Name: Choose a unique name and apply using the SPICe+ form.
- Draft Incorporation Documents: Prepare the Memorandum of Association (MOA) and Articles of Association (AOA).
- File Registration Forms: File SPICe+ (Simplified Proforma for Incorporating a Company) form.
- PAN and TAN Application: Obtain these documents as part of registration.
Certificate of Incorporation: Once approved, the company receives its incorporation certificate, which includes its Corporate Identification Number (CIN).
Compliances for Companies
After incorporation, companies must adhere to statutory compliances to avoid legal issues.
Key Compliances:
- Annual General Meeting (AGM):
- Mandatory for public companies.
- Must be held within six months of the end of the financial year.
- Financial Statements and Audit:
- Filing audited financial statements annually.
- Appointment of an auditor.
- Annual Returns (MGT-7):
- Filing details of the company’s structure, shareholders, and directors.
- Board Meetings:
- Private companies: At least 2 meetings annually.
- Public companies: At least 4 meetings annually.
- Income Tax Returns:
- Filing annual tax returns by due dates.
- Maintenance of Statutory Registers:
- Registers for members, directors, loans, charges, etc.
- TDS and GST Compliance:
- Monthly/quarterly filings for TDS and GST returns.
- Employee-Related Compliances:
- Provident Fund (PF), Employee State Insurance (ESI), and Professional Tax, if applicable.
ROC Filings
The Registrar of Companies (ROC) oversees company compliance with the Companies Act. Companies are required to file various forms and returns with the ROC.
Key ROC Filings:
- Form AOC-4: Filing of audited financial statements.
- Form MGT-7: Filing of annual returns.
- Form DIR-3 KYC: Director KYC compliance.
- Form INC-22A (ACTIVE): Address validation for companies.
- Event-Based Filings:
- Changes in directors (DIR-12).
- Allotment of shares (PAS-3).
Change in registered office (INC-22).
Penalties for Non-Compliance
Failure to adhere to the compliances attracts penalties under the Companies Act, 2013.
Common Penalties:
- Non-Filing of Annual Returns (MGT-7):
- ₹100/day of delay per form.
- Non-Filing of Financial Statements (AOC-4):
- ₹100/day of delay.
- Company: ₹1 lakh + ₹100/day (max ₹5 lakhs).
- Directors: ₹50,000 + ₹100/day (max ₹5 lakhs).
- Failure to Conduct AGM:
- Fine of ₹1 lakh + ₹5,000/day of default.
- Non-Maintenance of Registers:
- Fine of ₹50,000–₹3 lakhs.
- Non-Compliance with Director KYC (DIR-3):
- Director’s DIN is deactivated, and a late fee of ₹5,000 is charged.
- General Non-Compliance:
- The Companies Act allows fines or even imprisonment of officers in default, depending on the violation.
Conclusion
Proper company registration, adherence to statutory compliances, timely ROC filings, and maintaining records are essential to avoid penalties and ensure smooth business operations. Regular monitoring of compliance deadlines and consulting professionals can help companies stay compliant.