Compliance Checklist for a New Private Limited Company
In short
In its first year a new private limited company must hold its first board meeting and appoint its first auditor within 30 days of incorporation, issue share certificates within 60 days, file the declaration for commencement of business (INC-20A) within 180 days, hold board meetings through the year, and hold its first annual general meeting within nine months of the end of its first financial year, followed by Forms AOC-4 and MGT-7 or MGT-7A and the income tax return.
Incorporation is the start, not the end. The Companies Act, 2013 attaches deadlines to a new company from the day its Certificate of Incorporation is issued, and missing some of them leads to penalties for the company and its directors. This checklist follows the order in which the obligations arise.
Within 30 days of incorporation
- First board meeting. The board must meet within 30 days of incorporation. At this meeting directors usually note the Certificate of Incorporation, adopt the common seal if any, authorise the bank account and appoint the first auditor.
- Appoint the first auditor. The board appoints the first statutory auditor within 30 days. If it does not, the members must appoint one at an extraordinary general meeting within 90 days. The first auditor holds office until the end of the first annual general meeting.
- Directors' disclosures. Each director discloses their interest in other entities in Form MBP-1 and confirms that they are not disqualified in Form DIR-8.
Within 60 days: share certificates
The company must issue share certificates to its subscribers within 60 days of incorporation and pay the stamp duty that applies in its state. Private companies other than small companies must also issue and hold their securities in dematerialised form under the MCA's demat rules, so check whether this applies to your company before issuing certificates.
Within 180 days: commencement of business (INC-20A)
Before it starts business or borrows, a company with share capital must file Form INC-20A, declaring that every subscriber has paid for the shares they agreed to take. The subscription money has to reach the company's bank account first, and the bank statement is attached to the form.
The deadline is 180 days from incorporation. Missing it attracts a penalty of ₹50,000 on the company and ₹1,000 a day on each officer in default, up to ₹1 lakh, and the Registrar can start proceedings to strike the company off.
Throughout the year
- Board meetings. A company must hold at least four board meetings a year, with no more than 120 days between two meetings. A small company or OPC needs only one meeting in each half of the calendar year, at least 90 days apart.
- Statutory registers. Keep the register of members, register of directors and key managerial personnel, register of charges and minutes books up to date at the registered office.
- Books of account. Maintain books of account on an accrual basis, with backups in India if kept electronically.
- Tax registrations and deductions. Deduct TDS where required and file quarterly TDS returns. Register for GST when your turnover or business model requires it.
- MSME payments. If the company owes money to micro or small enterprises for more than 45 days, it files Form MSME-1 every half year.
- Deposits return. Companies with outstanding loans or receipts that are not deposits file Form DPT-3 every year by 30 June.
At year end: the first annual general meeting
A company's first financial year ends on 31 March. If it was incorporated on or after 1 January, the first financial year can run to 31 March of the following year.
- Audit. The accounts are audited by the statutory auditor.
- First AGM. It must be held within nine months of the end of the first financial year. Later AGMs are due within six months of the year end, and by 30 September at the latest.
- Auditor for five years. The members appoint an auditor at the first AGM for a term of five years, and the company files Form ADT-1 within 15 days of the meeting.
- Form AOC-4. The financial statements are filed within 30 days of the AGM.
- Form MGT-7 or MGT-7A. The annual return is filed within 60 days of the AGM. Small companies and OPCs use the simpler MGT-7A.
- Director KYC. Each director with a DIN completes DIR-3 KYC on the schedule the MCA prescribes.
- Income tax return. Every company files an income tax return, whether or not it has income, and a tax audit applies above the prescribed turnover.
Frequently asked questions
What happens if a company does not file INC-20A?
The company faces a penalty of ₹50,000 and each officer in default ₹1,000 a day up to ₹1 lakh. The company cannot lawfully start business or borrow, and the Registrar may strike its name off the register if it believes the company is not carrying on business.
How many board meetings must a new private limited company hold?
At least four a year, with no more than 120 days between two meetings. A small company needs only one in each half of the calendar year, with at least 90 days between them. The first board meeting is due within 30 days of incorporation.
When is the first AGM of a new company due?
Within nine months of the end of its first financial year. After that, each AGM must be held within six months of the end of the financial year.
Does a company with no business still have to file annual returns?
Yes. Annual ROC filings and the income tax return are required even if the company had no transactions. A company that does not intend to do business can apply for dormant status or to be struck off instead of filing indefinitely.