Secretarial compliances are applicable to every company incorporated in India, irrespective of their size. Often smaller companies, lacking the professional skills to deal with these compliances, are bogged down by these processes and find themselves at risk. This article outlines the Minimum Mandatory Compliances as well as the Event Based Compliances applicable to a Private Limited Company.

MINIMUM MANDATORY COMPLIANCES

These need to be complied with, by all companies notwithstanding their active or defunct status. Following are the minimum mandatory compliances along with a brief description of each compliance (the list is informative and not exclusive):

Director Identification Number (DIN):

No person can be appointed as a Director without getting a DIN. The compliance can be quite an irritant for foreign residents, as all the documents need to be notarised. If the documents are not in English then translated version along with the original documents need to be notarised.

Digital Signature Certificate (DSC):

The digital signature certificate is required for e‐filing of documents/forms of secretarial compliances and as such at least one Director need to have a DSC.

Board Meetings:

At least four board meetings need to be held in a year and at least one meeting needs to be held every quarter. Physical presence of the directors is needed for the meeting. Net meeting or video/tele conference is not recognised by law. Quorum is 1/3rd or 2 Directors whichever is greater. The meetings need to be logged and the signed minutes need to be maintained at the Registered Office.

Annual General Meeting (AGM)

This is a shareholders meeting that needs to be held every year. Approval of financial statements, declaration of dividends, appointment of auditors, etc. is the primary agenda for this meeting. AGM needs to be held in the city where the registered office of the company is situated.

Annual Filing of Forms:

There are a number of annual forms that need to be filed besides the annual financials. The information is quite detailed and talks about shareholdings, directors, financials, etc. All these forms are required to be certified by a practicing Chartered Accountant or practicing Company Secretary. Companies having paid up share capital in the range of INR 1 million to 50 million are required to file a Compliance Certificate from a practicing company secretary.

Yearly forms by directors:

The directors are required to inform the company about their directorship in other companies every year.

Maintenance of statutory register & minutes book:

A number of registers are required to be maintained, such as‐ Register of Member, Register of Directors, Register of Contracts, Register of Charges, etc. The registers are required to be kept at the registered office of the company.

EVENT BASED COMPLIANCES

These are triggered based on happening of certain events. Examples are:

• Receipt of share application money
• Allotment of shares
• Transfer of shares
• Appointment/Resignation of directors
• Appointment of Managing Director/ Whole Time Director
• Executing agreement with related parties
• Change in the Bank signatories
• Change in the statutory auditors

There is paperwork that needs to be done for the above and there are various deadlines for these tasks. In case, of noncompliance or even a missed deadline there can be penalties, additional fees or a compounding of offence, etc. Hence, it is necessary that the happening of such events be tracked and compliances met with on time.

Cost of Non‐compliance:

The Companies Act, 1956 provides for penalty/fine or imprisonment either of the officer in default and/or the company. The Managing Director, Executive Director are the “officer in default”. If there is no executive director, all the directors are treated as “officer in default”. For the procedural lapses such as late filing of forms, additional filing fees are required to be paid.

In case of FEMA, the penalty for noncompliance can go up to thrice the amount involved.