POST-INCORPORATION STATUTORY COMPLIANCES. Upon incorporation, a company is required to file with the ROC on an annual basis the following:

Transcription

1 POST-INCORPORATION STATUTORY COMPLIANCES COMPLIANCES UNDER THE COMPANIES ACT, 1956 Upon incorporation, a company is required to file with the ROC on an annual basis the following: Balance Sheet of the Company, and Annual Return Apart from the aforesaid, there are periodic documents/forms required to be filed with the ROC, if such need accrues, which are more particularly discussed ahead. 1. FIRST BOARD MEETING Business to be necessarily transacted within a month of incorporation in the First Board Meeting of the company: Appointment of First Auditors: Within one month of incorporation of a Company, the Board appoints first auditors of the Company. In case the first auditors are not so appointed within one month of the company incorporation, then they can only be appointed by the shareholders in a general meeting. It means the first Board meeting should be held within one month from the date of its incorporation. Commencement of Financial Year: The first Board must also decide the Financial Year of the company. Usually, the first financial year strikes on from the date of incorporation of the company, until the approaching 31 March. Thereafter each subsequent financial year would commence from 1 April and until 31 March.

2 Description of Directors: The first Board Meeting must also record the particulars and description of the directors and also the notices of interest from the Directors. Minimum 4 Board Meetings: The Companies Act, 1956 mandates at the minimum four Board Meetings of the company to be held during a single financial year or one in every quarter of the Financial Year. Quorum: The quorum of the meeting constitutes of at the minimum 1/3 rd of the entire strength of the Board, or 2 directors whichever is higher. 2. ANNUAL GENERAL MEETING TO BE HELD IN EACH YEAR Business to be transacted in the Annual General Meeting (AGM):- Adopt Annual Accounts - Annual General Meeting is required to be held each year wherein the members of the Company adopt the Annual Accounts and auditors are re-appointed. The meeting is alternatively also called the shareholders meeting. Place First annual accounts before shareholders: The balance sheet, the profit & loss accounts, auditor s report and the director s report are required to be placed before the shareholders for their adoption as required by section 210 of the Companies Act, Within thirty days of their adoption, three copies of the balance sheet, profit and loss account, auditor's report duly signed by any two Directors of the company are required to be filed with the concerned registrar. AGM to be held within months: The first annual general meeting can be held within eighteen months of incorporation. Generally second and subsequent AGMs are held within 6 months from the last day of the financial year. The gap between the two AGM shall not exceed the

3 period of 15months if the period is extended then it is mandatory to take permission with the Registrar, if the registrar satisfy that due to any special reason the company is unable to conduct its AGM in the given time then it can be extended not exceeding the period of 3 months. (The gap between the last day of the financial year and date of holding the first annual general meeting should not, however, exceed nine months.) 3. FILING ANNUAL RETURN It is required to be filed with the Registrar every year a return in the form given in part II of schedule V to the Act along with all the information as required to be furnished in accordance with part I of the said schedule. This return is called the 'annual return', which is required to be prepared and file with the Registrar under section 159 of the Act. It is made as on the day of the annual general meeting. If the annual general meeting is not held, then it is to be made as on the day when the annual general meeting ought to have been held. It is to be filed within sixty days of the annual general meeting or on the day on which it ought to have been held, as the case may be. 4. STATUTORY BOOKS AND REGISTER WHICH A COMPANY MUST MAINTAIN A Company should maintain statutory books and registers listed below. Non-maintenance of these registers attracts penal provisions under the relevant sections of the Act. Most of these registers are also required to be made available for inspection to any member / debenture holder and, in some cases, to other persons as well, during business hours. Subject to such other restrictions as the company may impose by its articles or in

4 general meeting, not less than two hours in each working day must be allowed for inspection: LIST OF REGISTERS, BOOKS, ETC., REQUIRED TO BE MAINTAINED: Particulars of register, books etc. Section / Rule of the Companies Act, 1956 Register of investments in shares and securities 49 (7) not held on its own name Register of fixed deposits 58 A Copy of every instruments creating any charge 136 requiring registration Register of charges 143 (1) Register of members 150 (1) Index of members (if a company has more than 151 (1) 50 members) Register of debenture holders 152 (1) Index of debenture holders (if a company has 152 (2) more than 50 debenture holders) Copies of all annual returns prepared under 159 / (1) section Minutes of board of directors and committees 193 (1) thereof Minutes of proceedings of general meetings 193 (1) Books of account and other cost records 209 (1) (a), (b) & (c) Proper books of account relating to transactions 209 (2) effected at branch office

5 All the aforesaid documents need to be maintained/ kept at the Registered Office of the Company. TAX RELATED COMPLIANCES A. DIRECT TAX 1. ACCOUNTING AND AUDIT a. Accounting of the Transactions: Accounting of the transactions of the Company held during a financial year by preparing the balance sheet and profit and loss account of the company; b. Audit of Accounts: The accounts prepared by the Company are required to be audited by an independent Chartered accountant or a firm of Chartered Accountants, before the same are filed with the office of the ROC. 2. TAX RETURN AND TAX AUDIT a. Income Tax Return: Preparation of Annual Income Tax return and electronic filing thereof; b. Tax Audit: In case the turnover of the Company exceeds Rs.60 Lacs or gross receipts for services exceeds Rs.15 Lacs, the Accounts are required to be audited; 3. PERMANENT ACCOUNT NUMBER (PAN) After incorporation, the Company must obtain its PAN. For this purpose, an application needs to be filed with the Income Tax Department in Form

6 49A with the necessary documents. PAN is mandatory for opening of Bank Account, filling of Income Tax returns and various other financial transactions including making and receiving the payments.. 4. TAX DEDUCTION ACCOUNT NUMBER (TAN) TCS/TDS deposit has to be made on a monthly basis After incorporation, the Company must also obtain a TAN. For this purpose, an application needs to be filed with the Income Tax Department in Form 49B with necessary documents. TAN is required for depositing of TDS/TCS. B. INDIRECT TAXATION 1. VALUE ADDED TAX VAT registration is required for a trading business. This is to be applied to the local Sales Tax Department in the prescribed forms along with specified fees and necessary documents. On completion of the formalities, a Tax Identification Number (TIN) is granted. Further, the VAT return has to be filed on a monthly basis 2. PROFESSIONAL TAX It is a tax on profession (including employment). Professional tax is applicable in some states in India and the rate of tax also varies from State to State.

7 3. SERVICE TAX Service tax is applicable on an entity which is engaged in providing prescribed services. There are more than 100 services on which service tax is currently applicable. The rate of service tax presently is 12.36%. The payment of the Service Tax and Central Excise duty has to be made on monthly basis. LABOR LAWS 1. THE SHOPS & ESTABLISHMENT ACT The Shops and Establishment Act is a State legislation and, thus, each state has its own rules for the Act. The objective of this Act is to lay down statutory obligation and rights of employers as well as the employees. Registration of shop / establishment is mandatory within 30 days of commencement of work. 2. EMPLOYEES PROVIDENT FUND ORGANIZATION Provident fund registration is compulsory if the size of your workforce is 20 or more. The employer is required to provide necessary information to the concerned regional Provident Fund Organization (EPFO) in the prescribed form for allotment of ESTABLISHMENT CODE NUMBER. PF return & Payment has to be filed on a monthly basis 3. EMPLOYEES STATE INSURANCE CORPORATION (ESIC) Employees State Insurance Scheme of India is an integrated social security scheme tailored to provide social protection to workers in the

8 organized sector and their dependents in contingencies such as sickness, maternity or death and disablement due to an employment related injury or occupational disease. The ESI Act, (1948) applies to the following categories of factories and establishments in the implemented areas:- (i) Non-seasonal factories using power and employing ten (10) or more persons. (ii) Non-seasonal and non-power using factories and establishments employing twenty (20) or more persons. The employer is required to provide necessary information to the concerned regional ESI department in the prescribed form for allotment of Establishment Code Number. The ESI payment is to be paid on a monthly basis C. MISCELLANEOUS 1. Importer Exporter Code (IEC) IEC Code is mandatory for doing the business of import or export. Regular post incorporation compliances: Maintaining books of accounts on day to day basis, Filing quarterly return for withholding tax. Filing of quarterly Fringe Benefit Tax return, Maintaining payroll on monthly basis, Preparation of Balance Sheet annually and audit thereof Filing of return with Income Tax Department,

9 Filing of annual return with Registrar of Companies, Maintaining statutory register and writing of minutes book, Tax audit has to be done when turn-over will exceed INR 4 million, Annual audit for transfer pricing for income tax purpose, Consultancy in the above matters. RBI has to be informed about receipt of share capital amount from abroad within one month of its receipt