A Private Limited Company was established by legislation. It must adhere to the 2013 Companies Act’s requirements. The specific steps that must be taken right away following the company’s incorporation have been detailed. The Companies Act of 2013 lists some of them, while other state-level regulations including the Shops and Establishment Act, State Stamp Act, and professional tax have mentioned others as well.
There are numerous compliances that a company must adhere to after becoming a private limited company. While some of them are required, others are dependant on financial need.
Here is a list of some of the Compliances that have been discussed in detail:
1. Calling of the first board meeting: The board meetings, which are held at least once every three months, are meetings of the directors. This indicates that there shouldn’t be more than 120 days between meetings. The maximum number of board meetings that may be convened is unrestricted. The initial meeting, though, is crucial after incorporation. This is due to the requirement that the Companies Act’s numerous clauses be covered in the first meeting. Here, the choice of how to determine each of these requirements is made.
2. Directors must declare any conflicts of interest they may have, whether directly or indirectly through a contract or other agreement. The proposed contract or arrangement is settled upon at the board of directors’ initial meeting. Annually, these debates take place. The board of directors must be informed within 30 days of any change in the director’s interest. The contract or arrangement is voidable at the company’s choice if any such pertinent information is not disclosed.
3. Statutory Register Provision and Maintenance: Every company is required to keep and maintain a certain register at its registered office. Directors are liable for the same, and failure to do so is a crime that can result in fines and legal action.
4. Creating an accounting system for the business: In line with Section 128 of the Companies Act, every business is required to create and maintain books of accounts and other pertinent financial statements at the registered office. This provides a fair and accurate picture of the company’s situation. Double-entry accounting must be used for this purpose, and records of it must be kept for at least eight years. The accounts are kept at the company’s registered office address or any other location that the directors select in accordance with ROC.
5. Make a demand for and obtain paid-up capital from the shareholder: The company’s founders and other members subscribe for equity shares. In the Memorandum of Association, signatures are placed next to the number of shares that each subscriber has requested. The sum pledged here will serve as the company’s initial capital payment after incorporation. The directors have a responsibility to approach shareholders for funding and collect that money.
6. First auditor must be appointed within 30 days of the company’s establishment: The first auditor must be chosen within 30 days of the company’s incorporation. An extraordinary general meeting of shareholders is held after the appointment to announce the choice of the auditor. The shareholders’ appointment must be finished within 90 days.
7. Share certificates must be issued within 60 days: The share certificate shall be issued by the Board of Directors within 60 days after the date the Shareholder becomes a Shareholder of the Company. The first subscriber in the case of a new company shall be the shareholder as of the date of incorporation. Two or one director and the company secretary have signed the share certificate. The certificate must include the share certificate number, folio number, and a distinguishing share number for which it was issued. A fine of Rs. 20,000 is imposed for violations that don’t get resolved within 60 days.
8. Each state government has its own regulations controlling the imposition of stamp duty on the issue of share certificates. 8. Payment of stamp duty on the issuance of share certificates. After the issue, the stamp duty must be paid to the appropriate state government. States have different stamp duty payment options and rates. States typically impose a stamp tax of 0.1% of the market value of the shares. Non-payment is a serious violation that carries a prison sentence.
9. The company’s and its directors’ professional tax registration: All directors, designated partners, and employers must get a professional tax registration. The profession that falls under the purview of the industry is subject to taxation by state governments. The professional tax department is in charge of it, and the tax is paid at the set rates. In contrast, there is no law governing this in some states, like Haryana, Punjab, Rajasthan, and union territories like Delhi.
10. Intellectual property rights protection: A business must seize every chance to protect its intellectual property rights. This could take the shape of a joke, symbol, logo, brand name, or gadget mark. As soon as the business is incorporated, compliance consultants with professional backgrounds are available to help with this.
Indian business ecosystem is mushrooming every day. Along with them are the specialist that help right from the stage of incorporation till the lifetime of the company. This helps them complete all its compliances.