Since the Companies Act 2013 has been implemented in India, all companies have an additional responsibility to abide by the rules irrespective of their nature, e.g., Public Limited Company, Private Company, LLP, or OPC.

To make the reports easier to understand, SEBI and MCA attempt to bring new amendments in the form of notifications and circulars. All the rules must be complied with by due dates, or the company must pay heavy fines. In India, compliance with rules is of utmost importance while conducting business or operating a company. All the ROC Compliance must be followed to avoid penalties.

All Private Limited Companies in India must ensure yearly statutory compliance according to the Companies Act 2013. Yearly compliance of a private limited company in India generally does not depend on overall sales or money involved. ROC compliance of Private Limited Companies registered is mandatory, and non-compliance of Private Limited Company Compliance can result in serious actions against the Company.

Incorporation Compliance Requirements

You can register the company online using the facility by filling out the forms on the MCA portal with electronic signatures. All the suggested directors and signatories to the MoA and AoA must possess a DSC. You can obtain DSC from government-authorized certifying bodies. You can purchase it online within two working days using the following link. Directors and subscribers of MoA and AoA need to obtain Class 3 DSC.

A Director Identification Number (DIN) must be obtained by any individual wanting to become a company director. The directors mentioned in the company registration form should send proof of DIN, along with the name and address of the individual. You can apply for a DIN when you submit the SPICe+ form.

SPICe+ is an online application for company incorporation that enables DIN to be applied for by a maximum of three directors. To incorporate a company, the SPICe+ form has to be filled out and filed on the MCA portal. After registration, the director can log in to avail of the MCA portal services, including filing e-forms and viewing public documents. The name reservation is required because if the company name is identical to the name of a registered/existing company, LLP, or trademark, or includes words restricted under the Companies (Incorporation Rules) 2014, the SPICe+ form will be rejected.

When filed along with the documents, the Registrar will verify the application and issue the Certificate of Incorporation upon verification. The Income Tax Department gives the Certificate of Incorporation, PAN, and TAN.

First meeting: As per Section 173(1) of The Companies Act 2013, the company shall hold a meeting of the Board of Directors in less than 30 days from the date of its incorporation.

Bank account: Companies need to have a bank account even before approaching the authorities for company incorporation.

Official address: According to Section 12(1), the company is required to have a registered office within 30 days from the date of incorporation. This address will be utilized to receive all official communications from the different authorities.

It’s all in the name: Every company shall be required to affix its name at all places from where it carries on its business operations. It shall be displayed in the language generally used in the locality.

Auditor: According to Section 139(1), the first auditor shall be appointed by the Board of Directors (BOD), except for a government company, within 30 days from the time the company is registered.

Statutory registers: The company shall be required to maintain statutory registers at the company’s registered office. The same shall be maintained in the prescribed form, failing which the company will be subject to penalties.

Share certificate: The share certificate shall be issued to a shareholder within 60 days from the date of incorporation. In case additional shares are allotted, the period is 60 days from the date of allotment.

Annual Statutory Compliance Requirements

• AGM: The first AGM is to be held within nine months of the close of the initial financial year. The subsequent years have to witness the AGM being held annually within six months of the closure of the financial year. AGMs are where individuals vote to sanction financial accounts, pay dividends, re-appoint or appoint auditors, and determine directors’ remuneration, among other resolutions.
• MGT-7: All Private Limited Companies are required to file their Annual Return within 60 days of their Annual General Meeting. The Annual Return will be for the period April 1 to March 31.
• AOC-4: All Private Limited Companies shall submit their Balance Sheet and Statement of Profit and Loss Account along with the Director Report in this format within 30 days from the date of the Annual General Meeting.
• Board Meetings: The initial Board of Directors meeting of a Private Limited Company should occur within 30 days of the incorporation of the company. At least Four Board Meetings should be conducted in a calendar year (one meeting every 3 months). If it is a private limited company or a “Small company,” at least two board meetings should be conducted in a calendar year. The meeting agenda must be prepared and recorded in the form of “Minutes of the Meeting” and maintained at the Registered Office of the Company.

Tax Compliance Requirements

In Goods and Services Tax (GST), companies with revenues of more than Rs. 40 lakh, Rs. 20 lakh, or Rs. 10 lakh, respectively, are required to register as a regular taxpayer. You can obtain GST registration on the GST portal. You are required to submit Form REG-01 on the GST portal to register for GST.

According to the tax slab to which the individual belongs, the documents that are needed are different. Following is a common list of documents required for ITR filing:

• PAN card
• Form 26AS
• Form 16A, 16B, 16C
• Pay slips Salary
• Bank statements
• Interest certificates

TDS, or Tax Deducted at Source, is tax deducted while making payments of certain amounts like rent, commission, professional charges, Salary, and interest. The payer, or the deductors, deduct the tax. The deductor is required to remit the paid amount to the Income Tax Authority using the PAN of the individual from whom the tax has been deducted. The Tax Deducted at Source is to be remitted using the Income Tax Portal using the TAN login. Firms with tax dues of more than ₹10,000 in a year have to pay advance tax in installments.

• 15% by June 15.
• 45% by September 15
• 75% by December 15.
• 100% by March 15

Labor and Employment Compliance

The provident fund is a scheme that is beneficial to the employees. According to the scheme, the employer deducts a small amount of the employee’s monthly salary as the employer’s contribution to the Provident Fund. The employer also contributes the employee’s salary amount to the provident fund. EPF can be utilized for different purposes, such as retirement planning, the payment of medical bills, and the repayment of a house loan. The employees can withdraw an amount from the PF account at their will if they have a service period of five years. There are regulations for the withdrawal of amounts from the PF account.

• If an employee has been employed for less than five years, he/she can withdraw up to 50% of their PF balance.
• Employees can withdraw a maximum of 75% of the total PF amount if they are in service for more than five years but not more than 10 years.
• If the employee has been with the organization for 10 years or more, he/she can withdraw 100% of his PF amount.
• Money withdrawals from the PF account can be charged as income.
• If the employee is below 60 years, a 10% withdrawal charge for withdrawing funds from the PF account.

ESI regulation

Employees’ State Insurance Corporation (“ESIC”) is a government organization incorporated under the ESI Act of 1948. The ESI scheme is a standalone social security scheme intended to assist the employees covered under the scheme in times of economic distress. The ESI scheme shall be implemented in all factories and other establishments covered under the ESI Act where 10 persons (or 20 persons in certain states) or more are working.

Learn more from this detailed ESI practical guide for employers.

Professional Tax Compliance

Professional tax is the taxation of work, occupation, and trade. Professional tax is imposed on the value of money that one earns on his or her trade or occupation. Professional tax is imposed on workers, businessmen, freelance laborers, and professionals if they earn over a certain amount of money.

The Code on Wages, 2019 (“Code”) brings together and changes the current laws about wages, bonuses, and payments made to workers in both organized and unorganized jobs. Its goal is to make it easier to apply and enforce these laws and create a consistent labor law system in India. On December 28, 2024, the Government of India Ministry of Labour and Employment published a Year End Review 2024.

It states that all 36 States/UTs of India need to complete harmonization and pre-publication of draft rules under the four Labour Codes by March 31, 2025. These are the Code on Wages, Code on Social Security, Code on Industrial Relations, and Code on Occupational Health & Safety. One of the significant changes in the Code on Wages is the new definition of wage structures. Employers need to ensure that at least 50% of total wages are classified as “basic wages.”

Another significant aspect is working hours and overtime. The Code fixes the maximum work hours at 8 per day and explains how overtime is to be computed. Under the Social Security Code, employers need to extend social security coverage to gig and platform workers so they can avail themselves of provident funds and employee insurance.

Corporate Governance Requirements

Director’s Responsibilities and Liabilities

The Companies Act 2013 tasks directors with the important job of acting in the company’s best interests while also upholding legal and ethical standards. They need to keep accurate accounting records, establish effective internal financial controls, and ensure they follow the law. The Act requires the company’s annual report to include a Director’s Responsibility Statement. This statement confirms that they’ve followed accounting standards, made sound judgments, and maintained sufficient internal controls. If directors fall short in these responsibilities—especially if they’re not diligent or are involved in misconduct—they can be held personally accountable.

Key Managerial Personnel (KMP) Requirements

The Act identifies Key Managerial Personnel as including roles like the Chief Executive Officer (CEO), Managing Director, Whole-time Director, Chief Financial Officer (CFO), and Company Secretary. Certain companies, especially listed ones or those that hit specific financial benchmarks, must appoint people to these key positions. For example, companies with paid-up share capital over ₹10 crore need to have a full-time Company Secretary. These KMPs are critical for managing the company and guaranteeing that it complies with all statutory obligations, thereby supporting effective corporate governance.

Corporate Social Responsibility (CSR) Obligations

According to Section 135 of the Companies Act 2013, companies that meet certain financial criteria—like having a net worth of ₹500 crore or more, a turnover of ₹1,000 crore or more, or a net profit of ₹ five crore or more during any financial year—must contribute to CSR. They need to spend at least 2% of their average net profits from the last three years on CSR activities. These activities should align with the areas outlined in Schedule VII of the Act, such as promoting education, healthcare, and environmental sustainability. Companies are also required to set up a CSR Committee to oversee and monitor these policies to ensure they’re spending the right amount on eligible activities.

Internal Financial Controls and Audit Requirements

The Act stresses the importance of having strong internal financial controls to guarantee accurate and reliable financial reporting. Companies must set up and uphold adequate internal control systems, which should be reviewed regularly. The Board of Directors must confirm these controls’ effectiveness in their annual Director’s Responsibility Statement. Besides, the Act requires certain companies to form an Audit Committee. This committee, which needs to have at least three directors, with a majority being independent, is responsible for overseeing the financial reporting process, reviewing internal controls, and ensuring compliance with legal requirements. The Audit Committee plays a critical role in maintaining the integrity of financial statements and promoting transparency within the organization.

Annual Compliance Calendar for Private Limited Companies

January to March Compliance Deadlines:

January 15: Deadline for filing Q4 FUTA tax returns.

January 31: Distribute W-2 and 1099 forms to employees. File your W-2s and W-3s and submit Forms 1095-B and 1095-C to employees for ACA reporting.

February 28: Paper filing deadline for Forms 1095-B, 1095-C, and 1094-C (if not filing electronically).

March 15: Deadline for calendar-year S corporations and partnerships to file income tax returns. File Form 2553 if electing S corporation status.

March 31: Electronic filing deadline for ACA Forms 1095-B, 1095-C, and 1094-C.

April to June Compliance Deadlines

There are four important compliance deadlines in Q2:

April 1: Medicare Part D creditable coverage notices due for prescription drug plans.

April 15: Filing deadline for individual and corporate federal income tax returns.

May 31: Distribute Summary Annual Reports (SAR) for calendar year plans.

June 30: Deadline for employee benefit plans to file Form 5500 (if not extended).

July to September Compliance Deadlines 2025

July 31: File Form 5500 with the IRS for employee benefit plans. Also, the deadline for Q2 FUTA tax returns.

September 15: Extended deadline for calendar-year S corporation and partnership tax returns. Distribute SARs if Form 5500 extensions were filed.

October to December Compliance Deadlines 2025

October 15: Extended filing deadline for individual tax returns.

November 1: Open enrollment for healthcare benefits typically begins.

December 31: Conduct year-end performance reviews and review upcoming compliance requirements.

Recent Regulatory Changes (2025)

1. Compliance in Banking & Financial Services:

In the finance world, companies need to follow RBI and SEBI rules to keep things running smoothly and ensure customer protection.

2. Manufacturing & Environmental Compliance:

Manufacturers need to get environmental clearances and pollution control certifications and make sure they’re sticking to labor laws.

3. E-commerce & Data Protection Compliance:

Online businesses must comply with data privacy rules, including the DPDP Bill 2023, to safeguard customer information.

Penalties and Consequences of Not Following the Rules

If businesses don’t comply with regulations, they can face serious risks that hit them financially, legally, and operationally. Financial penalties can add up; for instance, violations of GDPR can lead to fines as high as 20 million or 4% of global income. Legal issues might involve lawsuits, losing business licenses, or even facing criminal charges. There’s also the possibility of director disqualification for those who keep ignoring the rules. In the worst-case scenario, company strike-off procedures might start, leading to a complete shutdown of the business.

Best Practices for Staying Compliant

To steer clear of these risks, businesses should think about putting in place compliance management systems, running regular audits, and keeping detailed records. Using compliance software can simplify the process, and getting professional help makes sure they follow the rules. Plus, providing employee training boosts awareness and accountability. These strategies can help businesses stay on track, sidestep penalties, and keep a solid reputation.

How can Finocircle help private limited companies meet annual compliance?

Finocircle provides comprehensive annual compliance services for private limited companies, including filing annual returns and financial statements, conducting AGMs, ensuring director KYC compliance, conducting secretarial audits, and providing advisory services on compliance matters. Non-compliance with annual compliance requirements can lead private limited companies to penalties, fines, legal complications, and even the risk of company closure. It can also damage your company’s reputation and credibility among stakeholders.

Conclusion

Private limited companies provide a new business model to the companies with advantages like limited liability, continuity, and growth. To fulfill the maximum potential of these advantages, businesses should make sure that they are meeting strict regulatory requirements, have a good financial management system, and have a good corporate governance structure. This paper also mentions that exploring various funding options, putting into place risk management measures, and embracing sustainability and innovation are all important for the long-term success of the company. Therefore, based on the recommendations given, private limited companies can improve the efficiency of their operations, financial health, and their position in the market.