In an organization, The Board carries a lot of responsibilities in making a decision. The role...
After a company has been set up, there are numerous compliances that have to be completed in order to maintain compliance as per the Companies Act 2013. Non-compliance with these compliances can invite penal actions on the directors and the company. Therefore if you have incorporated a company, you should be aware of the post incorporation compliances as well.
First Board Meeting-
According to Section 173(1) of Companies Act 2013, every company has to hold the first board meeting of board of directors within 30 days of its incorporation date.
It has been mandated by Section 184(1) of the Companies Act that in the first board meeting, every director should disclose their concern or interest in any company or companies or bodies corporate or other association of individuals.
Appointment of Auditor-
The first auditor of the company, apart from a government company, will be appointed by Board of Directors within 30 days from the registration date of the company. In case of failure to appoint such auditor, the board shall inform the members of the company who will within 90 days appoint such auditor in an extraordinary general meeting.
In case of a government company or any other company that’s owned or controlled by the Central Government/State Government, the first auditor shall be appointed by the Comptroller and Auditor General of India within 60 days from the registration date of the company.
Issuance of Share Certificate-
Every company must issue share certificate within 60 days from the date of its incorporation to the subscriber to the memorandum. It shall be issued vide a resolution passed by the board of directors.
Once the Share Certificate is issued, the company shall pay the stamp duty on the issuance of the share certificate. Any delay in payment of stamp duty will attract impounding of the share certificates under the Stamp Act.
Bank Account opening-
One of the essential post incorporation compliances for companies is to open a bank account in the name of the company. There are no specific provisions under Companies Act stipulating the time frame to open the bank account, however, since companies are mandated to issue share certificates in 60 days, it is consequent that the subscription will be transferred within 60 days of the incorporation. Thus the bank account shall also be opened within 60 days time.
Commencement of Business within 180 days of incorporation-
Within 180 days of the incorporation, the company shall obtain a certificate of commencement of business. There is a need to file a disclosure made by the company’s directors that every subscriber has paid the amount due on shares. The director should file the declaration within 180 days of the incorporation. It has to be filed with the registrar. Such declaration should be verified by a practising CA, CS or a Cost Accountant.
Holding of the Annual General Meeting-
As per section 96 of Companies Act, every company apart from the One Person Company, shall hold general meeting every year as its annual general meeting within a period of 9 months from the date of the closing of the first financial year of the company and in case of subsequent annual general meeting, within a period of 6 months from the date of the closing of the financial year and not more than 15 months shall elapse between a annual general meeting date and that of the next.
Such annual general meeting should be called in during the business hours on any day that is not a national holiday. It shall be held at registered office or at some other place within the city, town or the village where registered office of the company is situated.
Filing Annual Return-
Every company is required to file the annual return within 60 days of the annual general meeting with the registrar in Form MGT-7 and shall also place it on its website. The annual return will be signed by the director, CS of the company and practising CS.
Further listed companies ad companies with paid-up share capital of 10 crore rupees or more or turnover of 50 crore rupees or more will get the return certified in Form MGT-8 by a practising CS.
Maintenance of Registers-
Registers should be maintained and updated and should be kept at the registered office of the company. It is essential post incorporation compliances. Some of the registers should be kept open for inspection by directors, members and creditors. A company must provide the extracts from the registers if demanded by directors, members etc., on the payment of specified fees.
Filing of Financial Statements-
A copy of the financial statements, along with auditor’s report, board report and accounts of its subsidiary incorporated outside India and which have not established their place of business in India, duly adopted at AGM, shall be filed with the Registrar within 30 days of the AGM or adjourned AGM.
Incorporating a business is not enough, but it is just a beginning. There are different types of post incorporation compliances that are to be met by the company. A series of compliances is laid down in the Companies Act 2013 and its accompanying rules. Therefore ensure compliance to avoid paying hefty fines and penalties.
Read our article: Attendance of Audit Committee Chairperson at the AGM