In today’s Legal world where every company is under obligation to adhere to the basic legal framework, post-incorporation compliance for a company is the most important and basic need in order to avoid monetary as well as non-monetary penalties, monetary as well as non-monetary penalties.
The Companies Act 2013 is a stringent act and leaves no room for any mistakes.
Ignorance of the law is not an excuse, thus the directors and shareholders after the commencement of the business will have to follow the legal compliance involved post-incorporation of the company.
At this point of starting your business, please keep in mind the famous legal maxim Ignorantia Juris non-excusat, which means “ignorance of the law is not an excuse” It is a legal principle holding that a person who is unaware of a law may not escape liability for violating that law merely because one was unaware of its content.
Once a company is incorporated, a set of compliance-related formalities must be completed to maintain compliance as per the Companies Act, 2013. Non-compliance could lead to fines and penalties on the Directors and the Company. Hence, it is important for those incorporating a company to be aware of the post-incorporation compliance requirements of a company. In this article, we look at the post-incorporation compliances required for a company like statutory register maintenance, share certificates, auditor appointment, bank account opening, and more.
POST INCORPORATION COMPLIANCE
Post incorporation requirements of the company as per the companies act, 2013 are:
FIRST BOARD MEETING WITHIN 30DAYS FROM THE DATE OF INCORPORATION:
According to the provision of the companies act 2013 along with the secretarial standard issued by ICSI, the company has to conduct its first Board Meeting within 30 days of incorporation of the company. This meeting is for discussion then relevant factors, like a discussion about the certificate of incorporation of the company as issued by ROC, working of the company, and other factors which are relevant for the company
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. Directors are permitted to attend the meeting either in person or through video conferencing.
FILING OF INC-22
Filing of INC-22 is mandatory only when while incorporating the Company, correspondence address has been given instead of registered address.
- Rent Agreement or NOC along with utility bills where the premises has been rented or
- Sale deed where the premises has been owned.
The Form needs to be filed within 30 days of incorporation
BANK ACCOUNT FOR THE NEW COMPANY:
Opening of Bank Account is very important as the subscriber will deposit their capital to be brought in for incorporating of company.
There must be a bank account in the name of the company so originality of each and every transaction can be maintained for the sake of stakeholders of the company.
Documents required for opening bank account
❖ Certificate of incorporation
❖ Memorandum & Articles of Association
❖ Identity proof & Residence Proofs of all Directors, Authorized Signatories
❖ Registered office address proof of the company.
❖ Resolution of the Board of Directors to open an account.
❖ Copy of PAN allotment letter.
FILING OF INC-20A:
Every Company incorporated after the commencement of the Companies (Amendment) Ordinance, 2019 and having a share capital shall not commence any business or exercise any borrowing powers unless it has filed with the Registrar within 180 days of its incorporation, a declaration by Director in Form 20A stating that all the subscribers have brought in the capital as agreed in the MOA.
It means all the subscribers are mandatory to bring in their capital 180 days post its incorporation. Failure to bring in the capital within 180 days would lead to penalties and fines.
DISCLOSURE OF DIRECTOR’S INTEREST AND DECLARATION REGARDING DISQUALIFICATION:
According to the section 184 of companies act 2013, the first directors of the company has to disclose their interest to the company in the meeting of the board of directors and board will discuss on the same and intimate to ROC for this if required the company will also maintain the record of the same in the register of the company. This is very important because it will help the company to easily identify the related party transaction.
APPOINTMENT OF THE FIRST AUDITOR:
After incorporation of a company, it requires the Board of Directors of the Company to appoint the first auditor of the Company, a Chartered Accountant within 30 days of incorporation. In case the Board of Directors fail to appoint an Auditor, then it must intimate the members of the Company, in an extra ordinary general meeting of the company to be held for the said purpose. who in turn can appoint an Auditor within 90 days of incorporation of the company. The first Auditors of the Company will hold office until the completion of the first annual general meeting and would be eligible for re-appointment at the end of their term in office.
Once the Auditors have been appointed, file Form ADT-1 within 15days of appointment.
LETTERHEAD AND STATUTORY REGISTERS:
As per section 12(3)(c) of Companies Act, 2013 every company shall print its Letterheads and Bill heads and letter papers and in all its notices and other official publications with name of the company along with registered office address, Corporate Identification Number (CIN), telephone number, fax number, if any, e-mail and website addresses, if any
The Registers must be maintained and updated eventually and should be kept at the Registered Office of the Company.
ALLOTMENT OF SECURITIES
According to the provision of the Companies act 2013, the Company must allot the shares to its subscribers within 60 days from the date of incorporation of the company in regard to the Memorandum of Association.
Once the application monies are received (prescribed capital brought in by subscribers to memorandum), within 60days allot shares to the subscribers. Pass Board Resolution for allotment of shares and file PAS-3 within 30days of allotment.
According to section 56 of the Companies Act, 2013, the Company must issue share certificates to all the subscribers of the Company within 60 days from the date of incorporation of the company. The certificate must contain the following:
● Number of share certificate
● Face value of the share
● Number of shares purchased
● Name of the subscriber
● Amount received
● Kind of shares like preference or equity.
DEVELOPING OF ACCOUNTING SYSTEM FOR THE COMPANY:
Section 128 of the Companies Act, requires every company to prepare and keep at its registered office, books of account, and other relevant books of account and financial statement of every financial year to give a true and fair view of the state of affairs of the company. The books of account need to be maintained with the double-entry system to be preserved for eight financial years. The accounts need to be maintained at the registered address of the company or at any other place where directors decide under intimation to ROC.
Obtain GST Registration Certificate post-incorporation separately if the same was not filed with Spice+ form (in Form AGILEPRO).
OBTAINING PT, ESIC, PF LICENSES ETC.
Obtaining licenses under various other statutes (as and when an event occurs) is mandatory.
COMPLIANCES TO BE FOLLOWED ON YEARLY BASIS
The yearly compliance requirements are:
● Preparation of director’s report
● Holding an annual general meeting
● Statutory Audit of the financial statements,
● Filing of an annual return
● Minimum four board meetings with an interval of a maximum of 120 days between two consecutive board meetings.
● Drafting of the Minutes of the Board Meeting and Annual General Meeting of the Company.
● Form AOC 4 and MGT 7, both the Forms are mandatory to be filed by every Company registered under the Companies Act, 2013 of the Companies Act, 1956. … e-Form AOC-4 and MGT-7 should be filed within the period of 30 and 60 days, respectively from the date when the Annual General Meeting (AGM) is held.
If the Company fails to comply with the requirements of the Companies Act, 2013 then the Company and every officer who is in default shall be punishable with fine for the period for which default continues. If there is a delay in any filing, then additional fees will be required to be paid, which keeps on increasing as the time period of non-compliance increases.
For any company incorporated in India, it is important to consider the compliances discussed in this article as per Companies Act, 2013. The compliances might seem to be tedious and repetitive process, however, such compliances under Companies Act, 2013 is an ongoing process and not a onetime thing.