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Compliance with the Companies Act
Compliance with the Companies Act, 2013 refers to adhering to the statutory requirements and obligations imposed on companies operating in India. These include filings, disclosures, and adherence to governance norms prescribed under the Act to ensure transparency, accountability, and smooth functioning of the corporate sector.
The Companies Act, 2013 governs the incorporation, management, and functioning of companies in India. Compliance under the Act includes filing statutory forms, maintaining records, conducting meetings, and adhering to corporate governance principles. Non-compliance attracts penalties, disqualification of directors, or even company deregistration.
Importance
1. Statutory Requirement : Ensures adherence to Indian corporate laws.
2. Avoids Penalties : Prevents fines, litigation, and regulatory scrutiny.
3. Transparency : Builds trust among stakeholders, including investors and regulators.
4. Enhances Corporate Governance : Strengthens accountability and ethical business practices.
5. Smooth Operations : Ensures business continuity and ease in regulatory audits.
Key Compliance Requirements
Incorporation Filings:
- Filing Form SPICe+ for company registration.
- Issuance of a Certificate of Incorporation and PAN/TAN.
Annual Compliance:
- Filing Form AOC-4 for financial statements.
- Filing Form MGT-7/MGT-7A for annual returns.
- Conducting Annual General Meetings (AGMs) within the prescribed timeline.
Board Meetings:
- Holding a minimum number of board meetings:
- Private Companies: At least 2 meetings annually.
- Public Companies: At least 4 meetings annually.
- Preparation and maintenance of minutes of meetings.
Statutory Registers:
- Maintaining registers like Register of Members, Directors, Charges, and Share Transfers.
Director Compliance:
- Obtaining Director Identification Numbers (DINs) for directors.
- Filing Director KYC (Form DIR-3 KYC).
- Filing of director changes through Form DIR-12.
Shareholder Meetings:
- Filing changes such as:
- Change in Name: File Form MGT-14 and INC-24.
- Change in Address: File INC-22.
- Increase in Authorized Share Capital: File SH-7.
Statutory Audit:
- Appointment of an auditor through Form ADT-1.
- Compliance with auditing standards for financial reporting.
Event-Based Compliance:
- Filing CHG-1 for charge creation.
- Filing MGT-14 for special resolutions.
- Filing PAS-3 for allotment of shares.
Corporate Social Responsibility (CSR):
- Compliance under Section 135 for eligible companies.
Documents Required
Features
Features & Benefits of Compliance with the Companies Act
Extensive Filing Requirements
Emphasis on Corporate Governance
Time-Bound Compliance
Penalties for Non-Compliance
Compliance with the Companies Act
Audit Readiness
Focus on Transparency
Digital Filing System
Applicable to All Business Types
Support for Growth
Comparison with Related Services
| Feature | Companies Act Compliance | GST Compliance | Income Tax Compliance |
|---|---|---|---|
| Objective | Corporate governance | Indirect tax reporting | Direct tax reporting |
| Applicability | All registered companies | GST-registered entities | Taxable entities |
| Filing Authority | MCA | GST Department | Income Tax Department |
| Penalty for Non-Compliance | High | High | High |
| Focus | Governance and operations | Transactions and tax credit | Income and tax liability |
Frequently Asked Questions
Who is required to comply with the Companies Act, 2013?
All companies incorporated in India, including private, public, and listed entities, must comply with the Companies Act.
What happens if a company fails to file annual returns?
Non-compliance attracts penalties for the company and its officers, including disqualification of directors under Section 164.
What is the penalty for non-compliance with board meeting requirements?
Failure to hold meetings as prescribed can result in fines of up to ₹25,000 for the company and ₹5,000 for officers in default.
Are small companies exempt from compliance?
Small companies have relaxed compliance requirements, but they must still file annual returns and financial statements.
What are event-based compliances?
These are filings triggered by specific events like changes in the company’s name, address, directors, or shareholding structure.
Is the appointment of an auditor mandatory?
Yes, all companies must appoint an auditor to conduct statutory audits and report on the company’s financial health.