Post incorporation compliances by a private limited company

Over the years, the process of incorporating a company has been made simpler, which encourages full compliance by the companies. The management should be fully aware of the post-incorporation compliance to avoid any penalties or punishments. The Companies Act 2013 is a stringent act and leaves no room for any mistakes.

“Ignorantia juris non excusat” means “ignorance of law is not an excuse”. This is a legal maxim which goes on to say that one cannot escape liability on the pretext of unawareness of the law. Thus the directors and shareholders will have to be aware of the legal compliance involved post-incorporation of the company.

Following are the significant actions which need to be taken post company incorporation:

1. 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. Directors are permitted to attend the meeting either in person or through video conferencing.

2. Bank account

Companies need to have a bank account even before approaching the authorities for company incorporation. Since the company is an artificial entity, the transactions cannot be done in the name of any natural person.

3. Official address

As per Section 12(1), a company shall have a registered office within 15 days from the date of incorporation. This address shall be used to receive all official communication from the various authorities. The company shall inform the same to the registrar within 30 days from the date of incorporation.

4. 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 which is generally used in the locality. Additionally, the company has to get a seal with its name engraved on it, letterheads with appropriate information and printed negotiable instruments.

5. 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. Failing which, the members shall appoint the auditor within 90 days at an extraordinary general meeting. The term of the first auditor shall be until the conclusion of the first annual general meeting.

6. Interest disclosure

At the first board meeting, every director shall disclose his interest in any company/firm/body corporate/association of individuals as outlined in section 184(1) of the Companies Act 2013. Any changes in the disclosures shall be intimated to the board in its first meeting held during each financial year. An independent director, if any, must give a declaration that he meets the criteria of independence during the first board meeting as a director.

7. Statutory registers

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

8. Share certificate

The share certificate shall be issued to a shareholder within 60 days from the date of incorporation. In case of additional shares being allotted, the time period is taken as 60 days from the date of allotment.

9. Books of Accounts

As per section 128, every company shall maintain proper books of accounts which shall represent an accurate and fair view of the state of affairs of the company. The double entry system shall be followed, and the accounting is done on an accrual basis.

10. Commencement of business certificate

Within 180 days, the company shall obtain a certificate of commencement of business. There is a requirement to file a disclosure made by the directors of the company stating that every subscriber has paid the amount due on the shares.

17 Post incorporation Compliances for Public Limited Company

Being a Public Limited Company, there are more compliances as compared to Private Company. Also in case of Public Company, the provisions of Companies Act, 2013 are more strict and rigid. Here are some major post incorporation compliance check list for Public Limited Company as non-compliance of which may attract heavy penal provisions as per Companies Act, 2013..

1. Opening of Bank Account

On incorporation of Public Limited Company ,the foremost step is opening of Bank Account in the name of the Company. Opening of bank account may require following documents-

Copy of Articles of Association of the Company
Copy of Memorandum of Association of the Company
Challan copy of Spice form
Certificate of Incorporation
Copy of Pan Acknowledgement
Copy of Board Resolution
Copy of prospectus if needed
Registered office address proof of the company
Identity proof of all Directors / Authorized Signatories PAN card of Director
Passport
Voter Identity Card
Driving License
Aadhaar card issued by Unique Identification Authority of India (UIDAI)
Copy of PAN allotment letter
Copy of the telephone bill

2. Issue of Prospectus

Every Public Company is under obligation to issue prospectus either after formation of the company or in case of existing company. The rules and penal provisions with regards to issue of prospectus are very strict in nature. A prospectus must include the following information as per sec 26 of the Companies Act, 2013-

(i) names and addresses of the registered office of the company, company secretary, Chief Financial Officer, auditors, legal advisers, bankers, trustees, if any, underwriters and such other persons as may be prescribed;
(ii) dates of the opening and closing of the issue, and declaration about the issue of allotment letters and refunds within the prescribed time;
(iii) a statement by the Board of Directors about the separate bank account where all monies received out of the issue are to be transferred and disclosure of details of all monies including utilized and unutilized monies out of the previous issue in the prescribed manner;
(iv) details about underwriting of the issue;
(v) consent of the directors, auditors, bankers to the issue, expert’s opinion, if any, and of such other persons, as may be prescribed;
(vi) the authority for the issue and the details of the resolution passed therefor;
(vii) procedure and time schedule for allotment and issue of securities;
(viii) capital structure of the company in the prescribed manner;
(ix) main objects of public offer, terms of the present issue and such other particulars as may be prescribed;
(x) main objects and present business of the company and its location, schedule of implementation of the project;
(xi) particulars relating to—
(A) management perception of risk factors specific to the project;
(B) gestation period of the project;
(C) extent of progress made in the project;
(D) deadlines for completion of the project; and
(E) any litigation or legal action pending or taken by a Government Department or a statutory body during the last five years immediately preceding the year of the issue of prospectus against the promoter of the company;
(xii) minimum subscription, amount payable by way of premium, issue of shares otherwise than on cash; (xiii) details of directors including their appointments and remuneration, and such particulars of the nature and extent of their interests in the company as may be prescribed; and (xiv) disclosures in such manner as may be prescribed about sources of promoter’s contribution;

3. First Board Meeting

Section 173(1), of The Companies Act 2013 deals with conduct of Board meeting of the companies. As per the provisions of the section, a company shall within 30 days from the date of its incorporation conduct first board meeting of the company. Directors can attend the meeting either in person or through video conferencing

4. Deposit of Share capital money

Once bank account is opened, the next compliance is of depositing the share capital money in the bank account within 60 days from the date of incorporation of the company.

5. Issue of Share Certificates and payment of stamp duty

The Public Limited company shall issue share certificates to the shareholders of the company within 60 days from the date of incorporation of the company and pay stamp duty within 30 days from the date of allotment of shares as per the relevant stamp act applicable on the state.

6. Registered address

As per Section 12(1) of the Companies Act, 2013 a company should have its registered office within 15 days from the date of incorporation of the company. This address should be used for all types of future communications from various authorities.

7. Appointment of Auditors within 30 days

As per Section 139 of the Companies Act, 2013 every company is required to appoint its first auditor within 30 days of incorporation by its board of directors and in case the board of directors fails to appoint the auditor within said period of 30 days then they shall call an extraordinary general meeting of shareholders for appointing an auditor. The appointment of auditor through shareholder must be completed within 90 days.

8. Affixing Sign Board

Once the Public Limited company is registered, then its required to affix its name board at every place from where it is carrying on business all over India. Company need to affix name board at office premises.

9. Printing of letter heads

Section 12 mandate a company to print the following information on all its Business Letterhead / Billheads/Letter Papers etc. -Name of the Company – Address of Registered Office – CIN Number – Telephone No. – Fax (if any) -E-mail Id -Website address

10. Disclosure of interest

At First board meeting, every director is under obligation to disclose his interest in any company/firm/body corporate/association of individuals as outlined in section 184(1) of the Companies Act 2013. Any changes in the disclosures shall be intimated by the director to board of directors in its first meeting held during each financial year. An independent director, if any, must give a declaration that he meets the criteria of independence during the first board meeting as a director.

11. Maintenance of Statutory Registers

It is mandatory as a post incorporation compliance for Public Limited Company to maintain statutory registers like

MGT-1: Register of Members
MGT-2: Register of Debenture holders Register and Index of Beneficial Owner
MGT-3: Foreign Register of Members, Debenture holders, other security holders or beneficial owners residing outside India
Form SH-2: Register of Renewed and Duplicate Share Certificate
Form SH-3: Register of Sweat Equity Shares
Form SH-6: Register of Employee Stock Options
Form SH-10: Register of Shares or Securities Bought Back Register of Directors and KMPs Register of Deposits
Form CHG-7 Register of Charges
Form MBP-2: Register of Loans/Guarantee/Security and Acquisition by Company
Form MBP-3: Register of Investments not held in its own name
Form MBP-4: Register of Contracts or Arrangements in which Directors are interested

12. Declaration of Commencement of Business

As a post incorporation requirements Public Limited company required to file a declaration of commencement of business within 180 days from the date of incorporation of the company in accordance with the Companies (Amendment) Ordinance 2018, Section 10A, in form INC-20A.

13. Books of Accounts

As per section 128, every Public Limited company post registration company shall maintain proper books of accounts which shall represent true and fair view of the financial disclosure of the company.

14.Obtain Shop Act Registration

As a post Incorporation Compliance for Public Limited Company, the next important step is obtaining shop act license immediately. Shop Act is state Government registration. Within 30 days of registration company shall obtain Shop Act Registration The basic documents for obtaining shop act license is MOA, AOA, COI, Directors KYC documents etc.

15. Obtaining GST Certificate

Every business with annual turnover exceeds Rs. 40 lakhs or Service providers 20 lakhs is required to GST Registration under Goods and Services Tax (GST). However Public Company can apply GST Registration suomoto. In most of cases where company dealing with MNC companies they demand GST registration number. As a business need Company can apply for GST Registration.

16. Professional Tax Registration

It is mandatory to obtain Professional Tax registration to company and all directors, and employee.However, all Union Territories including NCT of Delhi and certain states like Haryana, Punjab, Rajasthan, Uttar Pradesh etc. does not have any law to tax profession.

17. Apply for Trade Mark registration

For a New company it’s important to protect their trade name. Once Public Limited company is registered is done not mean that name of Public company is protected. Name protection is limited under companies Act. In dynamic business name is goodwill and this need to be protected. To protect trade name , Public limited company post registration can apply for Trade Mark Registration. It give legal right to use name exclusively.

Conclusion

For Public Limited company there are some post incorporation compliance and some are event based compliances. Non compliance by company may attract to fines and penalties on company and directors. Its is important that company and directors should be aware about post incorporation compliances. Above is details checklist of compliances applicable post incorporation.