What All Formalities Are Required To Be Completed By A Company Post Incorporation

What All Formalities Are Required To Be Completed By A Company Post Incorporation

Often, we hear about a new unicorn making a turnover in millions and contributing to the growth of our country. With the help of overseas funding and IPOs, many businesses have started adopting a company structure. A company right from its incorporation till its winding up has to adhere to the provisions of all applicable laws of Country be it Company law or Income Tax laws or Goods and Service Tax law, etc.  Therefore, it becomes essential that business operators must know essential formalities which are to be completed by a company.

So, when you are done with incorporation of the company, question arises what next you need to do now? This article will let you know about several important post incorporation formalities for a company and the same can be used for a good compliance check-up of your company.

1.   Immediate compliances

a. Opening a Bank Account

  • Having a bank account is a must for doing any money transactions on behalf of a company. 
  • There is no time limit specified in Companies Act, 2013 to open a bank account.
  • However, Company law specifies time limit for issuing share certificates to shareholders’ which is 60 days. Therefore, the subscription money must be received by the Company within that time frame only.
  • Therefore, it is advisable to either open a bank account immediately with incorporation application SPICE+ or aforesaid period by making a separate application.
  • Documents Required:
  • Following documents are generally required for opening a current account in a bank:
    • Certificate of incorporation.
    • Memorandum of Association (MOA) and Articles of Association (AOA).
    • Board Resolution
    • Updated list of directors
    • Communication address proof of the entity, if it is different from the address mentioned on the certificate of incorporation.
    • Current landline/ mobile number and e-mail ID of the company.
    • PAN of company.
    • Latest passport-size colour photograph, identity proof and address of each of the authorised signatories.
    • Shareholding pattern/ list of beneficial owners holding more than 25% in the company either directly or indirectly
    • PAN/ identity proof and address proof of such beneficial owners as identified above. In case, the beneficial owner is not a natural person, identity proof and address of any senior managing officer is required.
    • Account opening Cheque from existing Current Account.

 b. Conveying First Board and Shareholders’ Meetings

  • First board meeting is to be conducted within 30 days of incorporation of a company for discussing matters relating to commencement of business activities and secretarial compliances.
  • First annual general meeting of shareholders’ except for an OPC is to be conducted within 18 months of incorporation of a company to present first financial results and future plans and strategies of a company.

c. Obtaining statutory registrations

  • A Company can’t operate merely by obtaining certificate of incorporation.
  • A Company is required to get itself registered under different statuts depending upon applicability of such act on company such as:
  • Registration can be obtained alongwith Incorporation Document:
    • Form filed for company incorporation, i.e., SPICE+ through AGILE PRO-S, offers services of obtaining PAN , GSTIN, registration under EPFO, ESIC, professional tax in Mumbai simultaneously with incorporation application.
    • Therefore, alongwith application of Company Incorporation automatic application is also filed for above mentioned registration.
  • Registrations required to be obtained separately:
    • However, various other registrations like MSME (if conditions satisfied), Shop and Establishment Act, Import export code for import and export, FSSAI registration for food business will be needed separately.

d. Appointing first statutory auditor

  • Conducting audit of a books of account is a mandate to be followed by every company and therefore, appointment of auditor is to be done every year. 
  • The first auditor of a company, other than Government company, is appointed by the board of directors within 30 days from the date of incorporation of the company.
  • If that does not happen, then, shareholders’ appoint an auditor within a period of 90 days through an extraordinary general meeting.
  • In case of Government Company, Comptroller and Auditor General of India appoints the first auditor within a period of 60 days of incorporation of the company.
  • The appointment of first auditor needs to be intimated to the Registrar in Form ADT-1 within 15 days of his/her/its appointment.

e. Intimating registered office address to the Registrar

Where a company has provided correspondence address in an incorporation application due to non-finalisation of registered office, it has to intimate the Registrar about address of registered office within a period of 30 days through Form INC-22 along with address proof by way of rent agreement in case of rental property or sale deed in case of owned property.

f. Making the name of a company vocal with affixation of name

Once the Company obtain its incorporation certification, if must get following things done at earliest to avoid any trouble:

  • Affix its name in the local language at all places where it carries business activities be it registered office, additional places of business like warehouse, branches, etc. 
  • Get a common seal prepared with the name of the company engraved on it and
  • Letterheads with name and address are to be printed for all communications.

g. Interest disclosure of directors

Every director is required to disclose his concern or interest including shareholding in any other company (ies) or bodies corporate, firms, or other association of individuals in FORM MBP-1 at the first board meeting of the company.

h. Allotting shares and issuing share certificate

  • A private company may issue shares through private placement whereas a public company can issue shares through initial public offer via prospectus in addition to private placement. 
  • Company Act provides a time limit of 60 days from the receipt of subscription money for allotment of shares.
  • In case, an allotment could not be done within a period of 60 days from the date of receipt of subscription money, entire subscription money needs to be refunded back to applicants within 15 days, else the same gets treatment of public deposit which attracts interest at the rate of 12% p.a.
  • Further, share certificates are to be issued within a period of 60 days from the date of allotment.

i. Commencing business or exercising borrowing power

  • Every company having a share capital is not allowed to commence any business or exercise any borrowing powers unless it has filed a declaration in Form INC-20A with the Registrar about commencement of business.
  • Form INC-20A should be filed within 180 days of date of its incorporation.
  • The declaration confirms that every subscriber to the MOA has paid the share value taken by him and the contents of the said form has to be verified by a company secretary or a chartered accountant or a cost accountant, in practice.

j. Maintenance of books of account

Every company is required to maintain proper books of account showing the state of affairs of the company.

2.   Subsequent annual compliances

a. Statutory Audit of books of account

  • Section 134 of the Companies Act, 2013 requires the Board of Directors of a company to lay financial statements along with an audit report before shareholders in an annual general meeting
  • Therefore, it is necessary that every company gets its books of accounts audited from an external auditor giving an audit report about the true and fair view of books of accounts and financial statements as at the end of a financial year.

b. Holding subsequent board and general meetings

  • Board meetings: After the first board meeting, board of directors needs to meet in a year between frequent intervals as given below.
Type of companyFrequency
Private or public company4 meetings in a calendar year with a maximum gap of 120 days in two meetings.
One person company with one directorNo requirement to hold such meeting
Small or dormant company or one person company with more than one director1 meeting in each half of the calendar year with a maximum gap of 90 days in two meetings.
Section 8 company1 meeting in each half of calendar months
  • First Annual General Meeting (AGM): First AGM should be held by a company except One Person Company on the earliest of the following dates:
    • Within 9 months from date of Financial Year
    • Further, length of Financial year can be extend upto 15 months
  • Subsequent Annual General Meeting (AGM): A company is required to hold AGM every year at earliest of the following dates:
    • 15 months from the date of the last annual general meeting.
    • 6 months from the close of the financial year (September 30th).

c. Filing income tax returns and conducting tax audit

  • A company is treated as a person under Income Tax Law requiring every person to file its income tax return in specified form for income of the previous year relevant to assessment year. 
  • Companies are required to file ITR-7 for declaring income of every previous year.
  • Further, companies having sales or gross receipts or turnover from the business during previous year of more than INR 1 crore are required to conduct tax audit under section 44AB of Income Tax Act, 1961 every year. 
  • This threshold limit of sales or gross receipts or turnover for businesses is increased to INR 10 crore w.e.f. 1st April, 2021 where digital transactions are at least 95 per cent of total transactions.

d. Filing GST returns and conducting GST audit

  • A company having annual aggregate turnover exceeding INR 5 crore has to file GSTR-1 (outward supplies return) and GSTR-3B (summary of inward and outward supplies) on a monthly basis.
  • A company having annual aggregate turnover below INR 5 crore has option to file GSTR-1 and GSTR-3B quarterly while making monthly tax payments.
  • A company registered under GST exceeding turnover of INR 2 crore needs to furnish the annual return in Form GSTR-9 on or before 31st December following the end of the relevant financial year.
  • A company having registered under composition scheme paying tax under section 10 needs to furnish an annual return in Form GSTR-9A.
  • In case, aggregate turnover of any of aforesaid companies exceeds INR 5 crores, then, such a taxpayer is required to furnish a self-certified reconciliation statement in Form GSTR-9C. No requirement to get a mandatory audit done from a practising chartered accountant.

e. Maintenance of statutory registers

Several registers like register of members, debenture holders, directors and key managerial personnel, beneficial owners, deposits, share certificates, charges etc. under Companies Act, 2013 are required to be maintained and updated regularly with the facility of inspection for few registers.

g. Filing financial statements and annual return in Form AOC-4 and MGT-7

  • Financial statements: A copy of the financial statements or consolidated financial statements along with auditor’s report and board report duly adopted at annual general meeting is required to be filed with the Registrar within 30 days of the AGM.
  • Annual return: An annual return is also required to be filed every year within 60 days of the annual general meeting with the Registrar in Form MGT-7 (Form MGT-7A for small company and OPC) which should also be placed on its website.

h. Updating annual KYC of directors on MCA portal

Every director’s KYC is to be updated on the MCA portal by 30th September of next financial year in Form DIR-3.

3. Event-based compliances

Apart from annual compliances, there are few corporate compliances which get triggered on the happening of any event. For instance, change in auditor or director, etc. The table given below represents event based formalities which are to be completed on occurrence of any of the events.

EventsTime LimitForm 
Filing of resolution and agreementsWithin 30 days from date of passing resolutionMGT-14
Creation and modification of chargesWithin 30 days of its creation, modification and satisfaction of chargeCHG-1
Satisfaction of chargesWithin 30 days of full satisfaction of chargesCHG-4
Removal of auditorWithin 30 days of passing of board resolution for removal of auditor before expiry of termADT-2
Return of deposits30th June of every yearDPT-3
Return for buy back of securitiesWithin 30 days of completion of buy back of securitiesSH-11
Change in registered officeWithin 15 days from the date of such changeINC-22
Change in directors or KMPWithin 30 Days of such changeDIR-12
Increase in authorised share capitalWithin 30 days from date of increase in authorised share capital.SH-7

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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