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A Private Limited Company is an independent legal entity with limited liability, established under the Companies Act 2013. It requires a minimum of two and a maximum of fifteen directors, and can have between two and two hundred shareholders or members. This structure offers directors limited liability to shareholders, perpetual succession, manageable compliance, ease of equity funding, and transferable ownership, facilitating the sale or purchase of the company.
A Private Limited Company is highly favored by foreign investors in India. It allows foreign nationals and companies to serve as directors and shareholders, enabling foreign direct investment in accordance with RBI guidelines.
This business structure is ideal for startups seeking to attract investors. It provides a strong foundation for securing funding from banks, financial institutions, and private equity investors, supporting business expansion efforts.
In addition to fulfilling statutory obligations like GST and Income Tax, private limited companies are mandated to adhere to certain regulatory requirements outlined in the Companies Act. These obligations are crucial for maintaining transparency, accountability, and legal standing. Failure to comply with these obligations can lead to penalties and legal repercussions. Here are the key compliance requirements that a private limited company must address without delay:
Within 180 days of incorporation, it is imperative for a private limited company to file the Commencement of Business (COB) e-form INC 20A. This form signifies that the company has commenced its operations and is actively conducting business as per its memorandum and articles of association.
A practicing Chartered Accountant must be appointed as the Statutory Auditor to audit the company's books of accounts and issue audited Annual Financial Statements. This ensures that the financial records are accurate, reliable, and compliant with regulatory standards.
The company is required to file various annual forms with the Registrar of Companies (ROC) to report its financial performance, management structure, and other relevant information. These forms include the Annual Return, Financial Statements, and other documents as prescribed by the Companies Act.
Directors of the company are obligated to undergo electronic Know Your Customer (e-KYC) verification, which involves providing updated personal and professional information. This process helps in maintaining the authenticity and integrity of the directorship
For startup companies, it's essential to allocate additional funds, approximately Rs 40-50K annually, for audit expenses and ROC filings. This financial provision ensures that the company can fulfill its compliance obligations without financial strain. By diligently adhering to these compliance requirements, private limited companies can operate smoothly within the legal framework and uphold their reputation in the business ecosystem.
After Company incorporation, you will receive below documents
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