Private limited companies are a popular choice for entrepreneurs who want to register their businesses. It is a popular type of entity that attracts owners due to its limited liability, perpetual succession, and ability to raise capital. 

However, these benefits come with strict compliances that the companies need to follow. One such compliance is the ROC compliance for private limited companies. Let us understand more about this compliance in this blog!

What is the Meaning of a Private Limited Company?

Private Limited Companies are companies that are incorporated under the Companies Act 2013 and fulfill all the criteria laid down in the Act. A private limited company is one of the most popular choices for anybody looking to establish a startup. 

Most private limited companies are recognized to protect their members from the company’s losses. The liability of members is subject to the nominal value of the shares subscribed by them or the predetermined amount guaranteed by them.

The doctrine of Ultra Vires protects the company from acts beyond the power of the directors. A private limited company forms a dual relationship by creating a contract with its members. 

The Memorandum of Association (MOA) and the Articles of Association (AOA) govern this dual relationship. However, the clauses written in these documents cannot subdue the regulations prescribed in the Companies Act, 2013.

The regulations and compliances in the Companies Act are of utmost importance for all private limited companies. The act has laid ROC compliance for private limited companies to ensure smooth and transparent functioning.

What are the Compliances for Private Limited Companies?

The Companies Act 2013 has laid down various regulations to monitor the transparency and honest working of companies. One such regulation is ROC compliance for private limited companies. Before we understand this compliance, let us first understand the basic meaning of compliance.

Compliance means following the set of rules that are established by a recognized governing body. The governing body sets certain rules and guidelines. Some of these are mandatory. The Companies Act 2013, too has set these guidelines that the companies have to follow. 

The mandatory rules will be compiled by every company registered under the Companies Act, 2013. There are different types of compliance laid by the act, which apply to all private limited companies. The three main categories of compliance are:

1. Statutory compliance for private limited companies,
2. ROC compliance for private limited companies, and
3. Annual legal compliance for private limited companies.

ROC Compliance for Private Limited Company

The Registrar of Companies (ROC) is a statutory body established under the Companies Act, 2013. It works under the Ministry of Corporate Affairs (MCA) and administers all the companies established under this Act.

ROC compliance means the legal obligations associated with the Registrar of Companies. Private corporations have to obey these regulations. The private limited companies have to follow these compliances to avoid any legal penalties or fines. 

These compliances include annual filings, event-based filings, and statutory requirements to ensure transparency, accountability, and proper governance of companies in the corporate sector. Every corporation has to inform all its minor and major changes to the ROC.

These changes include changes in the articles and the memorandum as well. Changes in the name, objective, directors, and passing of board resolutions should also be informed to the ROC. Providing all this important information and changes to the ROC is the ROC compliance for private limited companies.

Types of ROC Compliance

There are two major types of ROC compliance:

●   Mandatory ROC compliance,

●   Event-based ROC compliance.

Mandatory ROC Compliance:

Annual General Meeting:

All Private Limited Companies need to hold a mandatory Annual General Meeting (AGM) within six months from the end of the financial year. Newly incorporated companies are given a concession to hold an AGM. They can hold this AGM within 9 months from the end of their first financial year. The financial statements of the companies are presented in the AGM. The auditor, too, presents his reports here. The company’s performance and plans are discussed here.

This period can be extended to 15 months from the end of the financial year, by applying the ROC. The application should include a valid reason to ask for more time to hold the Annual General Meeting. The AGM can permit for extension of time upon receiving a valid reason.

●   Form: Form MGT-15

The company has to file Form MGT-15 within 30 days from the AGM. This form includes all important resolutions passed in the meeting.

●   Due date: 30 days from the date of AGM

Financial statements:

Companies must prepare and submit their financial statements. This includes their balance sheets, profit and loss accounts, and their cash flow statement. It also consists of the director’s report and the auditor’s report. All these statements should be filed with ROC within 30 days of the AGM.

●   Form: AOC 4

●   Due date: 30 days from the AGM

Annual return:

The annual return is another important ROC compliance for private limited companies. It holds the summary of the company’s shareholders, changes in the share capital, shareholding pattern, directors, any changes in directors, and particulars related to the registered office. The annual return must be filed within 60 days from the date of the AGM.

●   Form: MGT 7

●   Due date: 60 days from the date of the AGM

Director’s report:

The director’s report is the director’s overview of the past year. It states how the company has performed. Particulars like the company’s financial highlights, dividends, changes in the board of directors, related party transactions, and CSR (Corporate Social Responsibility) activities should be added to this report. It is a part of the Annual return.

●   Form: MGT 7

●   Due date: 60 days from the date of the AGM

Auditor’s Reports:

The Auditor’s report is the opinion of the auditor stating that the financial statements are free from any financial discrepancy. It may include any concealment of facts or mistakes found in the financial statement. It states the accuracy and fairness of the Financial statements. This too, is a part of the Annual return. The report is presented and approved in the Annual General Meeting.

●   Form: MGT 7

●   Due date: 60 days from the date of the AGM

Event-Based ROC Compliance

Change in Registered Office:

A form must be filed when the private company wants to change the address of its registered office. The form must be filled with the previous ROC and the ROC of the place where the new office needs to be registered. However, no previous approval of the ROC is required if a company is shifting to a place that lies within the same ROC.

●   Form: INC 22

●   Due date: 30 days from the date of change of registered office

Change of Directors:

The ROC has to be informed about the change in the composition of directors.

●   Form: DIR 12

●   Due date: 30 days from the appointment or resignation of director

Increase in Authorized Share Capital:

Approval should be taken from the ROC before increasing the share capital.

●   Form: SH-7

●   Due date: 30 days from passing the resolution to increase the share capital.

Allotment of Shares:

Particulars related to the allotment of new or existing shares should be shared with the ROC. Details such as band accounts where the application money was received, the name of subscribers, and the value of the shares should be added.

●   Form: PAS 3

●   Due date: 30 days from the allotment of shares.

Declaration before Commencement of Business:

Every company has to file a declaration within 180 days of the incorporation. This is done before the commencement of the business operations.

●   Form: INC 20A

●   Due date: Within 180 days of the incorporation

Importance of ROC Compliance

Legal Protection

ROC compliance for private limited companies ensures that the company operates within the established legal framework. It builds a legal protective barrier around the company.

Transparency

The ROC compliances ensure transparency and credibility between the company and its stakeholders.

Avoiding Penalties

Non-compliance with these rules can lead to penalties, fines, legal proceedings, and loss of goodwill. Some penalties include:

Monetary fines

The fines for non-compliance of ROC compliance range from a few thousand to lakhs. The amount of the fine is based upon the nature and the duration of the non-compliance.

Disqualification

Directors or other officers in charge of compliance can get disqualified as a punishment. The directors are refrained from holding directorship in any other companies for at least 5 years.

Persecution

Cases like fraud or severe non-compliance are taken to prosecution in courts. This may result in the imprisonment of directors and officers.

Striking of the name of the company

The ROC has the power to strike off the name of the company from the register of the company. However, a reasonable opportunity to be heard will be given to the company.

This is some important ROC compliance for private limited company. It is essential to ensure timely and accurate compliance for the same. It is essential to stay updated with the changes in compliance requirements and changes in deadlines. 

Maintain proper records of the activities to avoid last-minute hustle. Use compliance software to track deadlines and records. Lastly, engage appropriate professionals who can handle these compliances efficiently. Check out Lawgical Adda today to make sure that all your requirements are met on time.

FAQ

What is ROC compliance in Private Limited Companies?

ROC compliance means the legal obligations associated with the Registrar of Companies. Private corporations have to obey these regulations. The private limited companies have to follow these compliances to avoid any legal penalties or fines. 

These compliances include annual filings, event-based filings, and statutory requirements to ensure transparency, accountability, and proper governance of companies in the corporate sector. Every corporation has to inform all its minor and major changes to the ROC. 

These changes include changes in the articles and the memorandum as well. Changes in the name, objective, directors, and passing of board resolutions should also be informed to the ROC. Providing all this important information and changes to the ROC is the ROC compliance for private limited companies.