Compliances of Annual Filling for FY 2015-2016 Under Companies Act, 2013 (By: CS Shiriti Kumari)


        Dear Readers,


The Articles talks about the compliances for  annual filings for the FY 2015-2016 for Private Limited Company other than Small Company and  Private Limited Company which is Small Company. Every effort has been made to keep the Article lucid and give brief outline to cover all important aspects of annual filings so to mitigate chances of any non-compliance.

 

Small Company here means:

 

The concept of “Small Company” has been introduced for the first time by the Companies Act, 2013. The Act identifies some companies as small companies based on their capital and turnover for the purpose of providing certain relief/exemptions to these companies. Most of the exemptions provided to a small company are same as that provided to a One Person Company.

 

Definition:

 

Section 2(85) defines a Small Company as –

 

‘‘small company’’ means a company, other than a public company,—

 

1.           Paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees;

 

And”

 

2.          turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:

 

Provided that nothing in this Section shall apply to—

 

a)     a holding company or a subsidiary company;

 

b)     a company registered under Section 8; or

 

c)      a company or body corporate governed by any special Act

 

Salient Features:

  1. Only a private company can be classified as a small company.
  2. Holding company, subsidiary company, charitable company and company governed by any Special Act cannot be classified as a small company.
  3. For a small company, both criteria i.e paid up capital should not exceed Rs. 50 lakhs and the turnover as per latest statement of profit & loss should not exceed Rs. 2 cores.

The status of a Company as “Small Company” may change from year to year. Thus the benefits which are available during a particular year may stand withdrawn in the next year and become available again in the subsequent year. Financial year 2015-16

 

Ø  Disclosed MBP-1 under section 184(1)

 

Every Director of the Company in First Meeting (April-June) of the Board of Director in each Financial Year will disclose his interest in other entities.

 

Every Director is required to submit with the Company fresh MBP-1 whenever there is change in his interest from the earlier given MBP-1.

 

“A small company may hold only two board meetings in a year, i.e. one Board Meeting in each half of the calendar year with a minimum gap of ninety days between the two meetings.”

 

Note:

 

No need to file in form MGT-14 for disclosure.

 

Ø  DIR- 8 under section 164(2)

 

Form DIR - 8 Every Directors of the Company in each Financial Year will file with the Company disclosure of non-disqualification.

 

Note:

 

In case a director were to incur disqualification under section 164(2) of the Companies Act, 2013, then such director shall not be eligible to be re-appointed as a director of that company or be appointed in other company for a further period of 5 years from the date on which the company commits certain failures. Thus, disqualification under section 164(2) does not envisage immediate vacation of office.

 

“Disqualification is immediate but the director is allowed to serve the present tenure in that company and in other companies in which such person is a director.”

 

Ø  Appointment of Director during the year Under Section 149(1)


Every Company shall have a Board of Directors Consisting of Individuals as Director.

(The Board shall consist of individuals not of other persons like firms, LLP, companies, gods or other legal persons.)

 

Ø  Minimum No. of Directors as per Section 149(1) (a)

 

                                      i.      Three in case of Public Company

 

                                    ii.      Two in case of Private Company

 

                                  iii.      One in case of One Person Company

 

                                  iv.      Five in case of producer company

 

Ø  Company can’t appoint of Maximum 15 Directors

 

(If company needs to appoint more than 15 directors then Special Resolution required passing in extra ordinary General meeting)

 

Note:

 

Now vide Notification dated 5th June 2015 exempts a private company from the applicability of Sections 160 and 162 of the 2013 Act.

 

§  Section 160 of the 2013 Act prescribes certain processes to be followed by a person who intends to stand for directorship of the company.

 

§  Section 162 of the 2013 Act prohibits companies from passing a single resolution for appointment of 2 or more directors unless such a motion has first been agreed to unanimously by all the shareholders.

 

Ø  Additional Director as per Section 152(2).:

 

Every director other than first directors of company shall be appointed in general meeting as per Section 152(2). If company want to appoint a person as director in a board meeting other then General meeting Company can do this by appointing such person as additional director.

 

Ensure that the director to be appointed by board of directors exercising the power so conferred in them by the Articles of the companies not such a person who has failed to get appointed as a director in a general meeting.

 

Note:

 

a)     “If A proposal is made in General Meeting for appointment of a person as Director, if resolution got failed not passed in that meeting and that person fails to get appointed as a director in a general meeting, then that person can’t appoint as additional director”

b)     The additional director has to be appointed till date of next AGM or last date on which AGM should have been held, whichever is earlier.

c)      First Check whether Articles (AOA) of the Company contains power/authorization to appoint Additional Director read with Section 161(1) of the Companies Act, 2013. {If there is no provisions in Articles of the Company then Alter the Articles of the company to have enabling clause for appointment of Additional Director.


 

Ø  Notice of Annual General Meeting

As per the exemption Notification vide dated 5th june 2015, the provisions of Sections 101 to 107 and Section 109 of the 2013 Act shall apply to a private company unless otherwise specified in the respective Sections or the “articles of association” of a private company provide otherwise.

 

a)     Private company could lay down its own procedure in respect of conduct of its general meetings.

 

b)     The Notification has restored this power and provided private companies with the flexibility to decide their own procedure for conducting general meetings by incorporating the provisions in their articles of association.

 

Ø  Preparation of Director s’ Report 134

Director s’ Report will be prepare d by mention of all the information required for Small Company under Section 134. Directors report must be signed by the “Chairperson” (of board meeting) authorized by the Board, where he is not so authorized by at least 2 Directors of the company.

 

Note:

 

Section 204 Secretarial Audit for applicable companies The Board of Directors shall be contained any qualification or observation or other remarks made by the company secretary in practice in his secretarial report.

 

Ø  Circulation of Financial Statement & other relevant Documents for the financial year under section 136 :

 

Company will send to the members of the Company approved Financial Statement (including consolidated Financial Statement),

 

§  Cash Flow Statement,

 

§  Directors’ Report and

 

§  Auditors’ Report (with CARO 2016 if applicable)

 

At least 21 clear days /shorter notice if any before the Annual General Meeting.

 


CARO 2016 

1.       Applicability: CARO 2016 applies to all Companies, including a Foreign Company as defined u/s 2(42).

 

2.      Exceptions / Exemptions: CARO does not apply to the following classes of Companies –

a)     Banking Company as defined u/s 5(c) of the Banking Regulation Act, 1949;

b)     Insurance Company as defined Insurance Act, 1938;

c)      Company licensed to operate u/s 8,

d)     One Person Company as per Sec.2 (62) and a Small Company as per Sec.2(85),

e)     Private Limited Companies which satisfy all the following conditions

 

ü  Should not be a Subsidiary or Holding Company of a Public Company, 

ü  Aggregate of Paid Up Capital and Reserves & Surplus ? ` 1 Crore, as on the Balance Sheet date, 

ü  Total Borrowings from any Bank or Financial Institution at any point of time during the Fin. Year ? ` 1 Crore,

ü  Total Revenue (including Revenue from Discontinuing Operations) as disclosed in the Financial Statements as per Schedule III of the Companies Act, ? ` 10 Crores. [Note: Total Revenue includes “Other Income” also. 

3.      CFS: CARO 2016 reporting shall not apply to the Auditor’s Report on Consolidated Financial Statements.

 

Ø Filling of FINANCIAL STATEMENTS for the financial year starts from 01.04.2014 under section 137 in form AOC-4:

 

Company is required to file its Balance Sheet along with statement of Profit and Loss Account and Director Report in this form no AOC-4/AOC-4 XBRL

 

Financial Statements includes:

 

a)     Balance Sheet,

 

b)     Statement of Profit & Loss Account (Including Consolidated Financial Statement),

 

c)      Directors’ Report

 

d)     Auditors’ Report

 

e)     Cash Flow Statement ( earlier it was not mandatory)

 

f)       Notice of AGM

 

(Must be 21 days clear notice/or can be at shorter notice after taking consent of shareholder 95% in value)

 

Note:

 

A small company need not include Cash Flow Statement as a part of its financial statements.

 

Ø Filing of “ANNUAL RETURN” under section 92 file in Form MGT-7

Every Company will file its Annual Return within 60 days of holding of Annual General Meeting. Annual Return will be prepared for the period 1 st April to 31 st March. (Earlier it was form last AGM to current AGM)


Inspection of Annual Return:

 

Copies of Annual return shall be open for inspection during business hours, at such reasonable time on every working day as the board may decide, by any member, debenture holder, other security holder or beneficial owner without payment of fee and by any other person on payment of such fee as may be specified in the articles of association of the company but not exceeding fifty rupees for each inspection.

 

Reasonable time of not less than two hours on every working day shall be considered by the company

 

Preservation of annual return:

 

Copies of all annual returns and copies of all certificates and documents required to be annexed thereto shall be preserved for a period of 8 years from the date of filing with the Registrar.

 

Copies of Annual Return:

 

Copies of the Annual return shall be furnished to any member, debenture-holder, other security holder or beneficial owner of the company or any other person on payment of such fee as may be specified in the Articles of Association of the company but not exceeding rupees ten for each page and such copy shall be supplied by the company within a period of seven days from the date of deposit of fee to the company.

 

Annual Return by Foreign Company:

 

Every foreign company shall prepare and file, within a period of sixty days from the last day of its financial year, to the Registrar annual return in Form FC.4 along with such fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 containing the particulars as they stood on the close of the financial year.

 

COMPANY MUST KEEP IN VIEW OF THE FOLLOWING

 

 

One Director should be Resident Director:

 

 

As per Section 149 sub section 3 of Companies Act 2013, Board of Directors of a company, must have at least one resident director i.e. (A person who has lived at least 182 days in India in the previous calendar year)

 

As per General Circular No. 25/2014 The residence requirement would be reckoned from the date of commencement of section 149 of the Act i.e. 1st April, 2014, The first previous calendar year, for compliance with these provisions would, therefore, be Calendar year 2014. The period to be taken into account for compliance with these provisions will be the remaining period of calendar year 2014 i.e. 1st April to 31st December).

 

 

Therefore,  on a proportionate basis, the number of days for which the director(s) would need to be resident in India. During Calendar year 2014-15 must exceed 136 days. Regarding Newly Incorporated Companies it is clarified that companies incorporated between 01.04.2014 to 30.09.2014 should have a resident director either at the time of incorporation or within six months of their incorporation.

 

Companies Incorporated after 30.9.2014 need to have the resident director from the date of incorporation itself.

 

Frequency of Board Meetings

a)     Private Company other than small company

 

Shall hold a minimum number of 4 meetings of its Board of Directors every year in such a manner that maximum gap between two meetings should not be more than 120 (One hundred twenty) days. Company should hold at least 1 (one) Board Meeting every quarter of calendar year.

 

b)     Small Company

 

A small company may hold only two board meetings in a year, i.e. one Board Meeting in each half of the calendar year with a minimum gap of ninety days between the two meetings.

 

Note:

 

Must fallow the secretarial slandered on Board Meeting SS-1 for the board meeting held after 1st july 2015)

 

Ø Preparation of MGT- 8 under section 92 which is forming part of annual return MGT-9 for certain applicable Companies whose :

 

a.      Having paid up share capital of 10 Crore or more or

 

b.      turnover of Rs. 50 crore or more

 

Shall be certified by a Company  Secretary in whole time Practice.

 

Ø Appointment of statutory Auditor under section 139

 

Auditor will be appointed for the 5 (Five) year and form ADT-1 will be filed for 5-year appointment. The company shall inform the auditor regarding appointment/re-appointment and also file a form ADT-1 to ROC within 15 days of the meeting in which the auditor is appointed .After that every year in AGM s shareholder will ratify the Auditor but there is no need to file ADT-1.

 

Note:

 

Provision regarding mandatory rotation of auditor/maximum term of auditor being 5 years in case of an individual and 10 years in case of a firm of auditors is not applicable to a small company or companies not fallen under class of companies definitions. Maintenance of Registers under companies act 2013 Company will maintain the following mandatory Registers:

 

a.      Register of charge in form no. CHG-10.

 

b.      Registers of Members in form no. MGT-1.( entries in the register will be made in 7(seven) days from the date of approval of allotment, transfer of share, debentures or any other securities)

 

c.       Register of Director, register of directors & key managerial personnel

 

d.      Register of loan investment and guarantee register of loan investment and guarantee if any

 

e.      Register of investment made by a company held not in its Name in form no. MBP-3 members if any

 

f.        Register of contract or arrangements in which directors are interested in form MBP 4

 

Here in this article, provisions relating the compliances for  annual filings for the FY 2015-2016 for Private Limited Company other than Small Company and  Private Limited Company which is Small Company have been discussed and summed up. Hope the article will be helpful to the readers and will help them in compliance of the related provisions.

 

Author- CS Shiriti Kumari
M.Com, ACS, PGDIPR
E-mail: founders@compliancecalendar.in
Founder & Managing Partner
Compliance Calendar LLP

 Disclaimer: 
 
The entire contents of this article have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Though utmost efforts has made to provide authentic information, it is suggested that to have better understanding kindly cross-check the relevant sections, rules, notification , circulars  under the Companies Act,2013.

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