What are the post Incorporation compliances for a company?

Today’s legal world where every company is under obligation to adhere to the basic legal framework, post-incorporation compliance for a company is the most important and basic need in order to avoid monetary as well as non-monetary penalties.
Shivani Kharai
March 16, 2021

Ignorantia Juris non-excusat” which means ignorance of the law is not an excuse, thus the directors and shareholders after the commencement of the business will have to follow the legal compliance involved post-incorporation of the company.

Introduction

Once a company is incorporated, a set of compliance-related formalities must be completed to maintain compliance as per the Companies Act, 2013. Non-compliance would lead to fines and penalties on the Directors and the Company. Hence, it is important for those incorporating a company to be aware of the post-incorporation compliance requirements of a company.

Post-Incorporation Compliances

Post incorporation compliance requirement of a company as per the Companies Act, 2013 are:

· First Board Meeting Within 30 days from the Date of Incorporation

According to the provision of Companies Act 2013 along with the secretarial standard as issued by ICSI, the Company has to conduct its first Board Meeting within 30 days of incorporation of Company. This meeting is conducted for discussing the relevant factors, like a discussion about the certificate of incorporation of Company as issued by ROC, prospective working of the company and other factors which are relevant for the company.

· Disclosure of Director’s Interest and declaration regarding disqualification

According to the Section 184 of Companies Act 2013, the first directors of the company has to disclose their interest to the company in the meeting of the board of directors and board will discuss on the same and intimate to ROC for this if required the company will also maintain the record of the same in the register of the company.

This is the very important compliance because it will help the company to easily identify the related party transaction.

· Appointment of First Auditor

According to Section 139 of Companies act 2013, the Company has to appoint the first auditor of the company who shall hold the office until the first Annual General Meeting of the company. In case the board is not able to appoint the first auditor of the company then the auditor shall be appointed in the extraordinary general meeting of the Company within next 90 days from the date of incorporation of the Company.

· Registered Office

According to section 12 of the Companies act 2013, the Company must have its registered office with 30 days from the date of incorporation.

· Letterhead & Statutory Registers

According to the Companies Act 2013, It is applicable from 1st April, letterheads and other letters also need certain format certain things to be mandatory mentioned are:

  • Name of the company
  • Address of its registered office
  • CIN (corporate identity number) of the company
  • Phone numbers
  • Fax number, e-mail id,
  • Website, if any on all business letters, billheads, notice letter papers and other official publications also.

The Registers must be maintained and updated eventually and should be kept at the Registered Office of the Company.

· Bank Account for the Company

There must be a bank account in the name of the company so that originality of each and every transaction can be maintained for the sake of stakeholders of the company. Following documents are required for the opening of a bank account:

  • Certificate of incorporation and Memorandum & Articles of Association.
  • Identity proof of all Directors, Authorized Signatories PAN card of Director.
  • Registered office address proof of the company.
  • Resolution of the Board of Directors to open an account.
  • Copy of PAN allotment letter.

· Allotment of Securities

According to the provision of Companies act 2013, the Company must allot the shares to its subscribers within 60 days from the date of incorporation of the company in regard to Memorandum of Association.

· Books of Accounts

According to section 128 of Companies Act 2013, every company shall maintain proper books of accounts which shall represent an accurate and fair view of the state of affairs of the company.

· Issue of Share Certificate

According to section 56 of the Companies Act, 2013, the Company must issue share certificates to all the subscribers of the Company within 60 days from the date of incorporation of the company. The certificate must contain the following:

  • Number of share certificate
  • Face value of the share
  • Number of shares purchased
  • Name of the subscriber
  • Amount received
  • Kind of shares like preference or equity.

. Yearly Compliances

The yearly compliance requirements are:

  • Preparation of director’s report
  • Holding an annual general meeting
  • Statutory audit of accounts
  • Filing of an annual return
  • Minimum four board meeting with an interval of maximum 120 days between two consecutive board meetings.

. Non- Compliance

If the Company fails to comply with the requirements of the Companies Act, 2013 then the Company and every officer who is in default shall be punishable with fine for the period for which default continues. If there is a delay in any filing, then additional fees will be required to be paid, which keeps on increasing as the time period of non-compliance increases.

CONCLUSION

Today’s legal world where every company is under obligation to adhere to the basic legal framework, post-incorporation compliance for a company is the most important and basic need in order to avoid monetary as well as non-monetary penalties.

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