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Compliance Management 

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Business Compliances

Compliance Management

There are various laws and regulations applicable on a business, which have to be complied with. Compliances can be divided into parts, which are following:

1. Mandatory Compliances

  • Company Annual Compliances

  • Statutory Audits

  • Post Incorporation compliances- For Company and LLP

  • Changes in Company or LLP

2. Event-based Compliance

  • Raising Investments; Allotment of securities

  • Change in directorships; Appointment or resignations

  • Obtaining Loans

  • Change in Registered office

  • Transfer of shares

Kinds of Compliances

1. Company Annual Compliance - As a legal entity, a company must get its financial statement audited by the auditor and adopt the same in its AGM. Post conduct of AGM an annual report and the financial statement are submitted to the ROC. The returns with the ROC need to be filed within its due date to avoid heavy penalties.

Every company irrespective of its size, nature, etc has to file two documents with the registrar of the companies every year.

  • Audited annual accounts/ balance sheet

  • Annual return

2. Statutory Audit - It is an exercise by the auditors of the company or LLP to express their opinion in the form of an audit report about the correctness of accounting of the company. All companies are required to get their audit done; However, in the case of LLP, there is relaxation until the capital of 25 lac or turnover of 40 lac.

Maintenance of statuary books & registers -

Every company is required to maintain certain statuary books and registers as prescribed under the act like;

  • Register of members

  • Register of transfers

  • Register of directors

  • Minutes book for the meeting of board and members

  • Registers of directors shareholding

  • Register of investments

  • Register of contracts

  • Books of account

3. Post Incorporation Compliance - With the issuance of the certificate of Incorporation, a legal entity in the form of the company comes into being. Immediately after the incorporation, the first board meeting must take place to adopt requisite resolutions, for the Issue of Shares and Payment of stamp duty to state gov & appointment of first auditors.

Here is the list of some main compliance after incorporation of a company.

  • Opening a bank account

  • Deposit of capital, issue of shares & payment of stamp duty

  • Appointment of auditor within 30 days of incorporation

  • Intimation of registered office address

  • Filing of Form INC-20A- commencement of business

  • Preparation of statutory registers

  • Other compliance

4. Changes in Company - The changes in a company like its name or address has to be done in pursuance of the provisions of its articles read with The Companies Act, 2013 and the rules made there under. We strongly recommend having a consultation with us before you make decisions to carry any change.

5. Allotment of Shares - The board of directors are legally entitled to issue fresh equity shares of the company, however subject to its valuation and the right of first refusal of the existing shareholders of a private limited company. The main professional work with the fresh issue of equity is the valuation of share and filing the PAS-3 to ROC which is a return of allotment of shares of the company.

directors may not allot shares unless they have the power to do so. the directors power to allot shares expires 5 years from the date of incorporation or 5 years from the last renewal of the power to allot.

If you are going to allotment of new shares you have to confirm your current shareholders, the number of shares you want to allot, as well as the share structure of your shareholders. the new shareholders also need to confirm their name, date of birth, residential address, ID proof, nationality and relationship to the other shareholders in the company.

A transfer of shares must be approved by the directors of the company and the appropriate stamp duty paid to the revenue commissioners. Stamp duty is calculated at 1% of the total market value of the shares.

6. Increase in authorized capital - The authorized capital of a company is the limit to which a company can raise its capital. The subscribed capital or paid-up capital can never be more than the amount of authorized capital as mentioned in the capital clause of the MOA and AOA.

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