“Essential Guidelines For Small Company Compliances: Navigating Legal And Regulatory Requirements” | Semantic Taxgen Pvt Ltd

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“Essential Guidelines for Small Company Compliances: Navigating Legal and Regulatory Requirements”

July 03, 2024

Small company compliances

SMALL COMPANY COMPLIANCES

The MCA in 2022, issued an amended definition of a small company by increasing their threshold limit of paid up share capital and turnover.

As per section 2(85) of the companies Act, 2013.

The paid-up capital and turnover of the small company shall not exceed Rupees 4 Crores and Rupees 40 Crores, respectively. Revisions to the definition were aimed at simplifying business and reducing compliance burdens for many companies.

However, there are the following companies. If they meet the above criteria, they still do not qualify as a small company:

  • A Public company
  • A Holding company
  • A Subsidiary company
  • Company registered under section 8
  • A company that is governed by any particular act

Small companies under the companies Act, 2013

S. NoTITLESECTION & RULESFormsPARTICULAR OF COMPLAINCES
1)Disclosures by a director of his interest 184(1) & Rule 9(1)
of Companies
(Meetings of Board
and its Powers)
Rules, 2014.
Form MBP-1Every director shall at the first meeting of the Board in which he participates as a director and thereafter at the first meeting in every financial year or whenever there is any change in the disclosures
Already made, then at the first Board meeting held after such change, disclose his concern or interest in other entities which shall include the shareholding.
2)Disqualification of directors164(2) & 143(3)
(g) & Rule 14(1)
of Companies
(Appointment of
Directors) Rules,
2014
Form DIR-8Every director shall inform to the company concerned about his disqualification under sub-section (2) of section 164, if any, before he is appointed or reappointed.
3)Annual Return92(4) & (1) & Rule
11 (1) of Companies
(Management
And administration)
Rules, 2014
Form MGT-7AEvery Company shall file its Annual Return within
60 days of holding of AGM or where no AGM is held in any year within 60 days from the date on which the AGM should have been held together with the statement specifying the reasons for not holding the AGM.
Annual Return of every Small Company shall be
Signed by the company secretary, or where there is no company secretary, by the director of the company
4)Financial statement137 & Rule 12(1)
of Companies
(Accounts) Rules,
2014
E-Form AOC-4Company is required to file its financial statements, including consolidated financial statement along with all the documents required to be or attached to such financial statements, duly adopted at the AGM of the company with the Registrar within 30 days of the date of AGM or in case financial statements are adopted in the adjourned AGM, within 30 days of the date of adjourned AGM.
5)Board Report
                  
134 & Rule 8 of
the Companies
(Accounts) Rules,
2014
Board’s Report shall be prepared mentioning all the information required to be included in it for Small Company under Section 134. It should be signed by the “Chairperson” authorized by the Board, where he is not so authorized by at least 2 Directors one
of whom shall be a managing director or by the director where
There is One (1) director.
6)Circulation
of Financial
Statement &
other
Company shall send to all the members of the Company, all trustees for the debenture holders and to all persons being the persons so entitled, copy of the (approved) Financial Statements (including consolidated Financial Statements, if any auditor’s report and every other document required by law to be annexed/ attached to the financial statements) at least 21 clear days before the Annual General Meeting.
7)Notice of AGM
 
101 & Rule 18 of
the Companies (Management and
Administration)
Rules, 2014 & SS- 2
Every notice of AGM shall be prepared as per section 101 and SS-2
Notice of AGM shall be sent to all the directors, members, auditors.
8)Board Meeting
 
1743(5) & SS-1Every Small Company shall hold at least one (1) meeting of the
Board of Directors in each half of a calendar year and the gap between the two meetings shall not be less than 90 days.
9)Notice of Board Meeting173 (3) & SS-1A meeting of the Board shall be called by giving not less than 7 days’ notice in writing to every director at his address
registered with the company and such notice shall be sent by
hand delivery or by post or by electronic means.
However, meeting of the Board may be called at shorter notice to transact urgent business.
10)Appointment of Auditor
 
139(1) & Rule 4(2)
of the Companies
(Audit and Auditors)
Rules, 2014.
E-Form ADT-1Auditor shall be appointed for 5 years in the AGM.
The company shall inform the auditor concerned of his or its appointment, and also file a notice of such appointment with the Registrar within fifteen (15) days of the meeting in which the auditor is appointed in E-form ADT-1.
11)Register of
Members
88 & Rule 3 of
the Companies
(Management and
Administration)
Rules, 2014.
Form MGT.1 & Form
MGT.2
Company shall keep & maintain the following mandatory
Registers:
Register of Members,
Register of debenture-holders,
Register of any other security holders
12)Passing the Resolution179(3)MGT-14Resolution for disclosure of Interest of director with ROC.
Resolution for Adoption of Balance sheet
 
Resolution for adoption of Director’s Report.
 
 
13)Statement containing salient features of financial statement of Company129(3)
 
AOC-1Small Company is required to file every year in e-form- AOC-1 within 30 days from the date of AGM
14)Director KYC SubmissionPursuant to Rule 12A of The Companies (Appointment and Qualification of Directors) Rules, 2014DIR3KYCDirectors are required to submit their KYC details through Form DIR-3 by September 30th each year, provided their Director Identification Number (DIN) was allotted by March 31st of that year and the status is ‘Approved’. Failure to file DIN eKYC results in a penalty of Rs. 5000.
15)Return of depositsRule 16A of the Companies (Acceptance of Deposits) Rules, 2014DPT-3Companies must use this form to report details of deposits and other non-deposit receipts annually by June 30th.
16)Return in respect of outstanding payments to Micro or Small EnterpriseOrder dated 22 January, 2019 issue under Section 405E-Form MSME-131st October (For April-Sep)
30th April (For Oct-Mar) and Within 1 month from the conclusion of each half year

Conclusions:

Small companies have fewer compliances and friendly regulations, which reduces the burden on directors. There is an exemption from the CARO Report and an exemption from certification of the annual return by PCS. There are lower fees and penalties than for other private or public companies.

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DISCLAIMER: The information provided in this article is intended for general informational purposes only and is based on the latest guidelines and regulations. While we strive to ensure the accuracy and completeness of the information, it may not reflect the most current legal or regulatory changes. Taxpayers are advised to consult with a qualified tax professional or you may contact to our tax advisor team through call +91-9871990777 or info@semantictaxgen.in.

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