Corporate compliance means having internal policies and procedures within the organization to prevent and detect violations of applicable law, regulations, rules and ethical standards by employees, agents, staff and others. Complying with the compliances has an added advantage in maintaining the company’s good position in the eyes of others. Besides this one also needs to follow income tax compliance also and needs to pay tax properly as well following all the compliances.
Before even implementing these compliances, the basic question arises is, which laws need to be applied and what sort of compliances does my company needs to follow. For this however there are several compliances including Maintenance of Minutes books and statutory registers, Annual Returns Filing, Registered Office change, Change of Directors, Increase in Authorized Capital etc.
Maintenance of Minutes Book
Minutes Book is a bound book which contains permanent and detailed record of the deliberations of, and resolutions adopted at a firm’s official meetings. All incorporated or registered firms are required by law to maintain an up-to-date minute book which should be accessible to all members of the firm at the firm’s registered office or legal address. Usually
a Minutes Book is kept and maintained in order to track/record what was said or discussed at the meeting.
The expression “minutes” means a brief summary of the proceedings of a meeting. Minutes should contain a fair and correct summary of the proceedings of the meeting and should normally convey why, how and what conclusions were arrived at in relation to each business transacted at the meeting. It need not be an exact transcript of the proceedings. When we talk about Corporate Income Tax Compliance one also needs to see Annual Return Filings.
Maintenance of Statutory Registers
It includes the following:
- Register of members
- Inspecting the register of members
- Register of directors
- Register of secretaries
- Register of charges
- Persons with significant control (“PSC”) register
- Other registers
Statutory Registers are the requirements of the Companies Act 2013 & should be kept, and kept up to date. Now a day’s Maintenance of Statutory registers in electronic form is also done.
Importance of Maintenance
Whether minute books are maintained physically or electronically, keeping accurate summary sheets can be significantly increased
A well-maintained corporate minute book should contain an index sheet listing sections, separated by written or numbered tabs which can help in sorting out all necessary information
The statutory registers serve as a source of inspection by Directors, Members, Creditors and other persons
Maintenance of Minutes Book and Statutory Registers
- The register & books should be kept at the registered office of the company.
- The Minutes Book & Register shall be opened to inspection at such office by concerned members;
- Extracts can be taken by any known user,
- Copies may be furnished to concerned member of the company
Annual Return Filings
The Annual Return Filings provides a view of general information about your company, including the details of directors and company secretary (if appointed), the registered office, share capital and shareholdings. The filing is usually done with Registrar of Companies (RoC). The Annual filing is mandatory for a Private Limited company, Public Limited Company, One Person Company and even for Limited Liability Partnership.
For filing the Balance sheet and Annual returns the company needs to conduct Annual General Meeting and within 60 days from the date of AGM, the company needs to file the necessary forms along with the Notice for AGM and Director’s Report.
To enquire about annual return filing fees/annual return filing procedure or about annual return filing Companies Act 2013, just write to us at email@example.com. Also if you change your registered office address you need to file it under Registered Office Change.
Need for Annual Return Filing
- In order to show all the closing of accounts and conducting an audit, the company needs to file the Balance sheet & other financials of the company with RoC in a prescribed form within the stipulated time period.
- In the Annual filing all the information needs to be shown. For Example: Registered office address of the company, Authorized Capital, Paid up capital, present Directors of the Company, present Shareholders of the company etc.
- All the companies, whether incurring profits or losses need to file annual returns necessarily with RoC in which they need to display balance sheet & profit and loss account in order to provide information about their working.
Components of Annual Returns
- Authorized Capital
- Debentures issued if any
- Register of Directors
- Paid-up Capital
- Register of Members
- Details of Transfer of Shares
- The Annual Return has to be signed duly by the Directors of the Company. However if the company is a listed Public Limited Company, then it should also be signed by the Company Secretary of the Company along with the Directors
Registered Office Change
A registered office refers to the official address of an incorporated company, association or any other legal entity. However, every company in India as per Companies Act 2013, needs to mandatorily print their names and address of the registered office in all its business letters, bill heads, letters, and papers and in all its notices and other official publications. The change can be within a city or state or even there can be registered office change from one state to another.
Within 30 days from the date of issue of Certificate of Incorporation, a company needs to file all the verification of documents with respect to its registered office with RoC. Without this a company cannot commence its business. However every change of the registered office, verified in the manner prescribed, after the date of incorporation of the company, shall be given to the Registrar within fifteen days of the change.
Even for change of Directors, filing needs to be properly done.
E-forms need to be filed online for Registered Office Change Procedure:
- Notice for change given to the Registrar within 15 days of the change, (earlier in the old companies act, it was 30 days).
- Filing a Board Resolution along with the form INC-23 with Registrar of Companies for Company Registered Office Change (Registered Office change form)
- However if the Shifting of registered office is from one Registrar to another Registrar but within the same state, it can be done with the special resolution of the members & then after confirmation of Regional Director, an application to be filed for the purpose in Form INC-23.
- For Shifting of Registered office from one State to another, a special resolution of the members has to be obtained and an advertisement in English and local newspapers is to be made by the company
A Company is a legal entity and does not have physical presence. The natural person who runs the affairs of the company is called Director. A director is responsible for managing the company’s business activities. Even very small company must have atleast one director (depending on the kind of company).
Members of a company (‘shareholders’), collectively own the company. Directors, on the other hand, are responsible for the management of the company’s business activities. Change of Directors in Pvt Ltd Company or Public Limited Company or even Change of directors in NBFC can be done due to various reasons depending on Company to Company. The entire change of directorship takes place once you plan to add or remove a director.
Adding and removing the directors
For adding a director, one first needs to obtain Director’s Identification Number (DIN). However after this the person, who has obtained Director’s Identification Number, can become a director by the consent of shareholders. Change of directors’ form needs to be filled for adding or removing a director.
However for removing a director, the required form needs to be filed along with the resignation letter in order to remove the director. Filing even needs to be done in case of increase in authorized capital.
Minimum Requirements to become a Director
- At least one director of the company should stay in India for 182 days or more in the previous calendar year
- A person cannot be appointed as a director if he is of unsound mind and stands so declared by a competent court
- The person must be of 18 years of age
- To be appointed as a director, possession of DIN is a must
- Foreign Nationals can also become a director in the Indian Company
Authorized capital of a company refers to the maximum amount of share capital that the company is authorized by its constitutional documents to allocate to shareholders. That part of share capital which is issued to shareholders is the Issued Capital, while a part of the Authorized Capital is left unissued. However an increase in authorized capital would mean the case when company decides to add more value to its share capital.
The process of increase in Authorized Capital can be done anytime by the company after its incorporation. However for increase in authorized share capital, a provision needs to be made in the articles of association from the beginning. If there are no such provisions at the beginning, then the company has to take steps for alteration. Following the corporate compliance, even if the process of Share Transfer needs to take place, filing needs to be done. To discuss about increase in authorized capital fees, just contact us, we are here to solve your every problem.
Need for Increase in Share Capital
- The basic need for Increase in Authorized Share Capital arises when company plans to issue securities to the subscribers more than the authorized share capital of the company. Or
- Even when the company plans to expand its operations, the authorized share capital can be increased by the company.
Procedure for increase in Authorized Share Capital
- Holding Board Meeting to get approval of all the directors and discussing and fixing the date for Extraordinary General Meeting
- Calling for Extra-Ordinary General Meeting to get consent from all the shareholders of the company & passing ordinary resolution
- Filing RoC along with form SH-7 & altered MoA & AoA within 30 days of ordinary resolution
- Passing Special Association, giving all the necessary details about increase in share capital
Share Transfer is the act of changing the ownership of a share or group of shares from one owner to another. The transfer of shares basically means that the shares were owned by one person before the transfer and a different person after the transfer. A shareholder is free to transfer shares to a person of his own choice and that the articles cannot put a complete ban or unreasonable restriction on the transfer.
While shares in a private company are not freely transferable and are subject to the restrictions imposed by the articles of the company, shares in a public company are freely transferable and can be transferred from one person to the other.
Need for Share Transfer
- It ensures the perpetual succession of the firm
- When a shareholder dies, his shares immediately pass to the personal representatives (Transfer takes place)
- Ownership of shares of the company gets transferred
Procedure for transfer of shares
- Execution of transfer deed in form SH-4 by the transferor and the transferee
- Stamps done according to the Indian Stamp Act and Stamp Duty Notification in force in the State concerned
- Transfer Deed duly signed by Transferor and the transferee
- Attaching the relevant share certificate or allotment letter
- Registering the transfer by board after passing a resolution
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