Startup
Compliance

For a Startup registered as a private limited company in India, there are certain compliance requirements laid down by the Companies Act, 2013 and other regulatory bodies that need to followed and adhered to from time to time. Failure to adhere to such regulations would lead the startup to penalties that could severely damage your business and harm the reputation that you have worked so hard for.

It is important to note that this is not an exhaustive list but it includes the mandatory compliance such as holding board and other important meetings, filing of tax returns, filing of audit reports and regulatory assessment of your business under various acts of law.

The annual Compliance can be divided into two categories:

I. Registrar related Compliance
II. Non-Registrar related Compliance

Note: The annual compliance checklist for startups below is applicable for companies registered as a private limited entity, especially for Small Companies with paid up capital upto Rs. 50Lakh or having annual turnover in the last year below Rs. 2Cr.

Registrar
Compliance

Every Director of the Company in First Meeting of the Board of Director in each Financial Year shall disclose his interest in other entities.

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

Every Director of the Company in each Financial Year will file with the Company disclosure of non-disqualification.

Annual Return: Every Small Company will file its Annual Return within 60 days of holding of Annual General Meeting. Annual Return will be for the period 1st April to 31st March.

Financial Statement: Company is required to file its Balance Sheet along with Statement of Profit and Loss Account and Directors’ Report in this form.

Attachment:
 Balance Sheet, Statement of Profit& Loss Account, Directors’ Report, Auditors’ Report and Notice of AGM.

Directors’ Report shall be prepared by mention of all the information required 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.

Company will send to the members of the Company approved Financial Statement, Directors’ Report and Auditors’ Report at least 21 clear days before the Annual General Meeting.(Except in case of AGM is called on Shorter Notice)

Every Notice of Annual General Meeting will be prepared as per Section 101 of Companies Act 2013 and Secretarial Standard – II.

 Notice of Annual General Meeting will be sent to following:• All Directors, Members, Statutory Auditor.

 Every Company shall hold a minimum number of Two Meetings of its Board of Directors every year in such a manner that Minimum gap between both the meetings not less than 90 (Ninety) days.

Auditor will be appointed for the 5 (Five) year and form ADT-1 will be filed for 5-year appointment. After that every year in AGM, Shareholder will ratify the Auditor but there is no need to file ADT-1.

Company will maintain the following mandatory Registers:
• Register of Director, Director Shareholding, Members.

Important Note: The above mentioned Registrar related compliance are mandatory annual compliance for the Small Private Limited Company. Except above compliance, there may be other event based compliance for the Small Company. These include the following:

– Incorporation Of Company And Matters Incidental Thereto
– Management and Administration
– Appointment And Qualification Of Directors

For more details goto MCA site.

Non-Registrar
Compliance

The non-registrar compliance requirements include the following:

  • Income Tax Returns Filing

  • Tax Audit Report Filing

  • Periodic Returns Filing– (Monthly, Quarterly, Annual Returns of GST, TDS, etc.)

  • Monthly/Quarterly GST Returns

  • Quarterly TDS Returns

  • Assessment of advance tax liability and the periodic payment of advance tax

  • Payment of periodic dues such as GST Liability, TDS & TCS payment.

  • Regulatory Assessment of business under different acts of law (For example – Environment and Protection Act, Money Laundering Act, Competition Act, Factory Act etc.)

Running a Startup business in India is not an easy task. It involves a constant investment of both time and effort as well as technical capabilities of knowing the various statutory compliance and regulations. We hope the above annual compliance checklist for startups is helpful for both founders and budding entrepreneurs in imparting the right knowledge and guiding them.