POST INCORPORATION COMPLIANCES BY PVT LTD COMPANY
Introduction
Incorporation of the private limited company brings along a few mandatory compliances to be carried out after its incorporation. These compliances need to be carried out within a specified time period after incorporation. However, these Post Incorporation Compliances are not that much burdensome in nature and are very basic. Let us discuss what needs to be done after incorporation.
1) Hold a BM:
After the incorporation of the company, the board of directors is required to call for a board meeting within 30 days of its incorporation and take necessary decisions in this meeting. These decisions include the bank in which the company wants to open the account, issuance of share certificates, the appointment of an auditor, and any other transactions on which the consent of board members is necessary. The directors can attend meetings either in person or through video conferencing. A private limited company is required to hold at least 4 board meetings in a year and the gap between two consecutive meetings cannot be more than 120 days. Now a day, due to the current situation of pandemic, a company can do meetings through video conferencing also.
2) Open a bank account:
The company is an artificial person in the eyes of the law and thus it requires to have a bank account in its own name. The directors of a company cannot do business through their personal bank accounts. There must be a separate bank account in the name of the company to carry out business transactions of the company.
3) File Form 20A- Commencement of business:
A company cannot start doing business immediately after getting an incorporation certificate. The shareholders of the company, who have acquired the share of the company, are required to deposit their subscription money into the bank account of the company within 180 days from the incorporation of the company. It is the duty of the company to file Form 20A to the concerned ROC intimating that all the shareholders have deposited their subscription money. This form is called a declaration of commencement of business. A company can start doing business only after filing this form.
4) Appointment of the first auditor:
Every private limited company is required to appoint its first auditor within 30 days of its incorporation. This auditor shall be appointed by the board of directors. Filing form ADT-1 intimating ROC about the appointment of an auditor is not compulsory in the case of the first auditor. The first auditor appointed shall hold his office till the conclusion of the 1st Annual General Meeting. In the 1st AGM, the company shall appoint a subsequent auditor for 5 years who shall hold the office as an auditor till the conclusion of the 6th AGM. The company is required to file Form ADT-1 within 15 days of its appointment.
5) Issuance of share certificate:
The company is required to issue share certificates in Form SH-1 to its shareholders within 60 days of its incorporation. For any subsequent allotment of shares, the company is required to issue a share certificate within 60 days from the date of allotment.
Conclusion:
The above-mentioned Post Incorporation Compliances are mandatory compliances that need to be carried out after the incorporation of the company. Above compliance enables the company to run its business in a legitimate manner. To know the mandatory yearly compliances for the private limited companies please refer to our next blog post.
