Popular in Course
verified elite notetaker
Popular in Entrepreneurship
This 11 page Document was uploaded by an elite notetaker on Monday December 21, 2015. The Document belongs to a course at a university taught by a professor in Fall. Since its upload, it has received 27 views.
Reviews for HandBook---After-Incorporation-of-Limited-Company
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 12/21/15
Handbook On Compliance requirements of a Limited Company © CompaniesInn.com LLP www.companiesinn.com Manage your Company Being a registered entity, Limited Company is treated as artificial legal person in relation to regulatory compliance provisions. After registration of a Company, it has to comply the legal and regulatory requirements of various laws. The individual Promoters / Directors are required to ensure the compliance of the provisions of respective Acts and rules while conducting the business activities and regulatory procedures. Corporate Compliance is an essential part of a corporate function failing which stringent penalties are imposed under the provisions of Companies Act. While running the business, regular compliance of Company can be broadly classified in to a. Companies Act b. Accounting and Audit c. Taxation d. Other compliances specific to the industry where the business relates Limited Company While running the business, a company has to comply and adhere to various legal process and procedures as required under the Companies Act and Rules. The compliance process in a company is ensured by way of meetings of directors and shareholders, maintenance of Minutes, Registers and Records, appointment of company secretary, maintenance of accounts and audit, Filing of periodic and event based returns to Registrar of Companies. Board of Directors and Meetings Directors are appointed by shareholders and the day to day management of company is vested with the Board of Directors. The Board of Directors manages the company subject to the provisions of Companies Act and Rules. The Board carry out the management through decisions taken at their meetings. The decisions at the meeting of directors are carried by way of resolutions. The Board of Directors has to meet at least once in every three months and at least 4 meetings shall be © CompaniesInn.com LLP www.companiesinn.com held in every year. Minutes of Board Meeting should be recorded and kept signed by the Chairman of the meetings. Shareholders and Meetings Shareholders are the ultimate owners of the company and thus they are the ultimate decision making authority for matters such as appointment of directors etc. Every year, the company has to convene an Annual General Meeting (AGM) of the shareholders for adopting the Annual Accounts and appointment of Auditors for the following year. Any meetings of shareholders other than the Annual General Meeting are called Extra Ordinary General Meetings (EGM). In case of any items that requires shareholders approval and cannot be waited for next AGM, usually decided at an EGM of shareholders. Minutes of General Meetings of the company should also be recorded and kept signed by the Chairman of the meetings. Though the day to day affairs are managed by the board of directors, there is certain decision that requires the approval of Shareholders meetings. Considering the requirements of majority for passing, resolutions can be classified in to Ordinary resolution and Special resolution. Ordinary Resolution: Where the votes casted in favour of the resolution exceed the votes casted against the resolution in a general meeting by members or by proxies attended the meeting and entitled to vote. Special Resolution: Where the vote’s casted in favour of the resolution are not less than three times the number of votes casted against the resolution in a general meeting by members or by proxies attended the meeting and entitled to vote. Company Secretary Every company having a paid up capital of Rs.5 Crore or more shall appoint a whole time Company Secretary and every company having a paid-up share capital of Rs.10 Lakhs to Rs.5 Crore shall obtain the Secretarial Compliance Certificate from a Company Secretary in whole-time practice and have to file the same with the Registrar of Companies. © CompaniesInn.com LLP www.companiesinn.com Minutes / Registers / Records and Common Seal A company is required to maintain and preserve a set of records as required under Companies Act. The records and registers should be made available for inspection by Directors/ Shareholders and Regulatory authorities as and when required subject to restrictions under the Act. To ensure timely compliance of requirements in a systematic manner, the following records, registers and stationery is required by a company. 1. Share Certificate Share certificate is the proof of share holding in a company. The company has to issue share certificate to the subscribers of Memorandum on receipt of subscription money as agreed in the Memorandum of Association and for all subsequent share allotments. A Share certificate is required to be issued under the authority of board resolution with the common seal of the company and is required to be signed by two directors and an authorized signatory. Stamp duty is to be paid on share certificate according to the respective state stamp rules. 2. Minutes Book The decision taking process in a company happens through Meetings of Board of Directors and Members. Minutes of these meetings are required to be recorded, serially numbered, each page should be initialed and the last page should be dated and signed by the Chairman of Meetings as required under Companies Act. 3. Statutory Registers The following are the Registers that are mandatory to be kept by a company i. Register of Members ii. Register of Directors iii. Register of Directors Shareholding iv. Register of Companies / Firms in which Directors are interested v. Register of Contacts in which Directors are interested vi. Register of Charges © CompaniesInn.com LLP www.companiesinn.com vii. Register of Investments not in the name of Company viii. Register of Loans and Guarantee ix. Register of Investments x. Register of Share Transfers 4. Common Seal Common seal is an official seal used by the company. Use of common seal leaves an indentation or impression on the paper. Common seal is usually used for the following purposes a. Issue of Share certificates b. Contracts and deeds to be executed by the company The common seal is required to be used under the authority of board of directors and is required to be witnessed by directors as stipulated in the Articles of Association of the company. Filing of Returns with office of Registrar of Companies (ROC) Compliance mechanism under Companies Act mandates a company to file documents and Returns to office of Registrar of Companies (ROC) from time to time. Compliance related filing of returns / documents with the office of Registrar of Companies can be broadly classified in two categories; 1. Annual Statutory Compliances 2. Event Based / Process Compliances 1. Annual Statutory Compliances a. Annual Accounts. Every company has to prepare financial accounts consisting of Balance Sheet and Profit and Loss account on a yearly basis duly audited by a Chartered Accountant and the same has to be placed before the Annual General Meeting (AGM) of the company. Copy of the Annual Accounts has to be filed with the Registrar of Companies within 30 days from AGM. © CompaniesInn.com LLP www.companiesinn.com b. Annual Return. Every year a company shall file a return with the Registrar of Companies within 60 days of AGM containing the particulars such as address of registered office, register of its members, register of its debenture holders, shares and debentures, indebtedness, members and debenture holders, past and present, and directors, managing directors, past and present. c. Secretarial Compliance Certificate. In case of companies having paid-up share capital of Rs.10 Lakhs to Rs.5 Crore shall file the Secretarial Compliance Certificate with the Registrar of Companies within 30 days from AGM. 2. Event Based / Process Compliances The following are few instances that require a filing of a return with the Registrar of Companies. Events that requires filing of Returns a. Allotment of of Shares b. Increase Authorised Capital c. Creation / Modification / Satisfaction of Charges d. Change in Registered Office of the company e. Filing of certain Resolutions Passed by the Board / General Meetings and Agreements entered by the company f. Appointment of Directors / Managing Director and changes among them. Process related Filing requirements g. Change of Company Name h. Obtaining Certificate of Commencement of Business by a Public Company i. Statutory Meeting of a Public Limited Company j. Conversion of Private Company to Public and vice versa k. Various Approvals from the office of Central Government / Regional Director / Company Law Board /Registrar of Companies © CompaniesInn.com LLP www.companiesinn.com Accounting & Audit If finance is the life blood of Business, accounting is the function that of a heart. A Company or LLP is required to maintain proper books of accounts with respect to a. Sums of money received and expended b. Sales and purchase of goods and services c. Assets and liabilities As per Companies Act, books of accounts to be maintained according to double entry system on accrual basis in accordance with the Indian accounting standards and the same shall be maintained at the registered office of the company. A company has to close its accounts every financial year and such financial year may be less more than a calendar year but it shall not exceed fifteen months. The account of a company has to be audited by a Chartered Accountant. The requirement of audit is applicable to all companies irrespective of size and turnover. In case of companies where annual turnover is Rs.60 Lakhs or more, there is an additional requirement of audit under Income Tax Act by a Chartered Accountant and the report to be submitted along with the Annual Tax Returns. Every Annual General Meeting (AGM), the board of directors shall place the accounts of the company consisting of Balance sheet as at the end of the financial year and a Profit and loss Account for that period along with the report of auditors. © CompaniesInn.com LLP www.companiesinn.com Tax Compliances A. Income Tax Compliances Income Tax law compliances for a company / LLP are as follows: 1) Tax Deduction / Collection at Source (TDS/TCS) and filing of Returns Company or LLP while making specific payments has to deduct tax at source. TDS is applicable to payments such as Salary, Interest, Dividend, Rent, Fee for professional and technical services, Commission and brokerage etc. The collection tax will be made at the source where income arises or accrues. The Incomes Tax Act mandates the payer to deduct specific percentage from the payment and pay the balance to recipient. The payer has to file quarterly returns to Income tax department with details of payee, date of deduction and date of remittance to department etc. The die dates for filing the quarterly returns are as follows: Quarter Filing Due dates First Quarter (April to June) July 15th Second Quarter (July to Sept) October 15th Third Quarter (Oct to Dec) January 15th Fourth Quarter (Jan to March) May 15th 2) Advance Tax Payments Income Tax laws mandate payment of Income Tax in Advance in case of assesses total tax liability for a financial year exceeds Rs.10000 or more after deducting the tax deducted at source from the gross tax payable on the current income. Schedule of Advance Tax Payment by Companies and LLP Instalment Due Date Percentage First 15th June 15% Second 15th September 45% Third 15th December 75% Fourth 15th March 100% © CompaniesInn.com LLP www.companiesinn.com If the advance tax payment is not made in time, interest will be applicable for the delay in payment. 3) Filing of Income Tax Returns As per Income Tax Act, company or LLP has to close its financial year as on 31 March st every year and has to file the returns with Income Tax Department. In case of Company / LLP whose annual turnover is more than Rs.60 Lakhs, the accounts have to be audited as required under Income Tax Act as well. A company / LLP have to file its Income tax Returns on or before the due dates as follows: Company / LLP whose accounts are not 31 July of every year required to be audited under any Law Company / LLP whose accounts are 30 thSeptember of every year or such subject to Audit under any Law other date as may be notified by the Income Tax authorities. B. Service Tax A company / LLP providing taxable services have to obtain Service Tax Registrations when the annual turnover is more than Rs.10 Lakhs in any of the previous financial year. (i) Payment of Service Tax The service provider has to collect service tax at such rate from the recipient of services and to pay to the government as follows on receipt basis: Company Service tax to be paid on or before 20 th day of the following month th LLP Service tax to be paid on or before 20 day of the following month after each quarter (ii) Filing of Service tax Returns The service provider has to file the return to Service Tax Department as follows: Monthly / Company Monthly Return to be filed © CompaniesInn.com LLP www.companiesinn.com Quarterly returns on or before 20 th of the following month LLP Quarterly return to be filed th on or before 20 day of the following month after each quarter Half yearly Company / LLP Quarterly return to be filed returns on or before 20 day of the following month after each half year Yearly returns Company / LLP Yearly return to be filed on or before 20 th day of the following month after each Financial year C. VAT All the companies and LLPs dealing with taxable goods and materials should register under VAT if the turnover of Company / LLP from taxable goods is above the exempted limits as prescribed under state VAT Rules. Value Added Tax (VAT) or Sales Tax is a consumption tax levied on sale of taxable goods and materials. VAT is a state specific registration and it is applicable to sales within the state as well as interstate sales. The seller is liable to pay VAT to the government. As the name suggested this tax is levied on the value added on the product by a dealer. For example X sells a product at Rs.1100.00 (including 10% VAT) to Y. Y adds margin of Rs.200 and sells the product to the customer at Rs.1320.00 (ie., 1200+10% VAT). Tax liability in this case is follows: X to Government Rs.100.00 (10% of Rs.1000.00) Y to Government Rs.20.00 (10% of Rs.1200 – Rs.100) Payment and VAT Returns The amount of VAT collected should be paid to Government on monthly basis and Monthly / Quarterly / Half yearly / Yearly returns also to be filed for the same. © CompaniesInn.com LLP www.companiesinn.com D. Professional Tax This is a tax on employment and profession. Professional tax is imposed at the state level. Companies / LLPs employing people with stipulated salary shall have to obtain registration for Professional Tax. The slab for professional tax defers from state to state. Business owners, working individuals, merchants and people carrying out various occupations comes under the purview of this tax. E. Importer Exporter Code (IEC) Importer Exporter Code (IEC) is a unique 10 digit code issued by Director General of Foreign Trade, Ministry of Commerce, Government of India. To carry on import or export in India, IE Code is mandatory. No person or entity shall make any Import or Export without IE Code Number. If there is any change in the particulars of company, changes in directors, change of address, an application has to be made to Director General of Foreign Trade to effect such changes in the IEC Records / Certificate. ********** For more information and all your Company / LLP Compliance requirements, Contact our Helpdesk: # 463, 10th Main, 13th Cross, Wilson Garden, Bangalore -560 027 Phone: +91 98452 13333 or E Mail: email@example.com © CompaniesInn.com LLP www.companiesinn.com
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'