Post incorporation compliance for a private limited company
You have successfully completed your company registration now its time to comply with applicable regulation and the law of the land, Post incorporation compliance for private limited company cannot be ignored or taken lightly the consequences and the penalties are high
In civil jurisprudence, the term used is ‘IGNORANTIA JURIS NON EXCUSAT’ : IGNORANCE OF LAW IS NOT AN EXCUSE
At this point of starting your business, please keep in mind the famous legal maxim Ignorantia Juris nonexcusat, which means “ignorance of law is not an excuse”
It is legal principle holding that a person who is unaware of a law may not escape liability for violating that law merely because one was unaware of its content.
7 Mandatory Post incorporation compliance for a private limited company
- Appointment of First Auditor of the Company with 30Days of Registration of the Company
- Certificate Of Commencement Of Business INC 20A
- GST Registration
- Shop Act Registration
- Professional Tax Registration
- Issue of Share Certificate and Payment of Stamp duty on the same
- Opening of Bank Account
1. Appointment of First Auditor of the Company with 30 Days of Registration of the Company
As per Section 139 of the Companies Act, 2013 every auditor before his appointment shall provide his consent for such an appointment and submit a certificate that satisfies the criteria as mentioned under Section 141 of Companies Act, 2013 and Rule 4 of Companies (Audit and Auditors) Rule, 2014.
The Following are mandatory attachments
- Board Resolution for appointment
- Consent letter From Auditor
- Certificate from auditor Relating to eligibility
- Issue an appointment letter to the auditor of the Company
Filing of ADT 1 is not mandatory for appointment of the first auditor, but a matter of additional caution the form needs to be filed with the registrar of companies through the Ministry of Corporate affairs portal
2. CERTIFICATE OF COMMENCEMENT OF BUSINESS INC 20A
As per Section 10A of the Companies Act, 2013 every subscriber has to deposit the subscription money in Company’s bank account within 180 days of incorporation and submit such a declaration to concerned ROC in form INC 20A
All shareholders of the company must bring in the share capital subscribed individually for example there are 3 Shareholders all 3 shareholders should separately bring in capital into the company account
3. GST Registration as a part of company post-incorporation compliance
GST Registration in mandatory for all companies if they incur any transaction under Reverse Charge, so after the company is registered its important to register under GST laws
4. Shop & Establishment Act Registration (GUMASTA LICENSE)
The shop & establishment act is applicable to every office and shop where commercial activities are carried on even on employing one employee or even if the company has one director.
Your Office /Corporate office will be covered under the Shop & Establishment Act. and the provision of leave and other rules shall be applicable, even when your company is registered under the Companies Act.
5. Professional Tax Registration (PT)
Every employer in specific states is required to deduct taxes from salary when paid to one or more employees when payment made exceeds Rs 5000(this limit is for Maharashtra) and deposit with state government. That entity is required to obtain a registration certificate. When person is employed in a profession by two or more employers and is getting salary/wages exceeding Rs. 5000 but the employer is not deducting professional tax then the individual needs to get an enrolment certificate from authority.
6 Issue of Share Certificate and Payment of Stamp duty
Within 60 days of Registration, the company should issue share certificate to all shareholders with a distinct share certificate, stamp duty needs to be paid on the share certificate
Except for Karnataka, Maharashtra, Delhi where share certificate needs to be franking needs to be done in rest of the states the stamp duty needs to be a revenue stamp
For Karnataka the Stamp Duty is Re 1 for every Rs 1000
For Maharashtra, the stamp duty is 0.1% of the value of the shares (₹1 for every ₹1000) including the amount of premium
7. Infusion of Initial Capital by Subscribers to Memorandum
The subscribers to the Memorandum of Company has to bring the amount of subscribed capital as stated in the Memorandum of Association at the time of company registration within 60 days of incorporation.
There is no explicit conditions in Companies Act as to this time limit 60 days for bringing the capital. However, the company is required to issue share certificate to the shareholders within 60 days of incorporation. In order to comply requirements of issue of share certificates in time, it is advisable to bring the subscribed capital with 60 days of incorporation.
Infusion of capital to the Company bank account should happen preferably from the respective shareholders account. Also, the shareholder has to bring the entire amount of subscribed capital as stated in the Memorandum of Association.
In addition to the above-mentioned procedure the company must conduct a board meeting every quarter and maintain the requisite statutory registers and minutes under the company act 2013
Your Experts Virtual Auditor is here to support you For any assistance on Post incorporation compliance for a private limited company, contact virtual Auditor support team at [email protected] or contact 77000 89597 /044 -48560333, we will help you with the process