Forming a Private Company – steps and

legal documents and compliances required

Submitted by: Group B

Anjana Chandrasekaran(1710120004)
Harsha Bharadwaj(1710120008)
Neha Ghildiyal(1710120016)
Sanoop Vaidyan(1710120024)
Shivom Kalra(1710120028)
Swaminathan Vaidyanathan(1710120114)
Forming a Private Company

Obtain DIN (Director Identification Number) for proposed directors of the company
(minimum requirement 2). Based on the recent changes GST number is optional

Getting approval for the proposed name of the Company. It should be of two
parts, with one being the unique name of the company and the other being
the field in which the company is set up, ex. Cascara Healthcare Pvt. Ltd.

File the necessary Incorporation forms at the Registrar office of the city where the
company is registered at
Forming a Private Company (Contd.)

Obtaining of DSC (Digital Signature Certificate) for the proposed directors

Getting MoA (Memorandum of Association)and AoA (Articles of Association) printed

Pay the necessary Stamp duties (can be made online too)

Once incorporation is filed, obtain certificate of incorporation as well

If needed, request and obtain Certificate of Commencement of Business, to commence

operations (Companies Act, 2013)
Legal Documents Required
• Scanned copy of Passport size photographs, pan card and Aadhar card/voter I-card of directors.
• Scanned copy of latest bank statement/ telephone or mobile bill/ electricity or gas bill.
1 • Specimen of Digital Signature, email-Id and phone number of the Directors

• Proof of registered office address

2
• After getting your name approved from MCA, apply for the certificate of incorporation. The following three
forms are required:
• INC-7
3 • INC-22
• DIR-12

• Apply for a certificate to commence business. It is mandatory for a Public Limited Company and Private
Limited Company as per section 11 of the Companies Act, 2013.
4 • It is necessary to file INC-21 within 180 days of receiving a certificate of incorporation.
Fees Required
Basic mandatory compliances
Preparation of Financial Statements

Income Tax Return Filing

Annual RoC Filing

Audit Compliances

Secretarial Drafting
Compliance’s
Required
Once the Company is formed, there are certain compliances that the organization needs
to adhere to, in order to ensure that their license does not get cancelled. Few of those are:
Appointment of Auditors
• Appointed for 5 years
• First Auditor will be appointed within one month from the date of incorporation
Conducting Board Meetings
• First meeting to be conducted within 30 days of incorporation.
• 4 meetings/year and 1 meeting/quarter (min.)
• Directors must be present during the meetings
Conducting Annual General Meetings
• To be held every year
• Venue: Registered office
• Agenda’s included approval of financial statements to appointments of auditors.
Compliance’ Required
(Contd.)
 Annual filling of Forms
• This includes filling annual financials, details of shareholdings, directors, etc.
• Companies required to file a Compliance Certificate from a practicing company secretary if
they pay share capital more than Rs. 10 Lakhs
 Yearly forms and report preparation by Directors
• Directors are required to inform the company about their directorship in other companies
every year
 Statutory Register and Minutes book maintenance
• Register of Member, Register of Directors, Register of Contracts, Register of Charges, etc.
are maintained
• These registers are required to be kept at the registered office of the company
Certain event based compliances such as Allotment of new shares, Giving loans to directors or
other companies, appointment of Directors or their remuneration, Opening or closing of bank
accounts, change in signatory and appointment of or change of Statutory Auditors for the
company
Statutory & Regulatory Compliances
• New Companies Act 2013 states that apart from the legal formalities
mentioned, the company has to have a CSR provision.

• Requirements under the labor and employment legislation –

Employee working hours
Minimum wages and remuneration
Rights and obligations of the trade unions and insurance of the employees

• The company should ensure that proper compliances of these various

statues vis-à-vis its employees are in place and the employee policies are
formulated accordingly.
Statutory & Regulatory
Compliances(contd.)
• Requirements under the Environmental Law - Environmental and pollution
control matters are governed by various statutes such as
The Environment (Protection) Act, 1986
the Water (Prevention and Control of Pollution) Act, 1974
 the Air (Prevention and Control of Pollution) Act, 1981
Public Liability Insurance Act, 1991

• A company is required to comply with the provisions of these environmental laws

to the extent specifically applicable to the business operations of such company.

• Consequences of non-compliance - with the relevant provisions of any such

statutes and rules framed there under, are provided in the respective statutes.
Income tax compliances
 Filing of Income tax return-6 by the private Ltd. Companies for
annual tax return with the Income tax department.
Penalty Provision: Penalty can be levied up to Rs. 5,000 for non-
filing of tax return us 271F

 Filing of Tax Audit report under the Income tax act, 1961.
Penalty Provision: Penalty @ 0.5% of turnover, subject to a
maximum limit of Rs 1 lac.
Advance Tax(Sec 208)
• Liability only if advance tax payable in a FY is Rs Ten Thousand or
more.
• Due dates for the payment of Advance Tax:-
Instalments Due Date % of Income
1st On or before 15th July 15
2nd On or before 15th Oct 45

3rd On or before 15th Jan 75

4th On or before 15th March 100

Consequences of Non-
Compliance
• Roadblock in funding - The pre-requisite of any funding exercise is the status
of tax and regulatory compliances.
• Roadblock in availability of Bank loan - Banks require compliance
documents like audited financials, auditor’s report, auditor’s certificate for the
last 3 years.
• Roadblock in availability of Government Tenders
• Stamp of a “Dormant” Company - Companies with a non-filing history of 3
years or more are often categorized by the Ministry as ‘dormant’ companies. 
•  Liability of Directors - A director of a company which has not filed its returns
for 3 consecutive years is disqualified to become a director in any other company
as per the Companies Act, 2013. DIN gets blocked.
Penalties
• It is punishable with imprisonment for a term which may extend to one
Penalty for Non- Preparation year or with fine which shall not be less than Rs. 50,000 but which may
of Financial Statements extend to Rs. 500,000 or both.

• if the assesse fails to file its income tax return within the time prescribed
Penalty for Non- filing of by section 139, the he shall be liable to pay interest @ 1% per month or
Income Tax Return Filing part of the month from the due date of filing of return to the actual date
of filing of its return.

• Additional fee leviable as per specified MCA slabs, which may extend
Penalty for Non-filing of upto 12 times of original fees. Apart from this, provisions for striking off
Annual RoC forms the company and prosecution are also present.

Exports Private Ltd. v. The Registrar of Companies

Other compliances to know

Alteration of object clause in MOA

Displaying company identity – CIN on letter

heads, invoices, etc.

Acceptance of unsecured loans

Conclusion ??
References
• https://www.indiafilings.com/learn/private-limited-company-compliances/
• http://ventureasy.com/blog/compliances-for-a-private-limited-company/
• https://yourstory.com/2016/04/business-india-compliance-requirements/
• https://taxmantra.com/non-compliance-can-really-screw-your-business/
• http://
www.mondaq.com/india/x/429880/Corporate+Commercial+Law/CASE+LAWS
• https
://www.profitbooks.net/5-compliances-for-private-limited-companies-can-attract
-huge-fine-ignored
/
THANK YOU