Ensuring ongoing compliances relating to secretarial functions (with specific reference to private and unlisted public companies of small and medium-size)

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  • Last Updated on 20 August, 2021

compliances under companies act relating to secretarial functions

[2021] 129 taxmann.com 165 (Article)

The private limited companies and unlisted public companies (closely held) are the best-suited form of business with limited liability protection to its shareholders and also the simplest form of business registration. A private limited company can be registered with a minimum of two people while in the case of public companies seven people are required. This form of business organization can raise equity funds and enjoys a separate legal entity status.

However, running a business of these forms cannot be undertaken lightly. On one hand, the company needs an ongoing investment of much time and effort to run the business and on the other, the company also needs to meet the regulatory compliance requirements. A company that ensures the applicable compliance would be respected by its stakeholders and everyone would be proud to be associated with the compliant company and would win the trust of the customer, enjoys the competitive advantage and ultimately the company would gain proper returns on its investment.

Compliance is not only ‘doing the right thing’, or ‘ticking a box’ but it is the way of working, part of the business, investor confidence, transparent and open culture, and it should not be forgotten that the cost of non-compliance is always more than the cost of compliance.

Managing compliance

The required compliances to be fulfilled by the company can be divided into two parts i.e. mandatory compliances (routine and on an ongoing basis) and event-based compliances.

Routine Compliances

The routine compliances would be in respect of:-

1. Company Name Board is to be displayed at the registered office with the required details

2. Letter Head of the Company, notices, and other publications should bear the details of registered office details of the company.

3. First Board Meeting is required to be held within 30 days of the incorporation of the company and the subsequent board meetings are to be held as specified in the Companies Act 2013 and also fulfill the requirements of the secretarial standards.

4. Share Certificates are to be issued to the subscribers of the memorandum within 60 days

5. Filing of Disclosure of interest by directors at the first meeting of every financial year in MBP-1 form and also any changes are to be notified as and when the change takes place.

6. Declaration from Director at the time of appointment or reappointment in Form DIR‐8

7. Company should appoint at least one resident director

8. Company is required to maintain the statutory registers as specified by the Companies Act 2013 and keep updating the same for changes as and when takes place.

9. Copy of every resolution (with the explanatory statement, if any) or agreement for the specified matters to be filed with ROC in Form MGT‐14 within 30 days, and Articles of a company shall have a copy of resolution affecting amendment in Articles of Association of the company and agreements referred in Section 117(3) of the Companies Act 2013.

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