Annual Compliance Checklist for Startup and SMEs

Many startups and SMEs are coming into existence now a days. They are completely focused towards developing their business and increasing their clientele but they should not forget about the statutory and other government compliance which they are mandatorily required to do during the year.

Many startups and SMEs promoters are not aware of the compliances and they act as and when they come to know it through their consultant or advisors and sometimes it results in delays and penalties. They are unable to act proactively due to lack of knowledge and guidance.

This article will enlighten them about the things they need to do during the year in advance and will result in timely compliance of all the government act, rules and regulations.

Startups and SMEs are generally incorporated as a one person company, small company or other private limited company as per companies act, 2013. We will discuss the same one by one.

One Person Company

One person company is a company which has only one member and one shareholder. Only one member subscribes to its memorandum of association.

Compliance checklist for OPC:

• Form MBP-1

All the directors in the company in each financial year shall disclose their interest in other entities in form MBP-1. If there is any change in interest from previously disclosed form, new form needs to be submitted.

• DIR -8

Every Director in each financial year needs to submit form DIR-8 for non-disqualification for acting as a director.

• Annual Return (MGT-7)

OPC needs to file its annual return with 180 days from the end of the financial year in form MGT-7.

• Financial Statements (AOC-4)

OPC is required to file its financial statements, Auditor’s report and Director’s report also within 180 days from the end of the financial year.

• KYC for Directors

All the directors of the company is required to file their KYC also in form DIR-3 till 30^th September every year.

• Board Meetings

Board of directors of OPC are required to held at least 1 board meeting in each half of the calendar year, further the difference between 2 meetings shall be more than 90 days.

• Auditor Appointment

OPC is required to appoint the auditor for a period of 5 year in form ADT-1 which needs to be filed within 15 days of AGM.

• Register to Maintain

OPC is required to maintain register for related party transaction, Director details, Director shareholdings.

• Reporting of delayed payment to MSME

OPC is required to file form containing details of delayed payment to MSME for each half of financial year within 30 days from the end of each half.

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Small Company

Small company is a company whose paid up capital does not exceed ? 50 Lacs and whose Turnover is up to ? 2 crore.

Compliance checklist for Small Company:

Just like the OPC, Small company is also required to submit the below forms:

1. Form MBP-1 for director’s disclosure in other entities.
2. DIR -8for non-disqualification of a director.
3. Annual Return in form MGT-7
4. Financial Statements in form AOC-4
5. KYC for directorsin form DIR-3
6. Minimum 2 Board Meetings in a year
7. Auditor appointment for 5 years in form ADT-1.
8. Reporting of delayed payment to MSME in form MSME-1.

Additional compliance:

1.     Register to Maintain

Small company is also required to maintain certain registers for:

• Director details
• Director shareholding
• Member detail
• Related party transactions
• Register of transfer

2.     Holding of AGM

Every small company shall hold an Annual general meeting (AGM) every year in addition to other meetings. It should be held within 6 months from the end of financial year.

3.     AGM Notice

AGM notice is required to be send all the directors, members and auditors of the company at least 21 days before the meeting.

4.     Circulation of Financial Statements

Every small company is required to circulate its financial statements along with the director’s report and auditor’s report to all the members of the company at least 21 days before the AGM.

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Private Limited Company

Private limited company is a company incorporated as a private limited company with MCA but not a small company.

Compliance checklist for a Private Limited Company:

Just like the OPC and Small company, Private limited company is also required to submit the below forms:

1. Form MBP-1 for director’s disclosure in other entities.
2. DIR -8 for non-disqualification of a director.
3. Annual Return in form MGT-7
4. Financial Statements in form AOC-4
5. KYC for directors in form DIR-3
6. Auditor appointment for 5 years in form ADT-1.
7. Reporting of delayed payment to MSME in form MSME-1.
8. Certain Register to maintain
9. Holding of AGM every financial year
10. AGM Notice before 21 days of AGM
11. Circulation of financial statements before 21 days of AG

Additional compliance:

• Certification of Annual return: Every private limited company having paid up capital of at least 10 crores or turnover of at least 50 crores shall get its annual return certified from a practicing company secretary.
•  Board Meeting – Every private limited company shall held at least 4 board meeting in a financial year and gap between any 2 meeting should not be more than 120 days.