What Are The Compliance Requirements For Companies Under The Companies Act?

The Companies Act establishes regulatory and compliance obligations for companies to ensure corporate governance, financial transparency, and accountability. Non-compliance can lead to penalties, fines, and even legal action against the company and its directors.

Key Compliance Requirements Under the Companies Act

1. Registration and Corporate Governance Compliance

Company Incorporation: Businesses must register under the Companies Act, 2013, with the Registrar of Companies (ROC).

Memorandum & Articles of Association (MOA & AOA): Governing documents defining the company’s objectives and operational structure.

2. Annual Compliance Requirements

Annual General Meeting (AGM): Mandatory for private and public companies to conduct within six months of the financial year-end.

Board Meetings:

• Private companies: At least 2 board meetings per year.
• Public companies: Minimum 4 board meetings per year.

3. Financial and Tax Filings

Statutory Audit: Companies must get their financial statements audited annually by a registered auditor.

Filing of Financial Statements (AOC-4): Submission of audited profit & loss statements and balance sheets with the ROC.

Annual Return Filing (MGT-7): Required for all companies, detailing shareholding structure, directors, and key corporate details.

4. Director & Shareholder Compliance

Director Identification Number (DIN) & KYC Compliance: Directors must maintain updated KYC records with the ROC.

Declaration of Interest (MBP-1 & DIR-8): Directors must disclose any financial interests in other companies.

5. Secretarial Compliance for Listed Companies

SEBI Compliance: Listed companies must adhere to SEBI (LODR) Regulations.

Secretarial Audit (For Large Companies): Conducted by a Company Secretary (CS) to verify regulatory compliance.

6. Corporate Social Responsibility (CSR) Compliance

Companies with a net profit of ₹5 crore or turnover above ₹1,000 crore must allocate 2% of their profits toward CSR activities.

Legal Actions and Protections

• Timely Filing of ROC Forms to avoid late fees and penalties.
• Maintain Proper Books of Accounts to ensure transparency in financial reporting.
• Appoint a Qualified Company Secretary (CS) for regulatory compliance in large companies.
• Ensure Regular Audits to prevent financial misstatements and legal scrutiny.

Example

A private limited company fails to file MGT-7 and AOC-4 within the due date. As per the Companies Act, the company faces a penalty of ₹100 per day for each delay. To avoid this, the company appoints a Chartered Accountant (CA) to ensure timely compliance.

By adhering to the Companies Act's compliance framework, businesses can avoid penalties, maintain credibility, and ensure smooth operations in the corporate ecosystem.