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Accounting, Annual Returns, RoC Filing

“Annual Declaration” means a declaration required to be lodged by a Limited Liability Partnership (LLP) under section 68 of LLP Act. Annual returns statement contains of the book of accounts accompanied by documents as required in the declaration. Given that the dates are getting closer, we have written this blog to guide you LLPs with the annual returns filing.

 

Conditions for Compulsory Auditing of Accounts

What is this? Well, LLPs, if records a turnover exceeding INR 40L or whose contribution exceeds INR 20L  need to get their accounts audited.

How should it be done? LLPs are required to follow these procedures:

  • Only a CA can be appointed as auditor
  • Appointment should be made anytime before the end of the first financial year
  • Remunerations or role played by partners in appointing or removing a partner is guided by the LLP Deed

Note: If LLP annual turnover is more than INR 5C or contribution is more than INR 50L, the annual return should be certified by a company secretary too.

Filing Annual Return – Form 11

What is this? Within 60 days of the end of financial year, LLPs registered till the 30th September 2017 are subject to file annual return statement with Registrar in Form 11. An LLP which fails to comply with annual returns filing will be fined of not less than INR 20K but which may extend to INR 5L. If your LLP is registered on or after the 1st October 2017 then you do not require to file LLP Annual Return in the year 2018.

How should it be done? Annual return reporting in form 11 accompanied by a certificate from a CS in practice should be filed, only if LLP turnover exceeds INR 5C  or contribution exceeds INR 50L. In all other cases, partners can file the form themselves.

When should it be done? By 30th May, 2018

Filing of Statement of Account and solvency – Form 8

What is this? LLPs are required to file form 8 with the registrar, within 30 days from the end of six months of the financial year. Form 8 or Annual Statements for the year 2018 is applicable to those LLP which is registered until the 30th September, 2017.

How should it be done? Annual return reporting in form 8 accompanied by a certificate from a CS/ CA in practice should be filed.

When should it be done? By 30th October, 2018

Note: Digital Signatures of any 2 Designated Partners would be required for filing both forms purposes.

Penalty for non-filing of annual returns:

  • Delay in Form 8 filing – INR 100 per day till it is filed
  • Delay in Form 11 filing – INR 100 per day

Penalty for the false statement:

  • Imprisonment up to 2 years
  • Fine up to INR 5L, not less than INR 1L
  • The registrar may summon partners to appear in the court

Quick FAQs:

Q1. Do LLPs that did no business in the previous financial year have to file annual returns?

Ans: Yes, file Nil-Returns.

 

Q2. Can an LLP be closed without completing annual returns?

Ans: No, to wind up an LLP you need to file the pending returns accompanied by the accumulated fine.

 

Q3. What are the documents required?

  • Incorporation Certificate
  • Books of Account
  • Minute Book
  • Details of Change in Partners
  • Supplementary LLP Agreement (optional)
  • DSC of two directors
  • Certificate by Company Secretary (optional)

 

 

 

 

 

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Accounting

What we know about a partnership firm is, that a partnership is defined as a relation between two or more persons who have agreed to share the profits of a business carried on by all of them or any one of them acting for all. The owners of a partnership business are individually known as the “partners” and collectively as the “partnership firm”. Partnerships are governed by the Indian Partnership Act, 1932. Apart from this, the general law of contracts, as contained in the Indian Contract Act 1872 also applies to Partnership Firms in India. In this blog we will pull the contracts part to the limelight, giving attention to the top 5 agreements for a partnership firm.

 

#1: Partnership Deed:

 

Irrespective of whether you register the partnership firm or keep it as an unregistered partnership firm, this document is mandatory. Partnership deed covers the partners by the drafted clauses and the firm will have to work as per the rules laid out in this document. Main features of this agreement:

 

  • A Partnership agreement must clearly specify the name of the partnership firm, the names of the partners, the capital to be contributed by each partner, the profit or loss sharing ratio between partners, the business of the partnership, the duties, rights, powers and obligations of each partner and other relevant details.
  • Must be signed by all partners and witnessed by independent persons
  • Specifies the duties and authority of all the partners
  • Details of salary and other payments to partners
  • Registration of partnership deeds is not compulsory; however, the Income Tax Act, 1961 provides that a partnership shall be assessed as a firm only if it is duly evidenced by an instrument. Therefore, it is desirable to draft and execute a proper deed of partnership.
  • Rights to the firm and its partners

 

#2: Agreement Modifying Partnership Deed:

 

In case the partners of the partnership firm decide to amend the existing partnership deed, there is special agreement called agreement modifying Partnership Deed, which has to be executed. Main features of this agreement:

 

  • This Deed is supplemental to the Deed of Partnership and duly signed by the said parties
  • Details of the old clauses that have to be will be modified and replaced by new ones
  • Witnesses, not partners, have to sign the agreement too

 

#3: Agreement on Introducing New Partner:

 

In case the partners of the partnership firm decide to add new partner(s), this agreement has to be freshly drafted and executed. Main features of this agreement:

 

  • Details of the new partner
  • Date from when this agreement will come into effect
  • Details of the capital contribution and interest on capital
  • Remuneration for the new partner
  • Details of drawing in addition to the remuneration that the new partner can make
  • Details governing carry forward or indemnity of Debts of Old Partnership
  • Details on how future Profits of old Partnership firm will be determined
  • Profit Sharing Ratio of a new partnership
  • The document should be signed by witnesses and all partners

 

#4: Deed of Dissolution:

 

Dissolution clauses, generally are covered in the Partnership Deed Agreement, but there will be cases where a separate agreement dedicated to dissolution is drafted. Main features of this agreement:

 

  • Details of all the partners
  • Date from when the partnership stands dissolved
  • Details on how the accounts would be settled
  • Details on how the partnership if not settle all penalties would be settling up
  • Should be duly signed by witnesses, and partners.

 

#5: Deed of Retirement:

 

This agreement will lay down rules that retiring partners should follow to have themselves retired from the existing partnership firm. Main features of this agreement:

 

  • Details of the retiring partner
  • Date from which the partner is officially considered retired
  • Details on how the partnership firm would be carrying on with purporting profits.
  • Details on how the payables to and receivables from retiring partners from the firm.
  • The retirement of the Retiring Partner shall be advertised in the Official Gazette and in the local newspapers as required by law and the registration entry of the Firm
  • Retiring Partner will pay the income tax on his income and other amounts of money received from the Firm.
  • Should be duly signed by witnesses and all partners.

 

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Accounting, Secretarial Compliance, Start up Lessons

We all know startups, except for sole proprietorship firms and partnership firms, are considered separate legal entities, distinct and independent from the members who represent it. So, how can courts punish these startups which commit crimes? Common law has various theories which determine the liability of the corporations and the most prominent one would be the doctrine of vicarious liability which states that corporations can be held liable for the torts committed by its employees. But can corporations be charged with the crimes they have committed? Or more importantly, should they be held liable, especially since a company itself is not capable of thinking or of creating any intention of its own. In this blog, we will figure out answers.

 

Under the Indian Penal Code (IPC), corporations can be prosecuted for the crimes they have committed. Section 11of the Act defines that the ‘person’ would include “any Company or Association or body of persons, whether incorporated or not”. Incidentally, the IPC also protect companies. For instance, Section 499 (Explanation 2) makes defaming a company a criminal offense.

 

What does corporate crime involve?

According to R.C. Kramer, the corporate crime involves “criminal acts which are the result of deliberate decision making or culpable negligence by persons who occupy structural positions within the organization as corporate executives or managers. These decisions are organizational in that they are organizationally based – made in accordance with the operative goals (primarily corporate profit), standard operating procedures, and cultural norms of the organization – and are intended to benefit the corporation itself.”

 

What do theories say on Corporate criminal liability?

 

  1. Doctrine of Attribution

A corporation can be convicted of a criminal offense involving mens rea by applying the Doctrine of Attribution. According to the doctrine, criminal intention of the “alter ego” of the company, i.e., the person/ group of person in charge of the business/affairs of the company can be attributed to the corporation as well to make it liable. In other words, corporates can be held responsible for offenses committed by the persons in control of its affairs, if such are perpetrated in relation to the business of the corporation.

 

However, the question then arises whether the reverse will also hold true, i.e., whether the officials of the company can be held responsible for acts of the company? This question was recently answered by the Supreme Court of India in Sunil Bharti Mittal vs. Central Bureau of Investigation. The Apex Court, in no uncertain terms, held that the principle of attribution cannot be applied in the reverse scenario to make the directors liable for offenses committed by the company. However, the Court thereafter observed that in the following circumstances a director/person in charge of the affairs of the company can also be prosecuted, along with the company as an accused:

 

  • If there is sufficient evidence of his active role coupled with criminal intent;
  • Where the statute specifically imposes liability.

 

 

  1. Vicarious Liability

 

Originally developed in the context of tortious liability, the doctrine of vicarious liability holds a person liable to answer for the acts of another. For instance: In the case of companies, the company may be held liable for the acts of its employees, agents, or any person for whom it is responsible.

 

The concept of vicarious liability of corporate officials has evolved substantially in the recent times so much so that it has become a trend to implead the officials of the company along with the company to exert pressure on the company to settle. However, it is important to note that there is no vicarious liability unless the statute specifically provides for it. Therefore, when the company is the offender, vicarious liability of the directors cannot be imputed automatically in the absence of any statutory provision to that effect.

 

Essentials for the doctrine of vicarious liability, therefore, are as follows:

  • There must be a crime committed by the agent of the company.
  • He must commit it within the scope of his employment.
  • The act must be carried out with intent to benefit the company.

 

  1. Theory of identification

 

The theory of identification recognizes that the acts and state of mind of certain senior officials in a company are the directing minds of the corporation and thus deemed to be the acts and state of mind of the corporation. The corporation is considered to be directly liable, rather than vicariously liable under this theory. In other words, this theory contemplates an identity between the corporation and the persons who constitute its directing mind. The commission of an offense by such person constitutes an offense by the corporation as well. If a corporate employee is virtually the directing mind and will of the corporation, the employee’s action and intent are the action and intent of the company itself, provided the employee is acting within the scope of his/her authority, either express or implied. Under the doctrine of identification, the company is personally liable. It is not liable vicariously. It is deemed to have committed the offense by itself.

 

The concept of corporate criminal liability is still in its emerging stage in India. However, attempts have been made in the Companies Act, 2013 to control and reduce corporate crime, and at the same time improve corporate governance practices, making companies more responsible and answerable. With the advent of globalization, imposing criminal liability on corporations makes sense; because they are immensely powerful actors whose conduct often causes very significant harm both individuals and society as a whole. Clearly, a lot is still required to be done in this area but the steps taken so far should not be undermined. How effectively laws and regulations will be able to control corporate behavior, only time will tell.


Let us know if you need any help, we at Wazzeer would be glad that we could help you out -> Get Started!


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Accounting, RoC Filing

A company being non – compliant, Ooh, that sounds interestingly controversial, doesn’t it? This topic has been among the most sorted topics in debate stages. In fact, there are a number of businesses that have taken the path, and lucky for some doing well.

Did you ever feel – heck with compliance works, the firm will just do a minimum of the essentials? Well, hold on, right there. In this blog, we will look into the scary truth of being a non – compliant firm (stressing on Companies).

The most common reason for such non-compliance that we found in our survey is lack of awareness. Businesses are most vulnerable in the first two-three years of their business. In these years, the majority of businesses do not generate revenue, and in some cases, there are hardly any expenses. This leads to a wrong belief that since there has not been much activity, there is no need for reporting to be done. The reality, however, is far from this. Irrespective of the whether there is any revenue or even there is any transaction businesses are supposed to comply with compliance requirements.

 

A Game you should avoid playing – Consequence of Noncompliance:

 

Following are some of the brief consequences in which failing to comply can cost your business.

  1. A roadblock in Funding –

The pre-requisite of any funding exercise is the status of tax and regulatory compliances. Never has a company got funded, even in the seed investment level, whose compliances are not up to date. Non-compliant startups do not even live through the term sheet stage. Further, there is a severe negative marking for compliances done post due date with additional fees.

  1. A roadblock in the availability of Bank loan–

External angel/venture funding is out of the question, next source of funding for any business is the bank loan. However, even banks require compliance documents like audited financials, auditor’s report, auditor’s certificate for the last 3 years or as the case may be. Chances of a non-compliance company availing bank loans are next to zero percent.

  1. A roadblock in the availability of Government Tenders-

The same principle applies to Govt tenders. The pre-requisite of any such tender is a compliant business environment, where all reporting is up to date.

  1. 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. These companies can never be eligible for any sort of Govt/institutional assistances/contracts. Apart from that, these companies are vulnerable to RoC demand notices technically at any time.

  1. Liability of Directors-

Now, one may think that simply closing down the inactive company or starting up a totally new company would solve the problem. However, that is not so. 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. In other words, his DIN gets blocked and he would not be able to start a new company.

  1. General Penalties-
  • The penalty for Non- Preparation of Financial Statements – 
It is punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 500,000 or both.
  • The penalty for Non- filing of Income Tax Return Filing–
It will attract interest u/s 234A and i.e. if the assessee fails to file its income tax return within the time prescribed by section 139, then he shall be liable to pay interest @ 1% per month or part of the month from the due date of filing of return to the actual date of filing of its return. A further penalty can be levied up to Rs. 5,000 for non-filing of tax returns us 271F.
  • The penalty for Non-filing of Annual RoC forms– 
Additional fee leviable as per specified MCA slabs, which may extend up to 12 times of original fees. Apart from this, provisions for striking off the company and prosecution are also present.
  • The penalty for Non-filing of Annual RoC forms– 
Additional fee leviable as per specified MCA slabs, which may extend up to 12 times of original fees. Apart from this, provisions for striking off the company and prosecution are also present.

 

The compliance requirements can be complex, and business owners may not always be fully educated about the least rules and regulations and if you concerned about your company compliance status, consider hiring a human resources experts to protect your business legal and financial standing. After all, when it comes to noncompliance issues, ignorance of the law is no defense. 

 

We at  Wazzeer are vouched by entrepreneurs as the reliable Legal and Accounting Partner, we would be excited to help you, so Let’s Connect!

 

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Accounting

What does the CA say?

 

Establishing Accounting Policies when your company grows in size of more than 10 employees.

 

Is Accounting Policies really important?

 

Accounting policies are the specific principles, bases, conventions, rules, and practices applied by an entity in preparing and presenting financial statements.  The view presented in the financial statements of an enterprise can be significantly affected by the accounting policies followed in the preparation and presentation of the financial statements.

 

The accounting policies followed vary from enterprise to enterprise. Disclosure of significant accounting policies followed is necessary if the view presented is to be properly appreciated. The disclosure of accounting policies followed in the preparation and presentation of the financial statements is required by law in some cases.

 

How do Accounting Policies benefit the firm?

 

Accounting policies, as described already, brings in standards of accounting. These accounting policies answer some major questions like:

 

  • How the business recognizes revenue
  • How the business recognizes depreciation
  • How research and developments costs are capitalized and which are expensed
  • How the business would plan petty cash usage.
  • How the business recognizes depletion and amortization
  • How the business recognizes conversion or translation of foreign currency items
  • How the business recognizes valuation of inventories
  • How the business evaluates investments
  • How the business treats retirement benefits
  • How the business recognize profit on long-term contracts
  • How the business valuation fixed assets
  • How the business treats contingent liabilities.

 

How are Accounting Policies drafted?

 

Accounting Policies can be drafted by your CA or pretty much by the founders too. When drafting, one should consider necessary laws and policies for the business based on size, geography, and other relevant factors.

 

Factors to be taken into consideration while drafting:

 

  • Accounting policies should represent a true and fair view of the state of affairs of the enterprise.
  • Transactions and events should be governed by their substance and not merely by the legal form.
  • Financial statements should disclose all “material” elements.
  • Disclosure of accounting statements should form part of the financial statements
  • Any change in an accounting policy which has a material effect should be disclosed.

 

Wazzeer Professional Network is built on qualified CAs, CSs, and Lawyers who have been working with startups and SMEs in understanding and delivering various compliance works seamlessly. We would be happy to work with you, let’s connect -> “Get your Wazzeer”

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Accounting

What does the CA say?

Maintain Employee handbook right from the early stage.


Is Employee handbook really important?

One of the best practice that is normally ignored in startups and small entities is to have an Employee Handbook. This manual contains information like:

  • Reimbursement/expense procedure
  • Travel policy
  • Work etiquette
  • Email etiquette
  • Outlines key legal issues
  • Employee leave entitlements and benefits

Generally, these ventures are bootstrapped entities formed by friends and families, similarly, the initial funding is from the same parties. Owners of these ventures think that the venture is an extension of the family even though there are employees from different backgrounds. Such attitude restrains them from taking policies easy.


How does Employee handbook benefit the firm?

  • During External Funding scenario, this document is one of the mandatory requirements for funding due diligence, the reason being employee liability is pretty high.
  • Reiterates the at-will status of employment
  • Minimizes time spent answering general questions that can be easily addressed in the employee handbook
  • Clearly defines and communicates policies applicable to all employees, which promotes a sense of fairness, if enforced uniformly
  • Identifies key performance expectations
  • Facilitates discipline by providing a document that management and HR personnel can point to when a policy has been violated
  • Outlines employer and employee rights and responsibilities.
  • Promotes consistent treatment throughout the company, which may reduce employee lawsuits.

How is Employee handbook drafted?

An employee handbook can be drafted by a CA, HR personnel, pretty much by the founders too. When drafting the employee handbook care should be taken because one should consider which laws and policies are necessary for the business based on size, geography, and other relevant factors. Due to continuing changes in the employment laws, it is highly recommended that organizations have the employee handbook reviewed by legal counsel. A typical Employee Handbook should consist the following clauses:


  • A welcome statement along with a brief history of the company and a summary of the company’s mission.
  • At-will status of employment
  • Contract disclaimer and right to revise
  • Equal employment opportunity statement.
  • Policy against unlawful harassment
  • Commitment to provide reasonable accommodations, where available, and to engage in the interactive process.
  • Other policies depending on the entity size.

Wazzeer Professional Network is built on qualified CAs, CSs, and Lawyers who work with startups in understanding and delivering various compliance works seamlessly. We would be happy to work with you getting this organized and compliant. Let’s connect -> “Get your Wazzeer”






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Accounting, Start up Lessons, Startup Funding Paperworks

What does the CA say?

Maintain Chart of Accounts right from the early stage of the venture.

 

Is Chart of Accounts really important?

A company’s Chart of Accounts is a view of all Asset, Liability, Equity, Revenue, and Expense accounts included in the company’s General Ledger. The number of accounts included in the chart of accounts varies depending on the size of the company. Designing a COA is one of the first tasks that have to be performed when setting up a budgeting and its associated accounting and financial reporting systems.

 

The Chart of Accounts (COA) although appears to be just concerned with classifying and recording financial transactions, is critical for effective budget management, including tracking and reporting on budget execution.  A mistake in designing the Chart of Accounts could have a long-lasting impact on the ability of the system to provide required financial information for key decisions. Remember, COA is also the hub of any computerized accounting and reporting system.

 

How does maintaining Chart of Accounts benefit the firm?

  • The COA specifies how the financial transactions are recorded in a series of accounts that are required to be maintained to support the needs of various users/stakeholders.
  • The COA provides a coding structure for the classification and recording of relevant financial information within the financial management and reporting system.
  • The COA provides room for planning, controlling and reporting of budgetary allocations as well as internal management needs of budget units and/or cost centers.

 

How is Chart of Accounts designed?

COA can be designed by anyone who is aware of the nuances of accounting, but the difference that an experienced professional brings in is productivity and quality. It is a known fact that startups, most of them, lack the management bandwidth and expertise to carry out COA related works. 

The development and implementation of a COA should involve the following key steps:

  • The COA can only be properly configured after a comprehensive business needs analysis has been undertaken
  • The COA segments and the hierarchical levels within each segment should be defined.
  • The COA and its segments should use basic logic and account definition
  • Creating a global or a unified COA establishes a foundation for consistency in terminology and serves to eliminate redundant accounts
  • Define clear institutional, legal and procedural frameworks to prevent the COA structure from becoming fragmented.
  • For the COA to achieve its desired impact of facilitating improved budget management and financial reporting, all users should be adequately trained.
  • An effective change management strategy also needs to be developed to implement the new COA and associated reforms in the accounting and reporting system

 

Wazzeer Professional Network is built on qualified CAs, CSs, and Lawyers who work with startups in understanding and delivering various compliance works seamlessly. We would be happy to work with you getting this organized and compliant. Let’s connect -> “Get your Wazzeer”

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RoC Filing

The news of Over 2 lakh directors to be barred from board posts for not complying with RoC filing has been driving awareness among startup community and entrepreneurs have started to acknowledge the fact that certain things no matter has to be performed as per law. This blog we shall look into what one has to do during the final countdown of RoC filing.

 

An annual return is a snap-shot of a company’s financial information as they stood on the closing of financial year. It is perhaps the most important document required to be filed by the company with the ROC. Apart from the financial statement, this is the only document which is compulsorily filed with ROC every year irrespective of any event or happenings in the company. While financial statements give information on the financial performance of the company, it is the annual return which gives detailed disclosure and deep insight of the non-financial information of the company viz. operations of the private limited company, funding, control and management.


Filing of the annual return yearly with the registrar of companies is obligation of the management of the company. It helps the stakeholders to ensure that the company is administered in a proper manner.
As per the provisions of Companies Act, 2013; every Company have to file e-form MGT-7 (Annual Returns) within 60 from the date of Annual General Meeting and AOC-4 (Annual Accounts) within 30 days from the date of Annual General Meeting.


Every company prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood on the close of the financial year regarding –

  1. Its registered office, principal business activities, particulars of its holding, subsidiary and associate companies;
  2. Its shares, debentures and other securities and shareholding pattern;
  3. Its indebtedness;
  4. Its members and debenture-holders along with changes therein since the close of the previous financial year;
  5. Its promoters, directors, key managerial personnel along with changes therein since the close of the previous financial year;
  6. Meetings of members or a class thereof, Board and its various committees along with attendance details;
  7. Remuneration of directors and key managerial personnel;
  8. Penalty or punishment imposed on the company, its directors or officers and details of compounding of offences and appeals made against such penalty or punishment;
  9. Matters relating to certification of compliances, disclosures as may be prescribed;
  10. details, as may be prescribed, in respect of shares held by or on behalf of the Foreign Institutional Investors indicating their names, addresses, countries of incorporation, registration and percentage of shareholding held by them; and
  11. Such other matters as may be prescribed, and signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice: Provided that in relation to One Person Company and small company, the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company.

 

Guidelines on annual filing

DIN (Director Identification Number) and DSC (Digital Signature Certificate)

Documents Required

Form

Description

Time line



Documents Required


ADT-1

Intimation about the Auditor of the company

Within 15 days of AGM

–       Consent letter from the Auditor.

–       Intimation to the Auditor.

–       Extract of the AGM.

AOC-4

Annual Return

Within 30 days of AGM

–       Financials of the company.

–       Director Report.

–       Auditor’s Report.

–       MGT-9


MGT-7

Financial Statement

Within 60 days of AGM



–       Shareholding pattern of the company.


AOC4-XBRL

For filing XBRL document in respect of financial statement and other documents

Within 29th October

 

–          Financial Statements


Signing of Documents

The Annual return of the Company must be signed by the Directors of the Company. The financial statements filed along with the Annual return must be audited and signed by a Chartered Accountant. Where there is no company secretary, by a company secretary in practice: Provided that in relation to One Person Company and small company, the annual return shall be signed by the company secretary or where there is no company secretary, by the director of the company.


When is the due date for filing annual returns?
Annual return is due before the 29th October this year or 6 months from the end of the financial year. In case of newly incorporated Company, an Annual General Meeting should be held within 18 months from date of incorporation or 9 months from the date of closing of financial year, whichever is earlier and an annual return should be filed with the MCA.



Procedure for annual return filing

Step 1: Preparing Financial Statements of the Company:

All companies are required to prepare financial statements of the company based on the Book of Accounts. Financial statements means any statement to provide information about the financial position, performance and changes in the financial position of an assessed and includes balance sheet, profit and loss account and other statements and explanatory notes forming part thereof.

Step 2: Appointing Auditor for the Company

Every Company must appoint its first Auditor within one month of the registration of the company. Any person who is a qualified Chartered Accountant in practice or a firm of Chartered Accountants can be appointed as the Auditors of the Company. However, the following persons / entities cannot be appointed as Auditor of a Company:

  • A body corporate;
  • An officer or employee of the company (irrespective of if he/she is a qualified Chartered Accountant);
  • a person who is a Partner or Director of the company;
  • A person who is indebted to the company;
  • A person who is in whole time employment elsewhere;

It is important to remember that the Auditor of the Company must be independent and not having bias towards the company. The term of an Auditors appointment would end at the conclusion of the Annual General Meeting of the Company; the company may re-appoint the same Auditor or may decide to replace the Auditor.

Step 3: Auditing the Financial Statement of the Company:

Audit plays an important role in the management of the Company. As per Companies Act, 2013 every company should appoint an Auditor to audit the accounts of the company and present their report on the accounts. The Auditor after being appointed by the Company would audit the financial statements of the Company and submit his/her report on the accounts of the Company to the members. The Auditor is also required to state in his report whether the accounts of the Company give a true and fair view of the state of affairs of the Company.

If the Auditor is not satisfied with the information / clarification provided in the financial statements of the Company, or if the Auditor has any reservation in respect of the account or book of accounts maintained by the Company, then he/she can bring the facts to the attention of the stakeholders by Qualifying the Audit report.

Step 4: Conducting Annual General Meeting

An Annual General Meeting is a meeting of the shareholders of a Company held every year. Companies Act, 2013 mandates that all company except One Person Company hold one Annual General Meeting every year. No company is exempt from this requirement. The date of any Annual General Meeting must be within 15 months from the date of immediately preceding Annual General Meeting. However, for a newly incorporated company, the first Annual General Meeting must be held within 18 months from the date of incorporation of the Company.

Step 5: Acquiring Documents

Arranging the documents together like financial statement of the company.  Examples, At the Annual General Meeting, the audited financial statements of the Company with the Auditor’s Report and Directors Report are placed before the members of the Company. The members of the Company on being satisfied about the financial statements of the Company can adopt the Annual Accounts of the company after due consideration. The financial statements of a company are considered final only after it is approved by the Shareholders of the company in the Meeting.

Step 6:  Form Filing

File the respective documents as mentioned on the above table.


Step 7: Pay Fee and charges for forms

Company having Authorized Capital of INR 1 Lakh is INR 300 for each Form AOC-4 and MGT-7, and Company having Authorized Capital of INR 5 Lakh or more is INR 400 for each Form.

Hence, A Company is required to file its balance sheet, profit and loss account, auditor’s report and annual return every financial year before the due date with the registrar of companies. Noncompliance with this provision will attract a fine that is charged while filing the e-Form. And, non-compliant with Income Tax filing, will restrict you from carrying your losses forward.

We at Wazzeer have built a smart platform of Legal and accounting professionals which include Chartered accountants, Company secretaries and corporate lawyers from different parts of the country. We can help your company in taking care of all the compliance related projects so that you can take the back seat and enjoy brainstorming sessions for your venture.

Please go through the below mentioned information which clarifies the list of Documents, Scope of work, Timeline and Pricing for filing the ROC and IT returns for your company.


Entrepreneurs generally are interested in these frequently asked questions :

Q1. What is the scope of work?

  • Annual Returns filing to RoC for the Financial Years ending March 31, 2017
  • Profit & Loss Statement filing to RoC for the Financial Years ending March 31, 2017
  • Audit Report filing to RoC for the Financial Years ending March 31, 2017
  • Income Tax Returns filing to IT Department for the Financial Years ending March 31, 2017

Q2. How much time does it take?

7-8 Working days.

Q3. How much will it cost?

Govt. Fees for the financial year ending March 31, 2017 – INR900/- (AOC-4, MGT-14 and ADT-1)

Professional Fees- In case of 0-10 Transactions – INR 8850 including GST charges (Fees- 7500 INR and 18% GST)

Payment terms: The fees will be collected in advance and kept as a deposit with Wazzeer. The amount will be released to the professional towards the government fees, out of pocket expense and professional fees as required and as the milestones are reached while completing the work. The release of the payment will be done only after confirmation from you (Client).

Please feel free to contact us for any of your queries, will be happy to take the complete authority and get this work delivered before deadline. 🙂

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Consequences of not filing Annual Return

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RoC Filing

An Annual Return is the most important document that is to be filed by every company with the Registrar of companies as this one document reflects the company performance on the close of the financial year. Annual return has to be filed with the RoC within 60 days from the date of Annual General Meeting (AGM). If the AGM is not held in any year, the return has to be filed within 60 days from the date on which AGM should have been held together with the statement specifying the reasons for not holding the AGM, on payment of such fee or additional fee as prescribed (Rule 12 of the Companies (Registration Offices and Fees) Rules, 2014. Similarly, the responsibility cannot be abandoned even if the company is inoperative except for the case where the company has been woundup or its name struck-off from the Register maintained by the Registrar of Companies, then the business need not file its annual returns. In this blog we intend to help business owners understand the Consequences of not filing Annual Return alias ‘RoC filing’.

 

Scenario when a company does not file Annual Returns:

To Director

Case 1: We will analyse the situation where the company has not filed its Annual Return before the expiry of a period of 270 days from the date by which it should have been filed with fee and additional fees

Director can be punished with imprisonment for a term which may extend to 6 months or with fine which shall not be less than INR 50K but which may extend to INR 50L, or with both (Section 92)

Case 2:  If the company has not filed its Annual Return for continuous period of 3 financial years, then every person who is or has been director of that company shall not be eligible for re-appointment as Director of that company or appointed in any other company for a period of 5 years from the date on which the said company fails to do so.

Case 3:  If in Annual Return, any Director or any Person makes a false statement or omits any material fact

Directors can be punished with imprisonment for a term which shall not be less than 6 months but which may extend to 10 years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud.

 

To Company

Case 1: If the company has not filed its Annual Return before the expiry of a period of 270 days from the date by which it should have been filed with fee and additional fees, the company shall be punishable with fine which shall not be less than INR 50K but which may extend to INR 15L

Case 2: If the Company has defaulted in filing Annual returns for the consecutive 5 previous financial years, the Company may be wound up by the Tribunal.


Given the seriousness of the RoC filing, business owners should consider filing their Annual Returns. We at Wazzeer can help you get RoC filing done seamlessly let’s connect.

 

 

 

 

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Accounting, Legal

Once you received the certificate of incorporation, it means, all legal formalities required for company registration is completed. There are certain Compliance required to be done after registering the Company. This blog intends to give you some clarity on the famous question ‘Registered a private limited company. What next?’ Listing down the mandatory legal and accounting compliance for a Private Limited company which are to be done within 100 days of registration.

a)   Filing of Form INC-22 for situation of registered office address

Situation of registered office has to be intimated within 30 days from the date of incorporation to the registrar of companies. This can also be filed at the time of incorporation but if it’s not filed at the time of incorporation then within 30 days from the date of incorporation, you need to file e-form INC22 with the registrar of companies.


b)    Display Company’s Identity and other details:

After incorporation, it’s the duty of the company to display following things outside the company’s registered office and also required to be printed in all business letters, bill-heads and in all other official publications:

·         Name of the company

·         Registered office address of the company

·         Corporate identity number or CIN

·         Telephone number, email ID

·         Website address and fax number if any 


c)   Appointment Of Statutory Auditor:

As per section 139(6) of Companies Act 2013, Company has to appoint its first auditor within 30 days from the date of incorporation in a board meeting. If the board of directors are not able to appoint then it has to be appointed within 90 days in a general meeting of members. Form ADT-1 is required to be filed within 15 days of appointment with RoC.



d)   Opening of Bank Account for the Company:

To transact business the company is required to open and maintain a current account with any bank in India through which all the receipts and payments of banking nature shall be transacted. The mode of operation of the said bank account has to be decided in the first board meeting and a copy of the resolution passed with respect to operation of bank account is required to be given to the banker at the time of opening of bank account. Any subsequent changes in the mode of operation is also required to be intimated to the bank. 


e)       Issue of Share Certificates to Subscribers:

Within a period of two months from the date of incorporation, every company must deliver the share certificates to the subscribers of the memorandum. This means that the subscriber has to remit the agreed subscription amount within 60 days from the date of incorporation in the bank account of the Company.

 

f)    Payment of Stamp Duty on Issuance of Share Certificate:

Every state government has made a law imposing stamp duty on the issue of a share certificate, which is to be paid to the respective state government after such an issue. The rates of stamp duty and the method of its payment differ from state to state. However, in Maharashtra the stamp duty payable is 0.1% of the face value of the shares. The non-payment of stamp duty is a very serious offence for which apart from punishment imprisonment has also been prescribed.

 

g)   Preparing books of accounts:

Section 128 of the Companies Act, requires every company to prepare and keep at its registered office, books of account and other relevant books of account and financial statement of every financial year to give a true and fair view of the state of affairs of the company. The books of account need to be maintain with the double entry system to be preserved for eight financial years. The accounts need to be maintained at the registered address of the company or at any other place where directors decide. 

h)   Filing of financial statements and annual return:

A private limited company is required to file its balance sheet, profit and loss account, auditor’s report and annual return every financial year before the due date with the registrar of companies. Non-compliance to this provision will attract additional fee in addition to the normal fee that are charged while filing the e-Form.


i)    Maintain Statutory Registers, Minutes and other necessary documents:

Every company is under obligation to maintain certain register under Section 85, Section 88 etc. of the Companies Act, 2013 and required to keep and maintain at its registered office in the prescribed form, any failure in maintaining the statutory register is an offence for which company as well as directors may be fined and prosecuted. Company needs to conduct at least 4 Board meetings in a year with the gap between 2 board meeting not exceeding 120 days. Every matter discussed in the meeting needs to be recorded in Minutes.

 

j)    Obtaining PAN & TAN:

Company needs to obtain Permanent Account Number (PAN) and Tax Account Number (TAN) in the name of the Company. GSTIN in case of businesses that are GST eligible.

 

k)   Obtain Registration under Shops and Establishment Act:

Every state needs to pass its own law from the point of view of working hours and basic facilities to be provided to the employees of the companies. Within 30 days of incorporation of a company, it is liable to obtain a registration under the law of shops and establishment as may be applicable in the respective state. The failure of obtaining shops and Establishment registration is a criminal offence.

 

l)     Need based registration and Licenses:

Based on the business activity and the goods in which the company is dealing, there are other licences and registration which are required examples are, Drug Licence, Food Licence etc.


Wazzeer is vouched by Entrepreneurs as the most reliable Legal and Accounting Partner. We would be super excited to help you. Let’s Connect! 🙂

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