Introduction

Secretarial compliance, a critical aspect of corporate governance, encompasses a range of legal and regulatory obligations that companies must fulfill to ensure transparency, accountability, and legal conformity in their operations. At its core, secretarial compliance involves adhering to the provisions of various laws, rules, and regulations formulated by regulatory authorities such as the Ministry of Corporate Affairs (MCA), Securities and Exchange Board of India (SEBI), Reserve Bank of India (RBI), and other statutory bodies. These regulations govern diverse aspects of corporate functioning, including corporate governance, financial reporting, shareholder rights, and disclosure norms. The Companies Act 2013 governs most of these regulations. Let’s review the statutory compliances applicable to 2024-25.

Directors

Section 184 outlines the duty of directors to disclose their interests in any company or entity. Directors are required to declare any concerns or interests they have in a company or companies at the first Board meeting they attend after their appointment and at the first meeting of each financial year. This disclosure, which includes shareholding, must be made using FORM MBP-1. Section 164(2) of the Companies Act, 2013, requires that at the beginning of each financial year every director must notify the company of any disqualification using Form DIR-8 before his appointment or re-appointment. According to The Companies (Appointment and Qualifications of Directors) Rules, 2014, every individual who holds a Director Identification Number (DIN) as of March 31 of a financial year must submit e-form DIR-3-KYC for that financial year to the Central Government on or before September 30 each year.

Acceptance of Deposit

Section 73 and Rule 16 of the Companies (Acceptance of Deposits) Rules, 2014, if a private company wishes to accept deposits from its members, it must follow the detailed process prescribed in this section. The company is required to submit a return in Form DPT-3 to the Registrar by June 30th each year. This return, which must be audited by the company’s auditor, should include all related information as of March 31st of that financial year. Form DPT-3 is used to file returns for both deposits, and details of transactions not considered deposits, including loan details.

Foreign Assets & Liabilities

The annual return on Foreign Liabilities and Assets, as mandated under FEMA 1999, must be submitted by all Indian resident companies that have received FDI or made overseas investments in any previous year, including the current year within July 15 each year.

Annual General Meeting

As stipulated by Section 96 of the Companies Act, 2013, Company is required to hold its annual general meeting each year before September 30th, ensuring that no more than fifteen months pass between one annual general meeting and the next. Additionally, the AGM notice must be sent out at least 21 days prior to the meeting.

According to Section 101 of the Companies Act, 2013, a general meeting of a company can be convened with a minimum of 21 days’ clear notice, delivered either in writing or electronically to all shareholders. When calculating the 21-day notice period, both the date the notice is sent and the date of the meeting are excluded. This notice period can be shortened if the company obtains prior approval from at least 95% of the voting members.

Auditor

According to Section 139, in conjunction with the Rules of the Companies Act, 2013, the company must appoint an individual or a firm as an auditor, who will serve for a term of five financial years. The company is required to file a notice of appointment or reappointment in Form ADT-1 with the Registrar within fifteen days of the meeting in which the auditor is appointed or reappointed.

Financial Statements

According to Section 129 of the Companies Act, 2013, the audit of accounts must be completed on or before the last week of August. Additionally, the signed and scanned versions of the financial statements (including the Audit Report, Balance Sheet, and Profit and Loss Account with notes to accounts and schedules) must be shared immediately. In accordance with Section 137 of the Companies Act, 2013, a copy of the financial statements, including any consolidated financial statements, along with all required documents attached under this Act, must be filed with the Registrar within thirty days of the company’s annual general meeting. This filing should be done in the prescribed manner and accompanied by the applicable fees or additional fees.

Annual Return

According to Section 92, in conjunction with the Rules of the Companies Act, 2013, the company must file a copy of the annual return in Form MGT-7 with the Registrar within sixty days of the annual general meeting. Additionally, if the company has a website, it must place a copy of the annual return on it and include the web link to this annual return in the Board’s report.

Board Meeting

According to Section 173 of the Companies Act, 2013, a Board meeting must be called by providing at least seven days written notice to each director at their registered address. This notice can be sent by hand delivery, post, or electronic means. In accordance with Section 173, along with the Rules and Secretarial Standard-I, the company must hold at least four Board of Directors meetings each year. The interval between two consecutive meetings should not exceed 120 days (for small companies, at least two meetings are required). As per Section 118 of the Companies Act, 2013, each company is required to prepare and document the minutes of Board meetings in a Minutes Book or on Minutes Sheets within 30 days following the conclusion of the meeting.

Related Parties

According to Section 188 and the accompanying Rules, the company must not engage in transactions involving the sale or purchase of goods and the provision or receipt of services with related parties without adhering to the necessary compliance requirements under the Companies Act, 2013.

Maintenance of Registers

According to Section 88 read with Rule 3(1) of the Companies (Management and Administration) Rules, 2014, a company is required to maintain a register of members, detailing separately each class of equity and preference shares held by members residing in or outside India. If a company fails to maintain this register or does not do so in accordance with the provisions, both the company and the responsible officers will be subject to a fine ranging from Rs 50,000 to Rs 3,00,000. If the failure continues, an additional fine of up to Rs 1,000 per day may be imposed for each day the non-compliance persists.

In accordance with Section 170 of the Companies Act, 2013, and Rule 17 of the Companies (Appointment and Qualification of Directors) Rules, 2014, a company must maintain a register at its registered office. This register should contain prescribed details of its directors and key managerial personnel, including information about the securities they hold in the company, its holding company, subsidiaries, or associate companies.

Under Section 186(9) and Rule 12(1), a company that provides a loan, gives a guarantee, offers security, or makes an acquisition must maintain a register in the prescribed manner, file the Form MBP-2. In accordance with Section 56 and its corresponding rule, the company is required to maintain a share transfer register. Under Section 188 and its related rules, the company must maintain a register of related parties and their relationships with the company.

Event Based compliance

Event-based compliances such as changes in the Board of Directors, changes in the registered office, issuance and allotment of shares, transfer of shares, and filing FCGPR with RBI in relation to further allotment of shares.

Threshold based compliance

Certain compliances are based on specific thresholds (such as turnover, borrowings, net worth, profit, etc.). For example, CSR requirements, MGT-8 certification by a Company Secretary, XBRL financial statements, and the appointment of an in-house Company Secretary.

MSME Specifics

The Ministry of Corporate Affairs (MCA) has amended Schedule III of the Companies Act, 2013, in conjunction with notification S.O. 368(E) dated January 22, 2019. This amendment introduces the Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order 2019, which mandates the filing of Form MSME-1. In Form MSME-1, companies are obligated to disclose specific information concerning vendors registered under the Micro, Small, and Medium Enterprises Development Act, 2006 (MSMED Act, 2006). There is no fee required for filing the MSME form.

Thus, Statutory compliance is very crucial to a company, in case of non compliance with statutory requirements, the company can have far-reaching and severe consequences, affecting its legal standing, financial health, reputation, and overall business operations.

Companies can reach out to Compliance management firms like BCL India who are specialised in latest laws and regulations. our expertise ensures that companies stay updated and adhere to all relevant legal requirements. We also provide strategic advice on compliance-related matters, helping companies to make informed decisions and align their compliance practices with their business goals. We prepare companies for audits by ensuring that all compliance-related documents and processes are in order, reducing the stress and disruption audits can cause. Compliance is an ongoing process. BCL India continuously monitor changes in regulations and update the company’s compliance practices accordingly, ensuring long-term adherence to statutory requirements.