Latest update as on 20th March 2020
1. MCA has announced the exemption of physical Board Meetings of the companies until 30th June 2020 for the matters such as the approval of financial statements, Board report, restructuring, etc.
2. Companies and LLPs are advised to implement ‘Work from Home’ policy till the 31st of March 2020, at the headquarters and the field offices across India. Staggered timings may be followed to reduce any physical interactions among the essential staff on duty.
3. A simple web form CAR 2020 is advised to be submitted by the authorised signatory of every company/LLP starting from the 23rd of March 2020 on the MCA website. Know more about the filing process by reading our article on ‘All about CAR 2020’
Over the years, the process of incorporating a company has been made simpler, which encourages full compliance by the companies. The management should be fully aware of the post-incorporation compliance to avoid any penalties or punishments. The Companies Act 2013 is a stringent act and leaves no room for any mistakes.
“Ignorantia juris non excusat” means “ignorance of law is not an excuse”. This is a legal maxim which goes on to say that one cannot escape liability on the pretext of unawareness of the law. Thus the directors and shareholders will have to be aware of the legal compliance involved post-incorporation of the company.
Following are the significant actions which need to be taken post company incorporation:
- First meeting
As per Section 173(1), of The Companies Act 2013, the company shall hold a meeting of the Board of Directors in less than 30 days from the date of its incorporation. Directors are permitted to attend the meeting either in person or through video conferencing.
- Bank account
Companies need to have a bank account even before approaching the authorities for company incorporation. Since the company is an artificial entity, the transactions cannot be done in the name of any natural person.
- Official address
As per Section 12(1), a company shall have a registered office within 15 days from the date of incorporation. This address shall be used to receive all official communication from the various authorities. The company shall inform the same to the registrar within 30 days from the date of incorporation.
- It’s all in the name
Every company shall be required to affix its name at all places from where it carries on its business operations. It shall be displayed in the language which is generally used in the locality. Additionally, the company has to get a seal with its name engraved on it, letterheads with appropriate information and printed negotiable instruments.
According to Section 139(1), the first auditor shall be appointed by the Board of Directors (BOD), except for a government company, within 30 days from the time the company is registered. Failing which, the members shall appoint the auditor within 90 days at an extraordinary general meeting. The term of the first auditor shall be until the conclusion of the first annual general meeting.
- Interest disclosure
At the first board meeting, every director shall disclose his interest in any company/firm/body corporate/association of individuals as outlined in section 184(1) of the Companies Act 2013. Any changes in the disclosures shall be intimated to the board in its first meeting held during each financial year. An independent director, if any, must give a declaration that he meets the criteria of independence during the first board meeting as a director.
- Statutory registers
The company shall be required to maintain statutory registers at the registered office of the company. The same shall be maintained in the prescribed form failing, which the company will be subject to penalties.
- Share certificate
The share certificate shall be issued to a shareholder within 60 days from the date of incorporation. In case of additional shares being allotted, the time period is taken as 60 days from the date of allotment.
- Books of Accounts
As per section 128, every company shall maintain proper books of accounts which shall represent an accurate and fair view of the state of affairs of the company. The double entry system shall be followed, and the accounting is done on an accrual basis.
- Commencement of business certificate
Within 180 days, the company shall obtain a certificate of commencement of business. There is a requirement to file a disclosure made by the directors of the company stating that every subscriber has paid the amount due on the shares.