Statutory Requirements: Easy Summary

Introduction

Indian companies are governed by the Companies Act 2013, which lays down several legal formalities. To adhere to the procedures as required by law, we offer the following services:

1. Company Incorporation 
2. Filing documents with the Registrar of Companies
3. Statutory YearEnd Audit
4. Director’s Report, to ensure all statutory compliances are met
5. Support for Annual General Meetings (AGMs) and compliance  
6. Guidance on Meetings, including Board and Statutory Meetings, as well as necessary filings  7. Advice on other provisions that might be applicable to your company

Company Law

Types of Companies  Private and Public Companies can be categorized under the respective head of the Companies registered under the Companies Act 2013.

Private companies cannot issue shares, cannot invite the public to subscribe to shares or debentures and are further restricted to 200 members. 

Public companies have no such restrictions. 

It introduces the concept of a One Person Company (OPC). It permits a single Indian citizen being the sole member.

Dormant Company (New in the 2013 Act)

A dormant company is one that has no significant accounting transactions, or one formed for future projects. If it is inactive for two consecutive financial years, it may apply for the dormant status. Dormant companies still have to hold Board Meetings every six months and adhere to certain filing and fee requirements.

Share Capital 

There are two types of share capital:

1. Equity Share Capital: It can be issued with voting or differential rights (like different dividend entitlements). 2. Preference Share Capital: It offers priority in dividends and capital repayment when winding up the company. Preference shares can be cumulative, convertible, participating, redeemable, or a combination. Minimum PaidUp Capital

The minimum paid up capital for private companies must be ₹1,00,000 whereas public companies should have a minimum of ₹5,00,000. In turn, this amount might differ according to specific terms.

Directors and Management

Types of Directors

Public companies are required to have at least three directors, private companies at least two, and OPCs require only one director.

Public Companies listed in an exchange should have 50% of non-executive directors on the board of directors, and independent director rules vary with the kind of company.

Independent Director

Companies with specific financial thresholds are required to have at least one independent director. Independent directors cannot have a material financial relationship with the company, and they are considered to be advisors and watchdogs for shareholders.

Key Managerial Personnel (KMP)

A company with paid up capital of ₹5 crore or more must have full time KMP that will comprise of Managing Director or CEO, Company Secretary, and Chief Financial Officer. Corporate Governance & Meetings Board and General Meetings Companies are required to hold four Board meetings annually, not more than 120 days between two meetings.

AGMs must be held within six months of the closure of the financial year, and there cannot be more than a 15 month gap between meetings. 

Electronic Meetings

Participation through video conferencing is allowed and has been a major relief to directors who cannot physically attend meetings. 

Compliance

Annual Filing & Returns

All companies must prepare and present group consolidated financial statements for subsidiaries also at their annual general meeting. Under OPCs, this period is 180 days after the annual general meeting.

Corporate Social Responsibility (CSR)

Every company falling in a particular category will have to spend 2 percent of its profit generated in CSR activities. In addition, every company needs to have a CSR Committee of three or more directors and at least one independent director on the board.

Conclusion

This Companies Act 2013 can be quite complicated, but with the right guidance, it is quite manageable. Our group ensures that your business complies with all relevant statutory obligations and thus enjoys peaceful, hasslefree operations.