Annual Compliance of Public Company – Fees, Forms & Filing

The Annual Compliance of a public limited company is an important part of corporate governance under the Companies Act, 2013. A public company must complete its statutory filings, Board meetings, AGM, financial statement filings, annual return and applicable director, auditor and secretarial compliances within the prescribed timelines.

For the listed public companies, the compliance framework is broader because SEBI and stock-exchange requirements also apply. Therefore, annual compliance should be treated as an ongoing process rather than only an annual ROC filing.

Quick Summary

The exact compliance requirements depend on the company's status, size, activities, transactions and whether it is listed or unlisted.

What Is Annual Compliance of a Public Limited Company?

Annual compliance refers to the statutory activities and filings that a public company must complete during and after every financial year.

These may include maintaining statutory records, conducting Board meetings, preparing audited financial statements, preparing the Board's Report, holding the AGM and filing the applicable forms with the Registrar of Companies (ROC).

The annual return contains prescribed information about the company's registered office, share capital, members, directors, KMP, meetings and other matters.

Key Annual Compliance Requirements

1. Conduct Board Meetings

A public company generally has to hold a minimum of four Board meetings every year, with not more than 120 days between two consecutive meetings, subject to applicable exemptions. Proper notices, agendas, attendance and minutes should also be maintained.

The Board is responsible for considering and approving important matters, including the financial statements and the Board's Report.

2. Prepare and Audit Financial Statements

The company must prepare its financial statements for the financial year and have them audited as required under the Companies Act, 2013.

The financial statements are approved by the Board before being signed and placed before the members at the AGM. The Board's Report and auditor's report are also important components of the annual reporting process.

3. Hold the Annual General Meeting

A public company must hold its Annual General Meeting (AGM) in accordance with Section 96 of the Companies Act.

The AGM is generally held within six months from the close of the financial year, subject to the provisions applicable to the company's first AGM and any permitted extension.

During the AGM, shareholders may consider matters such as adoption of financial statements, declaration of dividend where applicable, appointment or reappointment of directors and auditors and other matters requiring shareholder approval.

4. File AOC-4 With ROC

AOC-4 is used for filing the company's financial statements and applicable attachments with the ROC.

Under Section 137, financial statements adopted at the AGM are generally required to be filed with the Registrar within 30 days from the date of the AGM. If the financial statements are not adopted at the AGM, specific provisions apply for filing the unadopted statements and subsequently adopted statements.

Depending on the company and applicable requirements, another version or related form may be applicable.

5. File MGT-7 Annual Return

A public company generally files its annual return in Form MGT-7.

Under Section 92, the annual return must generally be filed with the ROC within 60 days from the date of the AGM. The filing contains prescribed details relating to the company, its members, shareholding, directors, KMP, meetings and other corporate information.

MGT-7 and AOC-4 are separate filings and they should not be treated as interchangeable.

6. Complete Director KYC Compliance

Directors who are required to complete the annual KYC must comply through DIR-3 KYC or the applicable DIR-3 KYC web service.

MCA states that an individual holding a DIN as of 31 March of a financial year is required to complete the KYC process by 30 September of the immediate next financial year.

Changes in director or KMP particulars during the year may also require separate MCA filings, depending on the circumstances.

7. Complete Auditor-Related Compliance

Where applicable, the company must complete auditor-related filings, including ADT-1 for notice of appointment of an auditor.

The Companies Act and applicable rules also contain requirements relating to auditor appointment, eligibility, rotation and other auditor-related matters.

Is Secretarial Audit Mandatory for Every Public Company?

No. Secretarial audit is not mandatory for every public company.

Under Section 204 and the applicable rules, secretarial audit applies to every listed company and specified classes of companies, including: -

• Public companies having paid-up share capital of ₹50 crore or more;
• Public companies having turnover of ₹250 crore or more; or
• Companies having outstanding loans or borrowings from the banks or public financial institutions of ₹100 crore or more.

The applicable secretarial audit report is issued in Form MR-3.

Other governance requirements, such as Audit Committee, Nomination and Remuneration Committee, independent directors and internal audit, may also apply depending on the company's category and prescribed thresholds.

Listed Company Compliance Under SEBI

An unlisted public company and a listed public company do not have identical compliance requirements.

A listed company must additionally comply with applicable SEBI Listing Obligations and Disclosure Requirements (LODR) and stock-exchange requirements. These can cover corporate governance, related-party transactions, material-event disclosures, annual reports, website disclosures and other continuing obligations.

Therefore, MCA annual filing alone does not complete the annual compliance of a listed public company.

Documents Required for Public Company Annual Compliance

Commonly required documents include: -

• Audited financial statements
• Auditor's report
• Board's Report
• AGM notice and minutes
• Board meeting minutes
• Shareholding and share capital details
• Details of directors and KMP
• Related-party transaction information, where applicable
• Secretarial Audit Report in Form MR-3, where applicable
• Details of applicable committees and governance requirements
• Previous MCA filings and supporting records

The exact and accurate document list may vary based on the company's activities and regulatory requirements.

Annual Compliance Fees for a Public Company

There is no single fixed annual compliance fee for every public limited company.

The total cost may include: -

Government filing fees and additional fees are governed by the applicable MCA fee rules. Professional fees are separate and depend on the company's compliance requirements.

What Happens If a Company Does Not File Annual Returns?

Non-filing can result in additional fees and statutory penalties.

For example, Section 92 provides a penalty for failure to file the annual return within the prescribed period, including a continuing penalty for each day of default, subject to the statutory maximums.

Failure to comply with other annual requirements can create additional consequences under the Companies Act and, for listed companies, applicable SEBI and stock-exchange regulations.

Compliance Checklist for a Public Limited Company

Before closing the annual compliance cycle, the company should verify: -

• Board meetings were conducted as required.
• Financial statements were prepared and audited.
• Board's Report was prepared.
• AGM was held within the applicable timeline.
• AOC-4 and the applicable financial statement forms were filed.
• MGT-7 was filed within the prescribed period.
• Director KYC requirements were completed.
• Auditor-related filings were completed where its applicable.
• Secretarial audit was completed where applicable.
• Applicable committee and the corporate governance requirements were complied with.
• Listed companies completed applicable SEBI and stock-exchange filings.

Conclusion

The Annual Compliance of a Public Limited Company involves a series of statutory and the governance requirements rather than a single annual ROC filing. A company should systematically track its Board meetings, AGM, audited financial statements, AOC-4, MGT-7, director KYC, auditor compliances and applicable secretarial audit requirements.

For listed companies, the compliance framework is broader because SEBI and stock-exchange obligations must also be considered.

CRSPL can assist with public company annual compliance, applicable MCA filings and regulatory compliance tracking to help businesses stay organised and compliant.

FAQs

1. How much does annual compliance cost for a public limited company?
   There is no fixed cost. The total expense basically depends on MCA filing fees, statutory audit fees, professional charges, secretarial audit requirements and, for listed companies, SEBI and stock-exchange compliance.

2. Is secretarial audit mandatory for every public company?
   No. It is mandatory for listed companies and specified classes of companies meeting the prescribed capital, turnover or borrowing thresholds.

3. What documents are required for public company annual compliance?
   Generally, audited financial statements, auditor's report, Board's Report, AGM records, Board meeting records, shareholding information, director/KMP details and applicable secretarial audit documents are required.

4. Which companies are required to file an annual return?
   Every company is generally required to file an annual return with the ROC, with the applicable form depending on its category. Public companies generally file MGT-7. Section 92 prescribes the annual return and its filing requirements.

5. What happens if a company does not file annual returns?
   The company and officers in default may face statutory penalties and continuing penalties for delayed filing. Additional fees may also apply when filings are made after the prescribed deadline.