Annual Compliance Under Companies Act, 2013-Complete Guide
In today’s dynamic era of business environment, compliance with regulation isn’t just a checkbox, rather it’s the fundamental element of a trust, transparent and accountable organization. In India, the Companies Act, 2013 provides a comprehensive and details legal framework to ensure that companies operate ethically, responsibly, and with due regard to all stakeholders.
Whether you’re a company secretary, director, entrepreneur or a curious mind venturing into the world of corporate law, understanding annual compliance requirements under the Companies Act, 2013 is vital. In this blog, we’ll dive into the essentials of annual compliance, decode their significance, and provide a roadmap for businesses to stay on the right side of the law.
What is Annual Compliance?
Annual compliance basically refers to the set of filings, disclosures, and formalities that every company registered under the Companies Act, 2013 must complete each year. These requirements ensure that the company’s affairs are transparent and that stakeholders—from shareholders to regulators—are well-informed about the company’s financial and operational health.
Company who fails to comply doesn’t just risk financial penalties. It can also affect a company’s reputation, stakeholder confidence and even invite unnecessary legal consequences.
Types of Companies & Their Compliance Obligations
The Companies Act, 2013 applies to several types of companies, including:
- Private Companies
- Public Companies
- One Person Companies (OPCs)
- Small Companies
- Section 8 Companies (Non-profits)
While the core compliance framework applies to all companies, certain exemptions and relaxations exist for small companies, OPCs, and Section 8 entities to reduce the compliance burden.
Key Annual Compliances under Companies Act, 2013
Here’s a breakdown of the mandatory annual compliances applicable to most companies:
1️. Board Meetings & Shareholders’ Meeting
Board Meetings:
- Every company (other than OPCs and small companies) must hold a minimum of 4 board meetings in a year, with a gap of not more than 120 days between two meetings.
- Annual General Meeting (AGM):
- Every company, except OPCs, must hold an AGM within six months from the end of the financial year. The primary purpose of this meeting is to allow the shareholders to review the company’s performance, approve the financial statements, declare dividends and appoint or reappoint directors and auditors.
2.Preparation & Filing of Financial Statements (Form AOC-4)
Every company must prepare financial statements in accordance with Schedule III of the Companies Act. These include:
- Balance sheet
- Profit and loss account
- Cash flow statement (if applicable)
- Notes to accounts
- Director’s report
Once approved in the AGM, these financial statements, along with the board report and auditor’s report, must be filed with the Registrar of Companies (ROC) in Form AOC-4 within 30 days of the AGM.
3.Filing of Annual Return (Form MGT-7 or MGT-7A)
An annual return provides a detailed snapshot of the company’s shareholding pattern, board composition, and other key details as on the financial year-end.
- Form MGT-7 is for all companies except small companies and OPCs.
- Form MGT-7A is a simplified version for small companies and OPCs.
The provided deadline for filing is 60 days from the date of the AGM.
4. Appointment or Reappointment of Auditors (Form ADT-1)
Companies must file Form ADT-1 with the ROC to inform about the appointment or reappointment of the statutory auditor at the AGM. The form must be filed within 15 days of the AGM.
5. Director’s Report
The Director’s Report forms part of the financial statements and includes:
- Financial performance and highlights
- Changes in directors or key managerial personnel
- Dividend recommendations
- Details of loans, guarantees, and investments
- Related party transactions
- Internal financial controls and risk management
This report is a comprehensive document that gives shareholders a detailed view of the company’s operations and governance.
Additional Annual Compliance for Specific Companies
For Public Companies:
a. Secretarial Audit Report (Form MR-3):
- Applicable to listed companies and certain large public companies (paid-up capital ≥ ₹50 crore or turnover ≥ ₹250 crore). It’s prepared by a practicing company secretary and filed as part of the board report.
b. Certification of Annual Return (Form MGT-8):
- Mandatory for listed companies and other companies with paid-up share capital ≥ ₹10 crore or turnover ≥ ₹50 crore. This certification confirms that the annual return complies with legal provisions.
For Section 8 Companies:
- Hold at least one board meeting every six months.
- File Form AOC-4 and MGT-7 as applicable, along with a comprehensive report on their non-profit activities.
Timelines for Compliance
| Form | Purpose | Due Date |
| AOC-4 | Filing of financial statements | Within 30 days of AGM |
| MGT-7 / 7A | Filing of annual return | Within 60 days of AGM |
| ADT-1 | Auditor appointment | Within 15 days of AGM |
| AGM | Annual General Meeting | By 30th September (if applicable) |
| Board Meetings | Minimum of 4 per year (gap ≤120 days) | Ongoing throughout the year |
Importance of Annual Compliance
- Legal Standing: Companies that comply with the annual requirements are considered as a “active” and “compliant” in the eyes of the law, which enhances the element of transparency and credibility...!
- Avoid Penalties: Non-compliance may lead to fines and other legal penalties. For example, failing to file financial statements and required data can attract fines of ₹1,000 per day of default, with a cap of ₹10 lakh.
- Investor Confidence: Regular compliance reflects a company’s commitment to good governance and transparency—factors that attract investors and business partners.
- Ease of Doing Business: Companies with clean compliance records find it easier to raise capital, get bank loans, and expand operations.
Consequences of Non-Compliance
Ignoring annual compliance isn’t an option. The penalties for defaults include:
- Financial penalties for the company and its officers.
- Disqualification of directors for continuous non-compliance.
- “Dormant” or “Strike-off” status if filings are overdue for an extended period.
- Legal actions and reputational damage.
Best Practices to Stay Compliant
- Maintain a Compliance Calendar: List all due dates for board meetings, filings, and disclosures. Set reminders to ensure nothing is missed.
- Engage a Qualified Company Secretary: A CS can guide you through complex compliance requirements and keep your company on track.
- Keep Records Organized: Maintain proper records of minutes, financial statements, registers, and returns.
- Leverage Technology: Use compliance management software or tools to track and automate reminders for key filings.
- Stay Updated: The Ministry of Corporate Affairs often updates compliance norms and regulations. Stay informed about changes to avoid surprises.
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Conclusion
Annual compliance under the Companies Act, 2013 isn’t just a legal requirement rather it’s a reflection of a company’s commitment to integrity, transparency, accountability and form of good governance. With the help of adhering to these norms and regulations, companies don’t just avoid penalties but they also build credibility, trust and lay the rooted foundation for sustainable growth.
Whether you’re running a startup, a family-owned business, or a large corporation, make annual compliance a priority, for any assistance related to compliance, contact CRSPL business consultants. After all, compliance isn’t just about ticking boxes—it’s about creating a resilient and responsible business.
