In a developing country like India, having such a favorable environment for new business venture, Startups, company registration & other entities in itself is a positive signal. The startup is a new venture which is in its early stage of its business life with a unique product/service. What differentiates Startups is the element of innovation they possess in their business.
In addition to all the benefits, a startup is entitled to, there is certain annual filing compliance for Startups in India. Some of the mandatory annual filing compliance for Startups in India is as follows:
MANDATORY ANNUAL FILING COMPLIANCE FOR STARTUPS IN INDIA
1. Auditor appointment (E-form ADT-1)
Filing E-form ADT-1 is a one-time compliance and needs further ratification every year after a period of 5 years. It is filed for a 5 year period after that at every AGM need to ratify the auditor and not be required to file from ADT-1 again. 1st statutory auditor needs to be appointed within 30 days of company incorporation
2. Board meeting
– Minimum gap between two board meetings should be 90 days.
– 1st meeting within 30 days of company incorporation
– Minimum of 2 meetings in the 1st half year calendar.
3. Annual general meeting (AGM)
The annual general meeting is one of the essential & mandatory features since majority of the decisions regarding the functioning of the organization are finalized during these meetings only. Along with it the actual financial position of the company is also discussed among the promoters, shareholders & stakeholders.
– Between 2 annual general meetings (AGM’s) not more than 15 days gap should be held.
– AGM’s ensure that all the promotors, shareholders & stakeholders asses the position of the company and keep a check on management functioning.
4. Directors report
It’s a part of the Annual Report in which the details of Company have been mentioned (which is intended to explain to shareholders, the overall financial position of the Company and its operation & Business Scope). The provision of making directors report mandatory is enshrined in section 134 of the companies act, 2013.
5. Annual financial statement
These are generally prepared at the end of the 12-month financial period and contain all the financials pertaining to the company. Some of the most looked after statements in this are Balance sheet, Trading, Profit & loss account, income statement & cash flow statements. However, these further helps in the computation of financial ratios which ultimately guide the shareholders & stakeholders in further decision making. Section (129) of the companies act, 2013 makes it mandatory for the companies to prepare annual financial statements and present them at the shareholders meeting as and when the AGM is scheduled.
6. Books of accounts
Section 44AA of the income tax act, 1961 makes it mandatory to maintain books of accounts when the income from profession exceeds INR 1,50,000 or total sales receipts exceeds INR 25,00,000 in any of the previous 3 years. Section 44AA details those who need to keep their books for income tax purposes.
Maintaining books of accounts is the mandatory requirement as per the income tax act which also makes the foundation for other compliances.
7. E-form filing
MGT-7: Annual filing returns within 60 days from holding of the AGM for that financial year.
AOC-4: Filing annual financial statement viz. balance sheet, Profit & loss account, Director’s report.
DIR-8: Disclosure about his non-disqualification needs to be filed with the company in the required format.
Chartered Accountant by profession, CA Sanket Agarwal has an experience of above11 years in Cross Border compliance , Import Export , International Taxation & is a passionate content creator.