Companies Act 2013
Compliance Guide
Everything a Private Limited, OPC, or Public Company needs to know — incorporation, annual filings, board meetings, AGM, audit, CSR, director duties, related party transactions and penalties.
📖 What is the Companies Act 2013?
The Companies Act 2013 is the primary legislation governing the formation, regulation, and dissolution of companies in India. It replaced the Companies Act 1956 and is administered by the Ministry of Corporate Affairs (MCA) through the Registrar of Companies (ROC).
The Act has 470 Sections, 7 Schedules and is supported by 29+ sets of Rules. It covers every aspect of a company's life — from incorporation to winding up — and introduces several key concepts like One Person Company (OPC), Small Company, dormant company, independent directors, class action suits, and mandatory CSR.
👉 Every Private Limited, Public Limited, OPC, Section 8 (NGO), and Nidhi Company registered in India must comply with this Act.
470
Sections
7
Schedules
29+
Rules Sets
2013
Year Enacted
🏢 Types of Companies & Their Compliance Load
Choose your company type to understand applicable compliances
Private Limited (Pvt Ltd)
One Person Company (OPC)
Public Limited Company
Small Company
📋 Annual Compliance Checklist — Month by Month
What needs to be done and when throughout the financial year
DPT-3 filing (Return of Deposits / Outstanding Loans)
Board meeting — Q1 (within 120 days of last meeting)
Advance Tax — 1st Installment (15%)
MSME-1 for Oct–Mar period (if applicable)
Update statutory registers for FY changes
Finalize Financial Statements with auditor
Board meeting to approve Directors' Report + Financial Statements
Send AGM notice (min 21 clear days before)
Hold AGM — Annual General Meeting
ADT-1 — Auditor appointment / re-appointment
DIR-3 KYC — All directors must file
Advance Tax — 2nd Installment (45% cumulative)
Board meeting — Q2
AOC-4 — Financial Statements filing with ROC
AOC-4 CFS — Consolidated FS (if applicable)
MGT-7 / MGT-7A — Annual Return filing
MSME-1 for Apr–Sep period (if applicable)
Board meeting — Q3
Advance Tax — 3rd Installment (75% cumulative)
CRA-4 — Cost Audit Report (if applicable)
Board meeting — Q4 (last meeting of year)
Advance Tax — 4th Installment (100%)
Appoint auditor for next year (if term expiring)
Review / update related party transaction register
CSR spend — ensure 2% CSR obligation is met
Transfer unspent CSR amount to PM CARES / schedule fund
Prepare documents for audit — books of accounts, vouchers, registers
🔴 Red dot = critical / penalty-attracting. ✓ = important but more flexible timing.
🔍 Types of Audits Under Companies Act
Different audits required for different types/sizes of companies
Statutory Audit
Sec 139–147Conducted by
Chartered Accountant (CA)
Mandatory For
All companies — every year
Output
Auditor's Report (CARO 2020 for eligible companies)
Cost Audit
Sec 148Conducted by
Cost Accountant (CMA)
Mandatory For
Companies in specified industries (pharma, cement, power, steel, etc.) with turnover > threshold
Output
Cost Audit Report — CRA-3; filed in CRA-4
Secretarial Audit
Sec 204Conducted by
Company Secretary (CS)
Mandatory For
Every listed company + unlisted public company with paid-up capital ≥ ₹50 Cr or T/O ≥ ₹250 Cr
Output
Secretarial Audit Report — MR-3 (annexed to Directors' Report)
Internal Audit
Sec 138Conducted by
CA / CMA (internal or external)
Mandatory For
Listed companies + unlisted public companies above threshold
Output
Internal Audit Report — reviewed by Audit Committee
🌱 CSR — Corporate Social Responsibility (Sec 135)
When does the 2% CSR obligation kick in?
| Threshold (any one triggers CSR) | CSR Applicable? |
|---|---|
| Net Worth ≥ ₹500 Crore | Yes — must spend 2% of avg net profits |
| Turnover ≥ ₹1,000 Crore | Yes — must spend 2% of avg net profits |
| Net Profit ≥ ₹5 Crore in any FY | Yes — must spend 2% of avg net profits |
| Below all three thresholds | No CSR obligation — voluntary only |
✅ What counts as CSR spend?
- •Education & skill development
- •Healthcare & sanitation
- •Environment sustainability
- •Gender equality & women empowerment
- •Rural development projects
- •PM CARES Fund (Schedule VII activities)
- •Protection of national heritage & art
❌ What does NOT count as CSR?
- •Activities benefitting only employees/families
- •Contributions to political parties
- •Sponsorships for business advantage
- •Activities outside India
- •One-off events not linked to CSR policy
- •Activities already mandated by law
👤 Director Compliance Requirements
Filings and declarations that individual directors must make — non-compliance is personal liability
| Compliance | When | Important Note |
|---|---|---|
| DIR-3 KYC (Annual) | 30 September every year | All directors with DIN — DIN deactivated if missed |
| MBP-1 (Disclosure of Interest) | First Board meeting of every FY + whenever interest changes | Non-disclosure = vacation of office |
| DIR-8 (Non-disqualification declaration) | At time of appointment + first Board meeting of every FY | Written declaration to company |
| Form 16 / 26Q (TDS on salary / professional fees) | Quarterly TDS returns | If director draws salary/remuneration |
| Independent Director — Declaration of Independence | First Board meeting of FY + whenever status changes | Required under Sec 149(7) |
| DIR-11 (Notice of Resignation) | Within 30 days of resignation | Director files directly with MCA + company files DIR-12 |
| DIR-12 (Change in Directors) | Within 30 days of appointment/change/cessation | Company files on behalf of the change |
📑 Key Sections — Quick Reference
Most important sections every business owner and CA/CS should know
Private Company Definition
Restricts share transfer, prohibits public invitation, max 200 members
Incorporation of Company
Memorandum, Articles, Directors consent, Registered office — all required for CIN
Commencement of Business
Company cannot commence business or borrow until INC-20A is filed (within 180 days)
Registered Office
Every company must have a registered office within 15 days of incorporation, to which all official communications are sent
Acceptance of Deposits
Strict rules on who can accept deposits, limits, repayment period, TDS — violations attract heavy penalties
Annual General Meeting (AGM)
First AGM: within 9 months of first FY end. Subsequent: within 6 months (by 30 Sep). Maximum gap between two AGMs: 15 months
Financial Statements
Must give true & fair view, prepared as per Schedule III, signed by 2 directors (MD/CEO + CFO)
Directors' Report
Must include extract of Annual Return, audit remarks, CSR report, related party disclosures, risk management policy
Corporate Social Responsibility (CSR)
Net worth ≥ ₹500 Cr OR T/O ≥ ₹1,000 Cr OR net profit ≥ ₹5 Cr → 2% of avg net profit in CSR activities
Appointment of Auditors
First auditor: Board appoints within 30 days. Subsequent: AGM → 5 year term. Rotation mandatory for certain companies
Board of Directors
Pvt Ltd: min 2 directors. Public Ltd: min 3. Listed companies must have Independent Directors, woman director, resident director
Duties of Directors
Act in good faith, not in conflict of interest, not gain undue advantage, not assign directorship — violation = personal liability
Audit Committee
Mandatory for listed companies and others above threshold — review financials, internal audit, related party transactions
Loans to Directors
Company cannot give loans/guarantees to directors or their relatives — violation: heavy penalty on company + director
Loans & Investments
Company can invest/lend up to 60% of paid-up capital + free reserves OR 100% of free reserves — beyond this needs special resolution
Related Party Transactions (RPT)
Transactions with directors, relatives, group companies need Board/Shareholder approval depending on threshold — MGT-14 if resolution passed
Managerial Remuneration
Pvt Ltd: no restriction. Public Ltd / Listed: max 11% of net profits — excess needs Central Govt / shareholder approval
Valuation by Registered Valuers
Compulsory for mergers, ESOPs, unregistered charge property valuation — only Registered Valuers can do this
⚠️ Key Penalties Under Companies Act 2013
Non-compliance is expensive — both company and individual officers are liable
| Non-Compliance | Company Penalty | Officer Penalty | Section |
|---|---|---|---|
| Non-filing of AOC-4 | ₹10,000 + ₹100/day | ₹10,000 + ₹100/day | Sec 137 |
| Non-filing of MGT-7 | ₹50,000 + ₹100/day (max ₹5L) | ₹50,000 + ₹100/day (max ₹5L) | Sec 92 |
| Failure to hold AGM | ₹1,00,000 + ₹5,000/day | ₹1,00,000 | Sec 99 |
| Loan to directors (Sec 185 violation) | ₹5L–₹25L | ₹5L–₹25L + 6 months imprisonment | Sec 185 |
| CSR non-spending | 2× unspent amount or ₹1 Cr (whichever less) | ₹50,000 to ₹5,00,000 | Sec 135(7) |
| Not maintaining statutory registers | ₹1L–₹10L | ₹25,000–₹1L | Sec 88 |
| Related party transaction without approval | ₹25L to ₹5 Cr | ₹25L to ₹5 Cr | Sec 188 |
| Accepting deposits in violation | Amount of deposits + 15% interest + ₹1 Cr | ₹25L to ₹2 Cr + imprisonment | Sec 73/76 |
❓ Frequently Asked Questions
Q: Is a Private Limited company required to have a statutory audit even if there are no transactions?
A: Yes — statutory audit under the Companies Act 2013 is mandatory for ALL registered companies every financial year, regardless of whether there were any transactions or revenue. Even a dormant company must get its accounts audited.
Q: What is the penalty if a company doesn't hold its AGM on time?
A: Under Section 99, the company and every officer in default is liable for a penalty of ₹1,00,000. Additionally, a continuing default attracts ₹5,000 per day. The Tribunal can also call the AGM on an application by any member.
Q: Can a director attend a board meeting via video conference?
A: Yes — directors can attend board meetings through video conferencing or other audio-visual means as per the Companies (Meetings of Board and its Powers) Rules 2014. However, certain matters like approval of annual financial statements, Related Party Transactions above threshold, and amalgamation matters must be discussed in person (cannot be through video conference for these specific items).
Q: Our company's net profit is ₹6 Crore. How much CSR do we need to spend?
A: CSR obligation = 2% of average net profits of the preceding 3 financial years. If your company's average net profit over 3 years is ₹6 Crore, CSR spend = 2% × ₹6 Cr = ₹12 Lakhs. The amount must be spent on activities listed in Schedule VII of the Companies Act.
Q: What is a 'Small Company' under Companies Act?
A: A company is classified as a 'Small Company' if its paid-up share capital does not exceed ₹4 Crore AND its turnover does not exceed ₹40 Crore. Small Companies enjoy reduced compliance burden: simplified Annual Return (MGT-7A), reduced penalties (50%), and no requirement for internal audit/secretarial audit.
Q: Can a director be held personally liable for company's non-compliance?
A: Yes — the Companies Act makes 'every officer in default' personally liable for penalties. Officers in default include: MD, Whole-time Director, Manager, Company Secretary, CFO, and any director who knowingly authorized or permitted the default. In serious cases (fraud, Sec 447), criminal prosecution and imprisonment are also possible.
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