Companies Act
The Companies Act is a law that describes how a company should be started, run, and closed in India. It has rules that every company must follow, such as filing returns, holding meetings, and maintaining records. Every business must follow this law properly to avoid legal hassles. The best CA firm in Kanpur can help you understand and follow the Companies Act without any confusion.
1. What is the Companies Act?
The Companies Act is not just about rules – it is the backbone of how businesses are legally run in India. It explains what types of companies can exist, how much capital they need, how decisions are made, and how records are kept. It also sets out the duties of directors, the rights of shareholder,s and the steps to be taken if someone wants to close their company. For a company to grow legally and safely, it must comply with the Companies Act. This is why businesses often rely on experts like the best CA firm in Kanpur to be fully compliant and avoid legal risks.
2. Key Features of the Companies Act, 2013
The Companies Act, 2013, introduced major changes to the way companies operate in India. It simplified company registration, introduced rules for one-person companies (OPCs), and made directors more accountable. Companies now have to deal with audits, annual filings, and corporate governance. Many businesses find it difficult to keep track of all these rules, especially when they keep changing. So it makes sense to work with professionals like the best CA firm in Kanpur, who can handle everything from compliance to filing and keep your business safe from penalties.
3. Companies Act Amendments and Recent Updates
The Companies Act keeps changing over time to suit the needs of the business community. Every year, the Ministry of Corporate Affairs (MCA) has introduced some new rules – to improve the compliance process and take action against fake companies.
Here are some of the important recent changes:
- Higher penalties for non-compliance – Now, if a company files forms late or provides incorrect records, the penalty is higher than before.
- Decriminalisation of minor offences – Earlier, minor mistakes were liable to be jailed, now they have been converted to fines.
- Introduction of MCA V3 Portal – A new version of the MCA portal has been launched which makes filling and tracking forms even easier.
- New compliances for small and one-person companies – Some compliances will be relaxed for small companies, such as board meetings and audit requirements.
Understanding and acting on new updates over time can be difficult for every company. This requires the best CA firm in Kanpur like SmartTaxServer.com who tracks every new amendment and ensures timely compliance – so that your business does not face any hassles.
4. Compliance Requirements Under the Companies Act
Every registered company has to follow certain basic rules which come under the Companies Act. Failure to comply with them on time attracts penalties and sometimes directors can also be held personally liable.
- Annual ROC Filings – Every company has to file Form AOC-4 (Financial Statements) and MGT-7 (Annual Returns) after the end of the financial year.
- Board Meetings – Private limited companies have to hold at least 2 board meetings in a year and public limited companies have to hold more.
- Statutory Audit – Whether the company is small or large, audit is mandatory (except for some exemptions for small companies).
- DIR-3 KYC – Every director has to update his/her DIN (Director Identification Number) KYC every year.
- Maintenance of Registers and Records – The company has to maintain registers of its shareholding, board meetings, loans, contracts.
- Income Tax and GST Filing – Apart from Income Tax Returns (ITR), GST filing is also mandatory if applicable.
Doing all these things on time and correctly can be difficult for small companies. This is why people rely on the best CA firm in Kanpur – which maintains a proper calendar of all these compliances and completes every filing on time without any penalties.
5. Common Mistakes Businesses Make
Many companies, especially startups and small firms, either take the rules of the Companies Act lightly or do not understand them properly. These are some common mistakes that can prove costly for businesses:
- Late or no ROC filings – Companies often do not file annual forms like AOC-4 (financial statements) and MGT-7 (annual returns) on time. This leads to penalties and a drop in compliance rating.
- Improper bookkeeping – Accounts and financial records are not properly maintained, leading to problems at the time of audit and filing of ITR (income tax returns).
- Not holding board meetings – Not holding the minimum required board meetings is a major non-compliance, especially for private limited (Private Limited) companies.
- Ignoring director KYC (know your customer) – Many directors forget to file their DIN (director identification number) KYC, which leads to the DIN becoming inactive.
- No professional guidance – When trying to do everything by themselves, businesses don’t take professional advice, and mistakes keep happening.
- Wrong company structure at the time of incorporation – Some people choose a company structure without thinking (like LLP – Limited Liability Partnership, OPC – One Person Company, Private Limited – Private Limited), which later turns out to be not suitable for the work.