IMPORTANT POST INCORPORATION COMPLIANCE FOR YOUR BUSINESS?
INTRODUCTION
There are a number of important post-incorporation compliances that businesses need to be aware of. These compliances are important to ensure that businesses are operating in a lawful and transparent manner.
Some of the most important post-incorporation compliances include:
- Filing an annual return: Every company incorporated in India is required to file an annual return with the Registrar of Companies (RoC). The annual return must be filed within 30 days of the close of the financial year. The annual return contains information about the company’s directors, shareholders, and its financial performance.
- Holding annual general meetings: Every company incorporated in India is required to hold an annual general meeting (AGM) at least once in every calendar year. The AGM is a forum for shareholders to meet and discuss the company’s affairs. At the AGM, shareholders vote on important matters, such as the appointment of directors and the approval of the company’s financial statements.
- Paying taxes: Every company incorporated in India is required to pay taxes on its income. The taxes that a company is required to pay will vary depending on its size and its activities.
- Keeping proper records: Every company incorporated in India is required to keep proper records of its business transactions. These records must be kept for a minimum period of 8 years. The records that a company is required to keep include its Memorandum of Association, Articles of Association, shareholders‘ register, board minutes, and financial statements.
- Adopting corporate governance practices: Every company incorporated in India is required to adopt corporate governance practices. Corporate governance is a set of principles that companies should follow in order to ensure that they are managed in a transparent and accountable manner. Some of the key corporate governance practices that companies should follow include:
- Having a board of directors that is independent and qualified.
- Having a code of conduct for directors and employees.
- Implementing whistleblowing procedures.
- Holding regular board meetings.
- Appointing an internal auditor.
Here are some tips for ensuring compliance
- Keep track of the relevant laws and regulations: The first step to ensuring compliance is to keep track of the relevant laws and regulations that apply to your business. This can be done by subscribing to a legal database or by hiring a lawyer who can keep you up-to-date on the latest changes.
- Document your processes: It is also important to document your business processes. This will help you to track your compliance with the law and to identify any areas where you may need to improve.
- Have a compliance officer: If your business is large enough, you may want to consider having a compliance officer. This person will be responsible for ensuring that your business complies with all applicable laws and regulations.
- Get regular audits: You should also get regular audits to ensure that your business is complying with the law. This will help you to identify any areas where you may need to improve and to take corrective action.
There are a number of advantages and disadvantages to complying with post-incorporation compliances for businesses.
Advantages
- Compliance with the law: By complying with the law, businesses can help to ensure that they are operating in a lawful and transparent manner. This can help to protect businesses from legal liability and can also help to build trust with customers and other stakeholders.
- Improved corporate governance: Compliance with post-incorporation compliances can help to improve corporate governance practices within businesses. This can lead to better decision-making, increased transparency, and reduced risk.
- Increased efficiency: Compliance with post-incorporation compliances can help to improve the efficiency of businesses. This can be achieved by streamlining processes, reducing errors, and improving communication.
- Improved reputation: Businesses that comply with post-incorporation compliances are often seen as more reputable than those that do not. This can lead to increased customer loyalty, improved access to funding, and other benefits.
Disadvantages
- Cost: Compliance with post-incorporation compliances can be costly for businesses. This is because businesses may need to hire lawyers, accountants, or other professionals to help them comply with the law.
- Time commitment: Compliance with post-incorporation compliances can also be a time commitment for businesses. This is because businesses need to set aside time to review the relevant laws and regulations, to implement compliance procedures, and to keep track of their compliance.
- Complexity: The compliance requirements can be complex and may vary depending on the industry or the activities that businesses are engaged in. This can make it difficult for businesses to understand and comply with the law.
