PLC Compliances

Public Limited Companies (PLCs) in India operate under stricter regulatory scrutiny compared to private limited companies or LLPs, primarily because they can raise capital from the general public. Compliance for PLCs is governed by the Companies Act, 2013, rules framed thereunder, and for listed companies, by the regulations of the Securities and Exchange Board of India (SEBI) and stock exchanges.

Failure to comply can lead to severe penalties, disqualification of directors, legal proceedings, and damage to the company's reputation.

Here's a comprehensive overview of PLC compliance processes:

I. Mandatory Annual Compliances (Companies Act, 2013 & Income Tax Act, 1961)

These compliances are recurring and must be fulfilled every financial year (April 1st to March 31st).

1. Board Meetings

Requirement: A minimum of four Board meetings must be held in a calendar year, with a maximum gap of 120 days between any two consecutive meetings.
Documentation: Minutes of all Board meetings must be prepared and maintained.
Purpose: To discuss and approve financial statements, Directors' Report, corporate governance matters, and other strategic decisions.

2. Annual General Meeting (AGM)

Requirement: Every PLC must hold an Annual General Meeting of its shareholders every year.
- First AGM: Within 9 months from the closing of the first financial year of the company.
- Subsequent AGMs: Within 6 months from the closing of the financial year. The gap between two AGMs should not exceed 15 months.
Purpose: To adopt audited financial statements, appoint/re-appoint auditors, appoint/re-appoint directors, declare dividends, and transact any other special business.
Documentation: Minutes of the AGM must be prepared and maintained.

3. Financial Statements (AOC-4)

Purpose: Filing of the company's audited financial statements (Balance Sheet, Profit & Loss Account, Cash Flow Statement, Statement of Changes in Equity, Notes to Accounts) with the Registrar of Companies (ROC).
Form: Form AOC-4 (and AOC-4 CFS for consolidated financial statements if the company has subsidiaries/associates). Certain companies (e.g., those meeting turnover/paid-up capital thresholds) might need to file in XBRL format (AOC-4 XBRL).
Due Date: Within 30 days from the date of the Annual General Meeting (AGM). If the AGM is not held, then 30 days from the due date of the AGM.
Audit Requirement: All PLCs must get their accounts audited by a practicing Chartered Accountant. The Auditor's Report is an integral part of the financial statements.
Penalty for Late Filing: INR 100 per day of delay, with no upper limit.

4. Annual Return (MGT-7 / MGT-7A)

Purpose: Filing of the company's Annual Return, providing a snapshot of the company's position at the close of the financial year. It includes information about share capital, indebtedness, directors, shareholders, meetings, etc.
Form: Form MGT-7 for most companies. Small companies and OPCs can use MGT-7A (a simplified version).
Due Date: Within 60 days from the date of the Annual General Meeting (AGM).
Certification (MGT-8): If a public company has a paid-up share capital of INR 10 Crore or more or a turnover of INR 50 Crore or more, its annual return in Form MGT-7 must be certified by a practicing Company Secretary in Form MGT-8.
Penalty for Late Filing: INR 100 per day of delay, with no upper limit.

5. Directors' Report

Requirement: The Board of Directors must prepare a comprehensive Director's Report, including details about the company's financial performance, operations, corporate social responsibility (CSR) activities (if applicable), details of directors, key managerial personnel, related party transactions, etc.
Approval: The Director's Report must be approved by the Board and adopted at the AGM.
Filing: It is filed along with Form AOC-4.

6. Appointment of Auditor (ADT-1)

Requirement: The first auditor is appointed by the Board within 30 days of incorporation. Subsequent auditors are appointed/re-appointed by shareholders at each AGM for a term of 5 years.
Form: Form ADT-1 must be filed with the ROC for the appointment of the auditor.
Due Date: Within 15 days from the date of the AGM where the appointment is made.
Rotation of Auditors: Provisions for mandatory rotation of auditors apply to certain classes of companies after specified periods.

7. Director KYC (DIR-3 KYC)

Requirement: Every individual holding a Director Identification Number (DIN) must file their KYC details annually with the MCA.
Form: Form DIR-3 KYC (web-based or e-form).
Due Date: September 30th of every financial year.
Penalty for Non-Compliance: Deactivation of DIN and a penalty of INR 5,000 for reactivation.

8. Disclosure of Interest by Directors (MBP-1)

Requirement: Every director must disclose their interest in any other company, body corporate, firm, or other association of individuals annually (or whenever there is a change).
Form: Form MBP-1 to be given to the company. The company records this in the minutes. No separate filing with ROC unless specifically required.
Due Date: At the first Board meeting of every financial year, or whenever there is a change.

9. Income Tax Return (ITR-6)

Purpose: All companies (including PLCs) must file an Income Tax Return with the Income Tax Department.
Form: ITR-6 (for companies other than those claiming exemption under Section 11, like charitable trusts).
Due Dates:
- October 31st of the assessment year: For companies whose accounts are required to be audited (which includes virtually all PLCs).
- November 30th of the assessment year: For companies involved in international transactions or specified domestic transactions requiring a transfer pricing report (Form 3CEB).
Audit Requirements: All companies (including PLCs) need to get their accounts audited under the Companies Act, 2013. Additionally, a tax audit (under Section 44AB) is required if the turnover exceeds a certain threshold (currently INR 10 Crores for businesses where cash transactions are limited to 5% of total transactions).
Penalty for Late Filing: Penalty of INR 5,000 to INR 10,000 under Section 234F, depending on the delay.

10. Filing of DPT-3 (Return of Deposits)

Purpose: Every company (other than a government company) must file this form to provide information about deposits or outstanding receipts of money/loan not considered as deposits.
Form: Form DPT-3
Due Date: June 30th of every year for the status as of March 31st.
Audit/Certification: This form requires certification by a practicing Chartered Accountant.

11. MSME-1 (Half-yearly Return for MSME Dues)

Purpose: Specified companies that receive goods or services from Micro and Small Enterprises and whose payments to such suppliers are outstanding for more than 45 days must file this return.
Form: Form MSME-1
Due Dates:
- For the period April to September: October 31st
- For the period October to March: April 30th

II. Event-Based Compliances

These compliances are triggered by specific events or changes within the company.

INC-20A: Declaration for Commencement of Business: For companies incorporated after November 2, 2018, this form must be filed within 180 days of incorporation, after subscribers have paid for shares and a registered office is verified. Essential for commencing business operations.
DIR-12: Changes in Directors/KMP: For appointment, resignation, removal, or any change in the designation of directors or Key Managerial Personnel (KMP). Filed within 30 days of the event.
INC-22: Change in Registered Office: If the registered office address changes. Filed within 15 days of the change. More stringent rules apply if moving between states.
SH-7: Increase in Authorized Share Capital: If the company decides to increase its authorized share capital. Filed within 30 days of passing the resolution.
PAS-3: Allotment of Securities: For every allotment of shares or other securities. Filed within 15 days of the allotment.
MGT-14: Filing of Resolutions: For certain Board resolutions (e.g., related to loans, investments, related-party transactions, appointment of MD/WTD/CFO) and all Special Resolutions (e.g., alteration of MOA/AOA, change of name, buyback of shares, preferential allotment). Filed within 30 days of passing the resolution.
CHG-1 / CHG-4: Creation, Modification, or Satisfaction of Charge: For creation, modification, or satisfaction of any charge (mortgage, hypothecation, etc.) on the company's assets. Filed within 30 days of the event (can be extended with higher fees).
BEN-2: Significant Beneficial Owner (SBO): If any individual holds significant beneficial ownership (generally 10% or more indirectly). The individual declares in BEN-1 to the company, and the company files BEN-2 to ROC within 30 days of receiving BEN-1.
ADT-2: Removal of Auditor: If an auditor is removed before the expiry of their term. Filed within 30 days of the removal resolution.
Corporate Social Responsibility (CSR): If turnover exceeds INR 1,000 Cr, or net worth INR 500 Cr, or net profit INR 5 Cr, the company needs to constitute a CSR Committee, formulate a CSR Policy, and spend 2% of average net profits on CSR activities. Report in the Directors' Report and file Form CSR-1 for entities undertaking CSR activities.
Secretarial Audit Report (MR-3): Mandatory for a public company having:
- Paid-up share capital of INR 50 Crore or more, or
- Turnover of INR 250 Crore or more.
- OR, every company having outstanding loans or borrowings from banks or Public Financial Institutions of INR 100 Crore or more.
- The Secretarial Auditor (a practicing Company Secretary) reports on compliance with various laws and regulations. This report is annexed to the Board's Report.
Compliance with SEBI (for Listed Public Companies): Listed PLCs have additional, rigorous compliance requirements under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, including:
- Quarterly/Half-yearly/Annual financial results and disclosures.
- Corporate governance reports.
- Insider trading regulations.
- Disclosures of material events.
- Annual reports, including Business Responsibility and Sustainability Report (BRSR).

III. General Process for Filing Forms with MCA

Most forms under the Companies Act, 2013, are filed electronically through the Ministry of Corporate Affairs (MCA) portal.

Preparation of Documents: Gather all necessary resolutions, financial statements, reports, and supporting documents.
Downloading e-Forms: Download the relevant e-Form from the MCA website.
Filling the Form: Fill out the e-Form offline.
Attaching Documents: Attach all required supporting documents as PDFs.
Digital Signature: Ensure the form is digitally signed by the Director(s) and/or Key Managerial Personnel (KMP) using their Digital Signature Certificate (DSC). For many forms, a practicing professional (CA/CS/CMA) also needs to certify and digitally sign the form.
Pre-Scrutiny: Use the 'Check Form' or 'Pre-scrutiny' button to validate the form and attachments for any errors.
Upload: Upload the validated e-Form to the MCA portal.
Fee Payment: The system calculates the applicable filing fees and any late fees. Make the payment online.
Acknowledgement: Upon successful submission and payment, an acknowledgment is generated.

Importance of Timely Compliance

Avoid Penalties: The penalties for non-compliance under the Companies Act, 2013, and Income Tax Act can be substantial (daily fines, lump-sum penalties).
Maintain 'Active' Status: Non-filing can lead to the company being marked as a 'defaulter' or even being 'struck off' by the ROC.
Legal Standing and Credibility: Good compliance enhances the company's reputation and credibility with regulators, investors, banks, and the public.
Access to Finance: Banks and financial institutions often check compliance records before sanctioning loans.
Investor Confidence: For PLCs, especially listed ones, robust compliance is vital for maintaining investor confidence and ensuring smooth trading of shares.
Smooth Operations: Avoids legal hassles, departmental inquiries, and potential prosecution.