The Indian startup ecosystem is seeing new startups mushrooming every day and, along with them, online portals helping them with incorporation. While it is a great feat to get your startup incorporated, you, as founders and directors of your company, should not fail to look into the compliance required after incorporation.
Let's have a look at what you need to keep in mind after incorporating your startup.
- CIN Display
The first thing to do after getting your company incorporation certificateis to display a company board outside the registered office. The details to be displayed are:
- Name of the company
- Registered office address of the company
- Corporate Identity Number or CIN
- Telephone number, email ID
- Website address and fax number, if any
The same details should also be printed on all business letters, invoices, letterheads, mails etc. Putting CIN on all documents is a new requirement as per Companies Act, 2013.
In case of failure to quote CIN number, a penalty of Rs 1,000 per day shall be imposed on the defaulting company and on every officer at default, for every day during which such default continues, up to a maximum limit of Rs. one lakh.
- Appointment of auditor
This is the most important compliance which new startups are failing to comply with, due to unawareness.
As per section 139(6) of Companies Act 2013, 'company (other than government company) has to appoint its first auditor within 30 days from the date of incorporation in a board meeting. If the board of directors are not able to appoint, then he has to be appointed within 90 days at an extraordinary general meeting of members.'
In simpler terms, an auditor has to be a chartered accountant holding a certificate of practice and is required to be appointed within 30 days of incorporation of company. The ADT-1 form needs to be filedon the Ministry of Corporate Affairs website for the appointment of auditor. So, you need to choose a chartered accountant and get your form filed for completing this compliance.
As per Section 147 of Companies Act, 2013, 'if the provision of Section 139(6) is contravened, the company shall be punishable with fine which shall not be less than twenty-five thousand but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than ten thousand rupees which may extend to one lakh rupees or with both.'
Though the department is not very strict with these provisions,they cannot be ignored. In case you haven’t filed ADT-1 within the prescribed time, the same can be filed later but with due penalties.
- Apply PAN and TAN
As a company is a separate legal entity, it's mandatory that it has its own PAN and TAN. So as the company is incorporated, PAN and TAN should be applied, which also results in registration of the company under Income Tax Act, 1961.
- Issue of Share Certificate
Companies Act, 2013 requires the company to allot and deliver share certificates within two months from the date of incorporation to all subscribers of Memorandum of Association (MOA). It’s also mentioned that each subscriber will deposit subscription money as specified in the MOA to the company’s bank account by cheque or through net banking.
We suggest companiesopen a bank account with the help of MOA, Articles of Association (AOA) and certificate of incorporation and then take cheque from each subscriber and deposit it in the company’s bank account.
So,after you open the current account of the company, the first thing to do is taking cheques from the subscriber or members of the company as decided in the memorandum of the company.
- Statutory register of company
There is a list of defined statutory registers that a company is required to maintain from the time of incorporation. It’s not only compliance but it also helps to keep all the statutory records maintained.
These are just the basics required to be followed instantly after the incorporation of the company. There are various other compliances that are required to be properly monitored. So, if you are managing a company, just take care of mandatory compliance at every step of your company to enjoy hindrance-free success.
For any assistance or discussion feel free to leave your query at company360