In this newsletter we examine the fundamental compliances to be undertaken by private limited start up companies under the Companies Act, 2013.
- Certificate of Incorporation: The certificate of incorporation of the company is to be filed with the Registrar within whose jurisdiction the registered office of the Company is proposed to be situated. The certificate of incorporation is received upon incorporation of a company. This provides a legal identity to the company.
- Certificate of commencement of business: The directors of the company have to apply for declaration of the commencement of business certificate within 180 days from the date of incorporation. A company cannot commence business or exercise any borrowings unless (i) declaration has been filed mentioning that the paid up capital has been received by the Company and (ii) the company files with the Registrar a verification of its registered office. This is applicable to companies incorporated on or after 2nd November 2018.
- Memorandum and Articles of Association: Memorandum of Association (“MOA”) sets out the business of the company. In case of any change in the business the MOA will have to be altered. Articles of Association (“AOA’) are actually an agreement between the shareholders and the Company. Any agreement pertaining to shareholding and management of the Company must be incorporated into the AOA.
- Share certificates: Every company is required to issue share certificates to the shareholders. A share certificate specifies the shares held by any member and is an evidence of the title of the member holding such shares. The stamp duty on share certificate is 1% in Karnataka payable in any cooperative bank. Every share certificate is required to be issued under the common seal of the company along with the signatures of two authorised directors and one authorised signatory.
- Meeting of Board of Directors: After incorporation of a company the first Board of Directors meeting is required to be held within 30 days from the date of incorporation. A notice of the meeting is to be send to every director of the Company at least 7 days before the meeting.
- Subsequent Board Meetings: The company must hold a minimum 4 board meetings in a year with not more than 120 days gap between two meetings. In case of one person company or a small company, it is sufficient to conduct only two board meetings with a gap of not less than 90 days between the two meetings.
- Annual General Meetings: All the companies are required to convene Annual General Meeting in every year except One Person Company. The very first Annual General Meeting should be held within a period of nine (9) months from the end of first financial year after its incorporation. Subsequently all annual general meetings after first AGM should be held within a period of six months from the end of financial year. Every Annual General Meeting should be held during business hours on any day except national holiday. Annual General Meeting should be held either at the registered office or any place within the city, town or village where such registered office is situated.