Post Incorporation Compliances under the Companies Act, 2013: A Practical Guide for Companies in India
Introduction
Incorporating a company is only the beginning of its legal journey. The initial period after incorporation is crucial, as a company must complete several essential formalities that establish its operational and governance framework.
Timely compliance during this stage ensures a smooth transition from incorporation to business operations and lays the foundation for sustainable corporate management.
Failure to comply with these requirements can result in heavy penalties, disqualification of directors, prosecution, and even the striking off of the company from the Register of Companies.
What are Post Incorporation Compliances?
Post Incorporation Compliances refer to the statutory obligations that every company must fulfill immediately after incorporation and throughout its existence.
These compliances ensure that the company operates transparently, maintains proper governance, protects stakeholders, and complies with Indian corporate laws.
Objectives of Post Incorporation Compliances
The primary objectives include:
- Ensuring corporate transparency
- Protecting shareholders and creditors
- Maintaining statutory records
- Promoting good corporate governance
Immediate Post Incorporation Compliances
Immediately after incorporation, a company is required to complete several foundational compliances to legally commence its operations. These compliances establish the company’s corporate governance framework and ensure compliance with the Companies Act, 2013.
- Opening of Bank Account and Deposit of Subscription Money
Every company should open its bank account immediately after incorporation to receive the subscription money from the subscribers to the Memorandum of Association.
Under Section 10A of the Companies Act, 2013 read with Rule 23A of the Companies (Incorporation) Rules, 2014, every company having share capital shall not commence any business or exercise any borrowing powers unless—
(a) a declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in form INC-20A with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and
(b) the company has filed with the Registrar a verification of its registered office as provided in sub-section (2) of section 12.
Penalty in case of non-compliance
The declaration for commencement of business must be filed within 180 days from incorporation. Failure to comply attracts the following penalty,
The company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.
Where no declaration has been filed with the Registrar within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, remove of the name of the company from the register of companies.
- Display of Company Details
As per Section 12(3) of the Companies Act,2013, Every company shall—
(a) paint or affix its name, and the address of its registered office, and keep the same painted or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in legible letters, and if the characters employed therefor are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages
(b) have its name engraved in legible characters on its seal, if any
(c) get its name, address of its registered office and the Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business letters, billheads, letter papers and in all its notices and other official publications and
(d) have its name printed on hundies, promissory notes, bills of exchange etc.
- Issue Share Certificates
As per Section 56(4)(a) Every company shall, unless prohibited by any provision of law or any order of Court, Tribunal or other authority, deliver the certificates of all securities allotted, transferred or transmitted within a period of two months from the date of incorporation, in the case of subscribers to the memorandum.
- Appointment of First Auditor
As Per Section 139(6) of the Companies Act, 2013, The First Auditor of the Company shall be appointed by the Board of Directors within 30 days from the date of Registration of the Company
- Holding of First Board Meeting
Every Company shall hold its First Board Meeting within 30 days of the date of incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board.
- Disclosure of Interest by the Directors
As Per Section 184(1) of the Companies Act 2013, Every Director shall at the first meeting of the Board in which he participates as a and thereafter at the first meeting of the Board in every or whenever there is any change in the disclosures already made, then at the first Board meeting held after such change, disclose his concern or interest in any or companies or bodies corporate, firms, or other association of individuals which shall include the shareholding in form MBP-1
- Statutory Registers
The company is required to maintain the following registers
- Register of members
- Register of Directors & KMP
- Register of Contract and Arrangements in which the Directors are interested
- Register of Charges
- Register of Loans, Guarantees, Securities and Investments and
- Any other registers as required under the Companies Act, 2013
- Payment of Stamp Duty
Pursuant to Stamp Act, 1899 stamp duty shall be paid on share certificates issued to subscribers and to any person to whom share certificates will be issued after allotment within the time specified under the said provisions. And in case of delayed, non-payment or evasion of payment of stamp duty on the issue of share certificate in case of Allotment of share, the company shall be liable for heavy penalty under the Act.
Conclusion
Post incorporation compliance is an essential part of a company’s journey after receiving its Certificate of Incorporation. Incorporation only creates the legal existence of a company, but continuous compliance ensures that the company remains legally active, transparent, and well-governed.
For any further query or consultations, please connect with us:
J. K. Gupta & Associates
(Company Secretaries & Insolvency Professionals)
Email: cs@jkgupta.com; Mobile: 9953887741
Delhi || Noida