Annual Compliance of a Public Limited Company: Rules and Procedures

After registering as a Public Limited Company, your legal obligations as a business owner begin. Running a public limited company comes with various responsibilities, and one crucial aspect is ensuring annual compliance with the rules and regulations set forth by the governing authorities. These obligations come in the form of compliance that needs to be taken care of. Compliance is not just a legal requirement but also vital for maintaining transparency, safeguarding stakeholders’ interests, and upholding the company’s reputation. In this article, we will discuss the annual compliance of a Public Limited Company.

What is the Annual Compliance of a Public Limited Company?

Public Limited Companies play a significant role in the global business landscape, offering opportunities for growth, investment, and economic development. However, with the privilege of operating as a public entity comes the responsibility of complying with various legal and regulatory obligations. Among these obligations, ensuring annual compliance holds the utmost importance. Annual compliance not only safeguards the interests of stakeholders but also contributes to transparency, accountability, and sustainable business practices.

Advantages of Annual Compliance of a Public Limited Company

The advantages of annual compliance with the rules of a Public Limited Company are-

• Reputation– By meeting the requirements of the commercial register and the MCA, the public limited company and its partners will increase their reputation in the eyes of the public. Through this process, a public limited company can increase its compliance requirements. More investors would be willing to invest in a public limited company that meets the requirements of the law.
• Compliance– By completing all compliances within a certain time, the corporation would be exempt from any form of compliance requirements. A public limited company can meet its goals by considering them.
• Less Burden– By complying with the authorities’ requirements, the public limited company would face less of a compliance burden. If such a company does not follow compliances, it can be detrimental to the development of the company. Therefore, the partners of a public limited company must comply with all compliance-related requirements.

Key Components of Annual Compliance of Public Limited Company

Annual compliance encompasses several critical components that Public Limited Companies must address within specified timelines. Understanding these components is crucial for effectively managing annual compliance. Some of the key elements include:

• Financial Statements: Public Limited Companies must prepare accurate and audited financial statements that comply with accounting standards and relevant laws. These statements, including the balance sheet, income statement, and cash flow statement, provide a comprehensive overview of the company’s financial performance.
• Director’s Report: The director’s report provides valuable insights into the company’s operations, financial position, and prospects. It typically covers information about the business model, risk management, Corporate Social Responsibility (CSR) initiatives, and the company’s governance practices.
• Annual General Meeting (AGM): Public Limited Companies are required to hold an AGM within a specified timeframe after the end of each financial year. The AGM provides shareholders with an opportunity to review company performance, approve financial statements, appoint auditors, and discuss other matters of importance.
• Statutory Filings: Public Limited Companies must file their annual financial statements, director’s reports, and other relevant documents with the designated regulatory authorities. Complying with the prescribed timelines for filing is crucial to avoid penalties or legal repercussions.
• Corporate Governance: These companies are expected to adhere to good corporate governance practices, including the composition and functioning of the board of directors, disclosure of related-party transactions, and implementing internal controls to ensure transparency, accountability, and ethical conduct.
• Regulatory Disclosures: These companies must make timely disclosures to regulatory bodies, stock exchanges, and other relevant authorities. These disclosures include material events, financial results, changes in ownership, or any other information that could impact the company’s performance or investor decisions.
• Compliance with Securities Laws: For publicly traded Public Limited Companies, compliance with securities laws and regulations is of utmost importance. This includes proper disclosure of material information, compliance with insider trading regulations, and adherence to regulations regarding public offerings, tender offers, and corporate actions.

Documents Required for Filing Compliance of Public Limited Company

The documents and information required to meet the requirements of a Public Limited Company are as follows:

• Shareholder structure associated with Public Limited Companies
• Headquarters address
• Maintained company register
• Compliance Certificate from Company Secretary
• Financial statements for the accounting period
• Member registration details
• Company management details
• Details relating to the company’s shares and debentures
• Company debt and charge details
• In the event of an event-based match, if there is a change of director, details of the changes are required
• In the case of event-based matching, if there is an event related to transmission sharing, details of the same are also required
• Shareholder structure of the company.

Procedure for Filing Annual Compliance for a Public Limited Company

Under the Companies Act 2013, the annual compliance for a Public Limited Company consists of:

• Keeping and preparing all financial records that must be submitted to the commercial register every year
• Submission of annual statements in form MGT-7
• Application for certification of annual return form MGT-8.
• Income tax return on an annual basis
• Secretariat Audit Report in Form MR-3
• Annual compliance with SEBI-related rules and regulations
• Annual report of the general meeting in the form of MGT-15
• Annual event-based compliance
• Acceptance of financial report and director’s report in form MGT-14.

Final words

It involves several crucial rules and procedures. Adhering to these requirements ensures transparency, accountability, and legal compliance, which are essential for maintaining the company’s reputation and building trust among stakeholders. Companies must allocate sufficient resources, including qualified professionals, to fulfill their annual compliance obligations. By doing so, they can demonstrate their commitment to good governance and effectively manage their legal and regulatory responsibilities.

In case of any query regarding the annual compliance of a Public Limited Company, a team of expert advisors from Legal Window is here to assist you at every step. Feel free to reach us at [email protected].