The introduction of the Companies Act, 2013, marked a significant change in the regulatory framework governing companies in India. From its enforcement in 2014, the compliance burden for every company, whether a Private Limited Company, Public Limited Company, Listed Company, Small Company, Section-8 Company, or One-Person Company, has increased considerably. This change aims to bring greater transparency and accountability in corporate governance and reporting.
To enhance transparency further, the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI) regularly issue amendments, circulars, and notifications. These directives ensure that companies comply with evolving regulations and adopt best practices in corporate governance.
Listed companies, being publicly traded and having a wide array of stakeholders, have a special responsibility to adhere strictly to all applicable laws within specified timelines. Failure to comply can lead to severe penalties, legal consequences, and damage to reputation. Therefore, it is critical for listed companies to systematically track and fulfill their compliance obligations under both the Companies Act, 2013, and various SEBI regulations.
Categories of Compliance
Compliances under the Companies Act and SEBI regulations for listed companies can broadly be classified into three categories:
Event-Based Compliance
These compliances must be undertaken when a specific event occurs. For instance, filing the e-form INC-22 when a company changes its registered office is an event-based compliance. The occurrence of such an event triggers the obligation to report to the concerned regulatory authorities within a stipulated timeframe.
Time-Based Compliance
These compliances are periodic and must be done regularly, such as annually, half-yearly, or quarterly. Examples include filing the annual return (e-form MGT-7) or the financial statements (e-form AOC-4). The time-bound nature of these compliances ensures consistent and timely reporting of company affairs.
Specific Criteria-Based Compliance
Some compliances depend on specific thresholds or criteria such as paid-up share capital, turnover, or particular corporate structures. For example, appointing a company secretary or filing e-form AOC-4 in the XBRL format depends on such criteria. Companies must be aware of these thresholds to fulfill their obligations accurately.
Compliance Obligations under SEBI Regulations
In addition to the Companies Act, listed companies must comply with various SEBI regulations, which govern disclosure, insider trading, takeovers, and shareholder rights. Key regulations include:
- SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
- SEBI (Depositories and Participants) Regulations, 2018
- SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
- SEBI (Prohibition of Insider Trading) Regulations, 2015
Each of these regulations includes quarterly, half-yearly, annual, and event-based compliance requirements that a listed company must fulfill in order to maintain its listing status and ensure transparency to investors.
Importance of Annual General Meeting and Board Meetings
A crucial aspect of compliance under the Companies Act is the timely holding of the Annual General Meeting (AGM). The AGM serves as a platform for the company to present its financial statements to shareholders, declare dividends, and discuss other essential corporate matters.
Additionally, companies are mandated to hold a minimum number of Board meetings and committee meetings as specified by law. These meetings facilitate corporate governance and decision-making, ensuring that the company’s affairs are managed responsibly and in compliance with regulatory requirements.
Compliance Calendar Under Companies Act 2013 for Listed Companies
The Companies Act, 20,13 prescribes a comprehensive framework of compliances to be observed by companies. Listed companies, due to their public nature and investor interest, are subject to strict adherence to these timelines and procedural mandates. Below is an elaboration of key compliances under the Companies Act, including the triggering provisions, statutory timelines, due dates, and forms required for filing with the Registrar of Companies (ROC).
Declaration of Commencement of Business
Every company incorporated under the Companies Act must file a declaration confirming the commencement of business. This declaration is mandated by Section 10A of the Companies Act, 2013, and must be submitted within 180 days from the date of incorporation.
This requirement serves as confirmation that the company has begun operations and is eligible to carry out its stated business activities. The filing is made using e-form INC-20A, which is submitted to the ROC. Failure to comply within the stipulated period can result in penalties and restrictions on the company’s ability to transact business.
Intimation of Change in Registered Office
Any change in the registered office address of a company must be communicated to the ROC within 30 days from the date of such change. This compliance is governed by Section 12 of the Companies Act, 2013.
The company is required to file e-form INC-22 to notify of this change. The purpose is to maintain updated records of the company’s principal place of business, which is critical for official correspondence and legal notices. Non-compliance may result in penalties and complications in legal proceedings.
Filing of Annual Return
The annual return provides a snapshot of the company’s structure, including details of its shareholders, directors, share capital, and indebtedness. Section 92 of the Companies Act requires the filing of the annual return within 60 days from the date of the Annual General Meeting (AGM).
Listed companies must file e-form MGT-7 for the annual return with the ROC. This document must accurately reflect the company’s shareholding pattern and other statutory details as on the date of the AGM. Timely filing is crucial to ensure compliance and avoid penalties.
Filing of Annual Financial Statements
Section 137 of the Companies Act mandates that companies file their financial statements with the ROC within 30 days from the date of the AGM. Financial statements include the balance sheet, profit and loss account, cash flow statements, and directors’ report.
Listed companies are required to file these financials in the e-form AOC-4 XBRL format. This requirement ensures transparency in financial reporting and allows regulatory authorities and investors to assess the company’s financial health. Delay in filing can attract penalties and impact the company’s credibility.
Appointment and Intimation of Statutory Auditors
The appointment of statutory auditors is governed by Sections 139 and 140 of the Companies Act, 2013. The first auditor must be appointed within 30 days of incorporation by the board, and the intimation regarding such appointment must be filed within 15 days using e-form ADT-1.
In the event of resignation of the auditor, the company must notify the ROC within 30 days by filing e-form ADT-3. Auditors play a vital role in ensuring the integrity of financial reporting, making these compliances essential to maintain accountability.
Directors’ KYC Filing
Every individual holding a Director Identification Number (DIN) must file a Director KYC (Know Your Customer) annually. As per Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014, this filing must be completed within six months from the end of the financial year, with the due date being 30th September.
Filing the DIR-3 KYC form ensures that the personal details of directors are up-to-date and helps maintain the authenticity of corporate records.
Filing of Resolutions and Agreements
Section 117 requires companies to file resolutions and agreements with the ROC within 30 days of passing the resolution or entering into the agreement. This is done through e-form MGT-14.
This compliance promotes transparency in significant corporate decisions, such as the approval of financial statements, the appointment of key personnel, or changes in the company’s structure.
Reconciliation of Share Capital Audit
Listed companies must conduct a Reconciliation of Share Capital Audit on a half-yearly basis, as prescribed by Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014. The audit report must be filed within 60 days from the conclusion of each half-year, typically by 30th May for the October to March period and by 29th November for the April to September period.
This audit reconciles the issued, listed, and held shares to ensure accuracy in share capital records. The report is filed in form PAS-6 with the ROC.
Return on Outstanding Payments to Micro or Small Enterprises
Under the Order dated 22 January 2019 issued under Section 405 of the Companies Act, companies must file a return related to payments outstanding to micro or small enterprises. This filing must be done within one month of the conclusion of each half-year, with due dates on 31st October and 30th April respectively.
E-form MSME-1 is used for this compliance, helping regulatory authorities monitor timely payments to small suppliers and promote fair trade practices.
Statement of Unclaimed and Unpaid Amounts
Section 125 of the Companies Act requires companies to maintain a statement of unclaimed dividends, matured deposits, and debentures. This statement must be filed with the Investor Education and Protection Fund Authority within 60 days of holding the AGM.
E-form IEPF-2 is used to report these amounts. The compliance ensures that unclaimed monies are appropriately managed and transferred as per law.
Return of Deposit or Particulars of Transaction Not Considered as Deposit
Rule 16 of the Companies (Acceptance of Deposits) Rules, 2014 mandates that companies file a return of deposits or particulars of transactions not considered deposits annually by 30th June. The e-form DPT-3 is filed with the ROC for this purpose.
This compliance helps in the regulation of deposit acceptance and prevents unauthorized collection of funds from the public.
Appointment or Resignation of Directors and Key Managerial Personnel
Any appointment or resignation of directors or key managerial personnel must be intimated to the ROC within 30 days of the event. This is governed by Section 152 of the Companies Act, 2013, and Rule 14 of the Companies (Appointment and Qualification of Directors) Rules, 2014.
E-form DIR-12 is used for filing such disclosures. The company must also maintain updated records of directors and KMPs to ensure compliance with governance standards.
Disclosure of Disqualifications Under Section 164
Directors must disclose any disqualifications at the time of appointment or reappointment, and also at the first board meeting of every financial year. This disclosure relates to conditions under Section 164 of the Companies Act and is submitted via e-form DIR-8.
Though this form is filed by the director to the company and not directly to the ROC, the company is responsible for maintaining records of these disclosures.
Report on Annual General Meeting
Section 121 requires companies to file a report on the proceedings of the Annual General Meeting within 30 days from the date of the AGM. This is done through e-form MGT-15 submitted to the ROC.
The report must detail attendance, resolutions passed, and other relevant information. Timely filing ensures regulatory oversight of shareholder meetings and transparency in corporate governance.
Disclosure of Interest by Directors
Directors are required to disclose their interest in any company, body corporate, or firm at the first board meeting and whenever there is a change in such interests. This obligation is under Section 184 of the Companies Act and Rule 9(1) of the Companies (Meeting of Board and its Powers) Rules, 2014.
This disclosure is made through form MBP-1 and is maintained by the company. It ensures that potential conflicts of interest are identified and managed appropriately.
Quarterly Compliance under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
Listed companies are required to submit various disclosures and reports every quarter to the stock exchanges. These disclosures enable the exchanges, investors, and other stakeholders to monitor the company’s performance and governance.
Corporate Governance Report
Under Regulation 27(2)(a) of SEBI LODR, listed companies must submit a quarterly Corporate Governance Report within 21 days from the end of each quarter. This report includes details about the composition of the board, meetings held, attendance of directors, and compliance with corporate governance norms.
The due dates for submission are by the 21st of July, October, January, and April, corresponding to the quarters ending June, September, December, and March, respectively.
Disclosure of Shareholding Pattern
Regulation 31(1)(b) mandates disclosure of the shareholding pattern within 21 days from the end of each quarter. The shareholding pattern includes details of promoters, public shareholders, institutional investors, and other categories.
This disclosure ensures transparency regarding the ownership structure and helps investors assess the distribution of shares.
Statement of Deviation or Variation
Regulation 32(1), read with SEBI’s circular dated 24 December 2019, requires listed companies to submit a statement of deviation or variation in the use of proceeds from public issues, rights issues, preferential issues, etc.
This statement must be filed within 45 or 60 days from the end of the quarter, with due dates falling on 14th August, 14th November, 14th February, and 30th May respectively. The disclosure highlights any material deviation from the projected utilization of funds.
Financial Results
Regulation 33(3)(a) requires listed companies to submit quarterly financial results along with limited review reports or auditor’s reports within 45 days of the end of the quarter, except for the last quarter of the financial year.
The due dates for these filings align closely with those for the statement of deviation or variation, ensuring that financial performance is promptly reported to the stock exchanges and investors.
Half-Yearly Compliance under SEBI LODR Regulations
Listed companies are required to comply with certain disclosures on a half-yearly basis to enhance transparency further.
Disclosure of Related Party Transactions
Regulation 23(9) mandates that listed companies disclose related party transactions every six months. This disclosure is to be made within 15 days from the date of publication of the standalone and consolidated financial results.
Related party transactions can involve potential conflicts of interest, and timely disclosure allows stakeholders to monitor such transactions and assess their fairness.
Annual Compliance under SEBI LODR Regulations
Annual compliances ensure that listed companies maintain governance standards throughout the year and provide comprehensive information to investors.
Compliance Certificate by Share Transfer Agent
Regulation 7(3) requires share transfer agents to provide a compliance certificate within 30 days from the end of the financial year. This certificate confirms adherence to regulatory requirements concerning share transfer and transmission processes.
Payment of Listing Fees and Other Charges
Under Regulation 14, companies must pay listing fees and other statutory charges to stock exchanges within one month from the end of the financial year, typically by 30th April. This payment is essential to maintain the company’s listing status.
Secretarial Compliance Report
Regulation 24A mandates listed companies to submit a secretarial compliance report within 60 days from the end of the financial year. The report certifies that the company has complied with all applicable secretarial standards and regulations.
Annual Affirmations for Compliance with Code of Conduct
Regulation 26(3) requires listed companies to obtain annual affirmations from directors and senior management regarding compliance with the company’s code of conduct. This is done at the first board meeting of each financial year.
Financial Results and Auditor’s Report
Regulation 33(3)(d) requires submission of annual audited financial results and the auditor’s report within 60 days from the end of the financial year.
Annual Report Submission
Regulation 34(1) mandates that the annual report must be dispatched to shareholders not less than 21 days before the Annual General Meeting. The annual report contains detailed financial statements, corporate governance reports, and other material disclosures.
Initial and Annual Disclosure Requirements for Large Entities
Certain large entities must comply with initial and annual disclosure requirements within prescribed timelines. Initial disclosures are to be submitted within 30 days from the beginning of the financial year, and annual disclosures within 45 days after the financial year ends.
Certificate from Practicing Company Secretary for Transfer of Securities
Regulation 40(9) requires a certificate from a practicing company secretary confirming compliance with share transfer regulations. This certificate is submitted within 30 days of the end of the financial year.
Transfer or Transmission of Securities
Regulation 40(10) mandates compliance with the transfer, transmission, or transposition of securities within 30 days from the end of the financial year.
Submission of Voting Results to Stock Exchange
Regulation 44(3) requires listed companies to submit voting results within two working days after the conclusion of general meetings. This disclosure provides transparency on shareholder voting outcomes.
Event-Based Compliance under SEBI LODR Regulations
Listed companies must also fulfill event-driven compliance requirements, which are triggered by specific corporate actions or occurrences.
Intimation of Appointment of Share Transfer Agent
Regulation 7(5) requires companies to inform stock exchanges within seven days of agreeing with a share transfer agent.
In-Principal Approval from Recognized Stock Exchanges
Regulation 28(1) requires companies to obtain in-principle approval from stock exchanges before issuing securities. This ensures compliance with listing norms before securities issuance.
Prior Intimation of Board Meeting
Under Regulation 29(1)(a) to (h), companies must provide at least two working days’ prior notice to stock exchanges before board meetings where key matters like financial results, buybacks, dividends, raising of funds, voluntary delisting, bonus issues, or alteration in securities nature are considered.
Disclosure of Material Events or Information
Regulation 30(6) obligates companies to disclose material events or information to stock exchanges promptly, no later than 30 minutes after the board meeting where the decision is made or within 12 to 24 hours of the event occurring. Timely disclosure ensures that market participants receive equal access to important information.
Verification of Market Rumours
Regulation 30(11) requires the top 100 listed companies, and subsequently the top 250, to verify, confirm, deny, or clarify market rumours relating to material price-sensitive information within 24 hours of any price movement triggered by such rumours.
Shareholding Pattern Before Listing of Securities
Regulation 31(1)(a) mandates the submission of the shareholding pattern one day before the listing of securities.
Shareholding Pattern in Case of Capital Restructuring
Regulation 31(1)(c) requires disclosure of changes in shareholding pattern within ten days when there is a change in capital exceeding two percent.
Draft Scheme of Arrangement
Regulation 37(2) requires listed companies to obtain observation or no-objection letters from stock exchanges before filing schemes of arrangement with courts or tribunals.
Loss of Share Certificates and Issue of Duplicate Certificates
Regulation 39(3) requires companies to inform stock exchanges within two days upon receipt of information about the loss of share certificates and the issue of duplicates.
Voting Results Submission
Regulation 44(3) requires submission of voting results within two working days after general meetings.
Change in Name of the Listed Entity
Regulation 45(3) requires annexing a certificate from a practicing chartered accountant with the explanatory statement seeking shareholder approval for a name change. The certificate confirms compliance with all regulatory requirements relating to the name change.
Website Compliance
Regulation 46 mandates that listed companies maintain a functional website with basic and updated information about the company, ensuring easy access to key disclosures by investors and the public.
Compliance under SEBI (Depositories and Participants) Regulations, 2018
Listed companies and their registrars and share transfer agents must comply with the SEBI Depositories Regulations. These regulations govern the dematerialization of shares, reconciliation of share capital, and processing of demat requests.
Processing of Demat Requests
Regulation 74(5) requires companies or their share transfer agents to process demat requests within 15 days from the end of each quarter. This timely processing facilitates smooth transfer and holding of securities in dematerialized form.
Reconciliation of Shares and Capital Audit
Regulation 76 mandates the reconciliation of shares and capital audit to be completed within 30 days from the end of each quarter. This ensures that the company’s share capital records are accurate and match the depository records.
Compliance under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
These regulations govern disclosures related to substantial acquisitions and takeovers of listed companies to protect minority shareholders and maintain market transparency.
Disclosure of Encumbrance by Promoters
Regulation 31(1) and 31(3) require promoters and persons acting in concert to disclose details of shares encumbered, including creation, invocation, or release of encumbrances, within seven working days. These disclosures must be made to every stock exchange where the company is listed and at the company’s registered office.
Annual Declaration on Encumbrance
Regulation 31(4) and 31(5) require promoters to declare annually that they have not made any undisclosed encumbrances during the financial year. This declaration must be filed within seven working days from the end of the financial year to the stock exchanges and the audit committee.
Compliance under SEBI (Prohibition of Insider Trading) Regulations, 2015
Insider trading regulations are vital to prevent misuse of unpublished price-sensitive information by insiders.
Continual Disclosures by Promoters and Designated Persons
Regulation 7(2) requires every promoter, member of the promoter group, designated person, and director to disclose to the company the number of securities acquired or disposed of if the traded value exceeds ten lakh rupees in a calendar quarter. This disclosure must be made within two trading days from the receipt of information or awareness of such transaction.
Annual General Meeting (AGM) Compliance for Listed Companies
The Annual General Meeting (AGM) is a pivotal event in the corporate calendar of every company, especially for liscompaniessaies,, which have a large shareholder base. The Companies Act, 2013, prescribes strict rules and timelines for holding AGMs to ensure shareholders are kept informed and have an opportunity to exercise their rights.
Timeline for Holding AGM
A company must hold its first AGM within nine months from the end of its first financial year but not later than 15 months from the date of incorporation. Subsequent AGMs must be held within six months of the end of each financial year, with the gap between two AGMs not exceeding fifteen months.
These timelines ensure the timely presentation of the company’s financial performance and governance reports to shareholders.
Notice of AGM
The company must send a clear notice to all members, directors, auditors, and other entitled persons at least 21 clear days before the meeting. The notice must specify the date, time, venue, and agenda of the meeting.
In the case of listed companies, this notice must also be filed with the stock exchanges and made available on the company’s website, ensuring transparency and broad accessibility.
Business to be Transacted
The AGM agenda typically includes approval of financial statements, declaration of dividends, appointment or reappointment of directors, appointment or ratification of auditors, and approval of other matters as required by law.
The Companies Act mandates that certain business be conducted only at an AGM, safeguarding shareholder interests.
Filing of Annual Return and Financial Statements Post-AGM
Within 60 days from the AGM, the company must file the annual return (e-form MGT-7) and, within 30 days, file the financial statements (e-form AOC-4) with the Registrar of Companies.
Failure to file these forms on time attracts penalties and can affect the company’s compliance status.
Board Meetings and Committee Meetings Compliance
The Companies Act, 2013, mandates that companies hold a minimum number of Board Meetings and committee meetings during the financial year. These meetings are essential for effective corporate governance and decision-making.
Minimum Number of Board Meetings
Every listed company must hold at least four board meetings each year, with a maximum gap of 120 days between two consecutive meetings.
These meetings must be convened with proper notice and an an agenda circulated in advance to directors, facilitating informed discussions and decisions.
Committee Meetings
Certain committees are mandatory for listed companies, including the Audit Committee, Nomination and Remuneration Committee, and the Stakeholders Relationship Committee. The Companies Act and SEBI regulations prescribe minimum meetings for these committees, which typically range from four to six per year.
These committees play a vital role in oversight, risk management, executive appointments, and grievance redressal.
Notice and Agenda for Meetings
The notice for board and committee meetings must be sent in writing at least seven days before the meeting. It must include the date, time, venue, and agenda. Any director can waive the notice requirement, but proper minutes must be recorded.
Quorum and Participation
The quorum for board meetings depends on the number of directors and is prescribed by the Act. Participation through video conferencing is permitted, enabling flexibility and ensuring compliance with meeting requirements even when physical presence is challenging.
Minutes of Meetings
Minutes of all board and committee meetings must be recorded in a Minutes Book within 30 days and signed by the chairperson of the meeting. These minutes are evidence of compliance and decision-making and must be preserved for statutory inspection.
Practical Considerations in Managing Compliance
Given the volume and complexity of compliance, listed companies often adopt systematic approaches to ensure timely and accurate filings.
Use of Compliance Calendars
Maintaining a compliance calendar is essential to track due dates for various filings, meetings, and disclosures. Calendars typically include reminders for event-based, time-based, and criteria-based compliances.
Involvement of Professionals
Companies often engage company secretaries, legal advisors, and compliance consultants to oversee and manage statutory compliance. Their expertise helps navigate frequent amendments and reduces the risk of non-compliance.
Automation and Technology
Many companies use compliance management software to automate alerts, document storage, and filing processes. This reduces human error and enhances efficiency.
Coordination Between Departments
Compliance requires coordination between corporate secretarial, finance, legal, investor relations, and other departments to gather information and prepare disclosures.
Board and Senior Management Awareness
Regular training and updates for board members and senior management help create awareness of their responsibilities and emerging regulatory changes.
Penalties and Consequences of Non-Compliance
Non-compliance with the Companies Act and SEBI regulations can attract severe penalties for both the company and its officers.
Financial Penalties
Late filings and non-submission of mandatory returns can lead to fines ranging from thousands to lakhs of rupees, depending on the severity and duration of the default.
For example, failure to file annual returns or financial statements on time can attract penalties of ₹1,000 per day until compliance.
Criminal Liability
In certain cases, persistent non-compliance or willful default may result in criminal prosecution, including imprisonment of officers responsible.
Impact on the Company’s Reputation
Non-compliance can damage the company’s reputation among investors, lenders, and regulators, impacting share price and business prospects.
Suspension or Delisting
SEBI may suspend trading of securities or initiate delisting proceedings against companies failing to meet listing obligations and disclosure norms.
Personal Liability of Directors and Officers
Directors and Key Managerial Personnel may be held personally liable for compliance failures, especially in cases involving fraudulent activities or insider trading violations.
Recent Trends and Amendments Impacting Listed Companies
The regulatory environment for listed companies is dynamic, with frequent amendments and new guidelines issued by the MCA and SEBI.
Increased Focus on ESG Disclosures
Sustainability and Environmental, Social, and Governance (ESG) disclosures are gaining prominence. SEBI has introduced requirements for listed companies to disclose ESG-related information in their annual reports.
Enhanced Insider Trading Regulations
SEBI has tightened norms on insider trading, including an expanded definition of insiders, increased disclosure requirements, and stronger penalties.
E-Forms Simplification
MCA has introduced simplified and consolidated e-forms to ease compliance burden, including the merger of some annual filings.
Relaxations during the COVID-19 Pandemic
Temporary extensions of compliance deadlines and allowances for virtual meetings were introduced, reflecting the adaptability of regulations to extraordinary circumstances.
Digital Filing and Scrutiny
The MCA and SEBI increasingly use technology for real-time scrutiny of filings and disclosures, requiring higher accuracy and diligence.
Conclusion
Compliance under the Companies Act and SEBI regulations is critical for listed companies to maintain good governance, transparency, and investor confidence. The extensive set of compliances includes event-based, time-based, and specific criteria-based filings and disclosures, covering annual general meetings, board meetings, financial reporting, shareholding disclosures, insider trading regulations, and more.
Strict adherence to timelines and procedural requirements protects companies from penalties, legal action, and reputational harm. It also strengthens the overall corporate ecosystem by promoting accountability and trust among stakeholders.
To navigate this complex landscape, listed companies must implement robust compliance frameworks, leverage professional expertise, and embrace technological tools. Keeping abreast of regulatory changes and fostering a culture of compliance within the organization are essential to fulfilling statutory obligations effectively.