Corporate Governance & MCA Filings

Why mechanics matter

A board decision is only valid if the meeting itself was validly convened. Get the notice, quorum, and process right and your resolutions hold up; get them wrong and decisions can be challenged. Lekha's Board Resolution template gives a compliant format for recording decisions.

Frequency and notice

• Frequency (s.173): At least four board meetings each year, with a gap of no more than 120 days between two consecutive meetings.
• Notice: Not less than seven days' notice in writing to every director at their registered address, by hand, post, or electronic means. A meeting can be called at shorter notice for urgent business if at least one independent director is present (or later ratified).

Quorum

Under Section 174, the quorum is one-third of total strength or two directors, whichever is higher. Directors participating by video conferencing count towards quorum. If the number of interested directors reduces the quorum below this, the remaining disinterested directors (if at least two) form the quorum.

Secretarial Standard SS-1

The ICSI Secretarial Standard on Meetings of the Board (SS-1) is mandatory and standardises how meetings are called, conducted, and recorded — agenda circulation, presence by video, recording of dissent, and minute-keeping. Following SS-1 is the cleanest way to ensure your meetings withstand scrutiny.

Common mistakes

• Breaching the 120-day gap between meetings.
• Issuing notice late or omitting a director.
• Not counting (or wrongly counting) interested directors when checking quorum.
• Passing items by circulation that s.179(3) requires to be decided at a meeting.

Takeaway: Four meetings a year, seven days' notice, a quorum of one-third or two directors, and SS-1 compliance are the four checks that make every board meeting defensible.

The annual general meeting

Under Section 96, every company (other than a One Person Company) must hold an Annual General Meeting (AGM) each year. The first AGM is held within nine months of the first financial year-end; subsequent AGMs within six months of year-end, with no more than 15 months between two AGMs. Notice of at least 21 clear days must be given to members. Lekha's AGM Minutes template helps you record proceedings correctly.

Ordinary vs special resolutions

• Ordinary resolution: Passed by a simple majority (more votes in favour than against). Used for routine items such as adopting financial statements, declaring dividends, appointing auditors, and appointing most directors.
• Special resolution: Requires votes in favour to be at least three times the votes against (effectively a 75% majority). Used for bigger decisions — altering the Articles or Memorandum, reducing capital, issuing ESOPs under s.62, changing the registered office between states, and similar structural matters.

Ordinary and special business

The AGM distinguishes ordinary business (accounts, dividend, retiring directors, auditor appointment) from special business (everything else), and special business needs an explanatory statement under s.102 attached to the notice.

Secretarial Standard SS-2

SS-2 governs general meetings — notice content, quorum, proxies, voting, and minutes. Many companies must also offer e-voting. Quorum for a private company is typically two members present.

Common mistakes

• Missing the six-month / 15-month AGM timing.
• Using an ordinary resolution where a special resolution (75%) is required.
• Omitting the s.102 explanatory statement for special business.

Takeaway: Hold the AGM on time with 21 days' notice, and always check whether the item needs an ordinary (simple majority) or special (75%) resolution before you put it to the vote.

The three filings that matter most

After the AGM, a company files its financials and annual return with the Registrar of Companies. Missing these triggers daily penalties and, eventually, director disqualification — so a filing calendar is essential.

AOC-4 — financial statements

Under Section 137, a company files its audited financial statements with the RoC in Form AOC-4 (or AOC-4 XBRL / AOC-4 CFS where applicable) within 30 days of the AGM. Lekha's AOC-4 Narrative template helps you prepare the supporting board's report narrative.

MGT-7 — annual return

Under Section 92, the annual return is filed in Form MGT-7 (small companies and OPCs use MGT-7A) within 60 days of the AGM. It captures shareholding, directors, and changes during the year. Lekha's MGT-7 Narrative template supports this.

DPT-3 — return of deposits

Form DPT-3 is an annual return of deposits and of money received that is not treated as a deposit (such as loans from directors or inter-corporate loans), filed by 30 June for the year ended 31 March. Many startups overlook it because they assume they have "no deposits" — but the form also covers exempt amounts and is still required.

Common mistakes

• Counting the 30/60 days from the financial year-end instead of from the AGM date.
• Skipping DPT-3 because the company believes it has no deposits.
• Filing AOC-4 without the board's report and required attachments.

Takeaway: AOC-4 within 30 days of the AGM, MGT-7 within 60 days, and DPT-3 by 30 June — put these three on a recurring calendar, because the penalties for lateness accrue every single day.

Appointing a director

Under Section 152, directors are generally appointed by the shareholders in a general meeting, and a person can only be appointed if they hold a Director Identification Number (DIN) and have given their consent in Form DIR-2. The appointment is reported to the RoC in Form DIR-12 within 30 days, along with the director's consent.

DIN and consent

• DIN: A unique number every director must hold, obtained through Form DIR-3 (or via SPICe+ at incorporation).
• Consent (DIR-2): The proposed director must consent in writing before appointment; appointing someone without consent is invalid.
• Disqualifications (s.164): Check the person is not disqualified — for example, by being a director of a company that failed to file financials for three years.

Resignation

Under Section 168, a director resigns by giving written notice; the resignation takes effect from the date the company receives it or a later date stated in the notice. The company files DIR-12, and the resigning director may also file Form DIR-11 with the RoC (optional but advisable, as it protects them from liability for later acts).

Common mistakes

• Appointing a director who has not yet obtained a DIN or given DIR-2 consent.
• Missing the 30-day window to file DIR-12 for an appointment or resignation.
• Resigning directors not filing DIR-11, then being shown as a director long after they left.
• Overlooking s.164 disqualification before appointment.

Takeaway: Every director change runs on consent, a valid DIN, and a timely DIR-12 — and a resigning director should file DIR-11 to be cleanly off the record.

Statutory registers

The Companies Act requires every company to maintain a set of statutory registers and keep them at the registered office. These are not optional paperwork — they are the legal record of the company's ownership and governance, and they are inspected during due diligence and by the RoC.

• Register of Members (s.88): Every shareholder and their holding.
• Register of Directors and KMP (s.170): Directors, key managerial personnel, and their shareholding.
• Register of Charges (s.85): Charges created on the company's assets (e.g. loans secured against property).
• Minutes books: Board and general meeting minutes, finalised within 30 days and signed.

DIR-3 KYC — the annual director check

Every individual holding a DIN must complete DIR-3 KYC each year by 30 September. First-time or detail-changing filers use the full DIR-3 KYC eForm; those with no changes can use the simpler DIR-3 KYC web service. Lekha's DIR-3 KYC template helps you gather the right details. Miss the deadline and the DIN is deactivated, with a ₹5,000 reactivation fee — and a deactivated DIN means the director cannot sign filings.

Incorporation records

Keep your incorporation documents organised from day one — the certificate of incorporation, MoA/AoA, and first board minutes. Lekha's Incorporation Minutes template covers the first board meeting where the company adopts its seal, opens its bank account, and appoints the auditor.

Common mistakes

• Treating registers as a formality and letting them fall out of date.
• Missing 30 September DIR-3 KYC, deactivating the DIN mid-year.
• Not signing minutes within 30 days.

Takeaway: Keep your statutory registers current and complete DIR-3 KYC for every director by 30 September — a deactivated DIN can stall every other filing the company needs to make.

How penalties accrue

Late RoC filings attract additional fees that climb with the delay — for most annual forms the late fee is ₹100 per day with no upper cap, so a form a few months late can cost many times the original fee. Beyond fees, persistent default brings adjudication penalties on the company and on the officers in default under the relevant sections of the Companies Act 2013.

Director disqualification

Under Section 164(2), a director of a company that fails to file financial statements or annual returns for three continuous financial years becomes disqualified — and cannot be reappointed in that company or appointed in another for five years. This is one of the most serious consequences of neglected filings, and it is automatic.

Striking off

The Registrar can strike off a company's name from the register under Section 248 if it is not carrying on business or has not filed returns for a long period. A company can also apply voluntarily for striking off (Form STK-2) when it has wound down operations and cleared liabilities. Once struck off, the company ceases to exist, though it can be restored by the NCLT within a limited window.

Practical guidance

• Maintain a compliance calendar so AOC-4, MGT-7, DPT-3, and DIR-3 KYC never slip.
• If filings are already overdue, file them promptly — penalties grow daily.
• For a genuinely dormant company, consider a clean voluntary strike-off rather than letting penalties pile up.

Common mistakes

• Letting a "dormant" company drift unfiled, risking director disqualification.
• Assuming an inactive company has no obligations — it still must file or be formally struck off.
• Ignoring RoC strike-off notices until the company is removed.

Takeaway: Filing penalties accrue daily and three years of default disqualifies directors — keep a compliance calendar, clear any backlog quickly, and formally strike off a company you no longer use rather than abandoning it.