Compliance Applicability Threshold under the Companies Act, 2013 and its Importance

Compliance Applicability Threshold under the Companies Act, 2013 and its Importance . We all know that every company whether private, public, or listed, must track its statutory compliance calendar in line with the Companies Act, 2013, allied rules, and regulatory directions. Below is a structured table highlighting important compliances, their governing provisions, and applicability thresholds for paid-up capital and turnover.
Compliance Applicability Table

Sr. No.

About the Section

Section/Rule

Applicability

Paid-Up Capital

Turnover

Small Company

Sec. 2(85)

Private Companies (except holding, subsidiary, Sec. 8, special Act companies)

≤ Rs.4 Cr

≤ Rs.40 Cr

Corporate Social Responsibility (CSR)

Sec. 135

Listed, Public, and Private

Net Worth ≥ Rs.500 Cr

Turnover ≥ Rs.1,000 Cr

DPT-3 Return of Deposits

Sec. 73–76

All Companies

Director’s Disqualification Disclosure (DIR-8)

Sec. 164

All Companies

Director’s Interest Disclosure (MBP-1)

Sec. 184

All Companies

Certification of Annual Return

Sec. 92(2), Rule 11(2)

All Listed + Others

≥ Rs.10 Cr

≥ Rs.50 Cr

XBRL Filing

Sec. 137, Rule 3

All Companies

≥ Rs.5 Cr

≥ Rs.100 Cr

Cash Flow Statement

Sch. III

All except small/private exempted

Annual Return (MGT-7/7A)

Sec. 92

All Companies

MGT-8 (Annual Return Certification)

Sec. 92(2)

Listed + other eligible Cos.

≥ Rs.10 Cr

≥ Rs.50 Cr

AGM – Subsequent

Sec. 96

Public, Private, Listed

DIN KYC

Rule 12A (Appointment & Qualification of Directors)

All Companies + LLP

MSME Form I

MCA Order (22 Jan 2019), Sec. 405

All Companies

Appointment of Auditor

Sec. 139

All Companies

Resignation of Auditor

Sec. 140

All Companies

CARO

Sec. 143

Mandatory for Listed; others if thresholds met

≥ Rs.1 Cr

≥ Rs.10 Cr

Women Director

Sec. 149(1)

Listed + Certain Public

≥ Rs.100 Cr

≥ Rs.300 Cr

Independent Director

Sec. 149(5)

Listed + Certain Public

≥ Rs.10 Cr

≥ Rs.100 Cr

First Board Meeting

Sec. 173

All Companies

Secretarial Audit

Sec. 204, Rule 9

Listed + Certain Public

≥ Rs.50 Cr

≥ Rs.250 Cr

Vigil Mechanism Policy

Sec. 177

Listed, deposit-accepting, or borrowings > Rs.50 Cr

Stakeholder Relationship Committee

Sec. 178

Listed Companies

POSH Compliance

POSH Act, 2013

All entities with ≥10 employees

Why Each Compliance is Important Under the Companies Act, 2013
Small Company – Section 2(85)
Being classified as a Small Company provides exemptions from several compliances such as fewer board meetings, exemption from cash flow statements, and reduced penalties. It eases compliance burden for startups and SMEs. If wrongly claimed, however, it can trigger penalties and invalidate filings.
Corporate Social Responsibility (CSR) – Section 135
CSR ensures companies contribute to society beyond profit-making. For large corporates, CSR is not just regulatory it builds brand goodwill, investor confidence, and ESG ratings. Non-compliance results in penalties and reputational damage, especially with SEBI’s increasing focus on sustainability reporting.
DPT-3 Return of Deposits – Sections 73–76
This return captures company borrowings, loans, advances, and deposits. It helps regulators track potential misuse of public funds. Non-filing can trigger hefty penalties and disqualification for directors, and it becomes a major red flag in any due diligence.
Disclosure of Director’s Disqualification (DIR-8) – Section 164
Directors must annually confirm they are not disqualified. This maintains integrity in governance. If a disqualified person continues as director, every decision they take may become challengeable, leading to governance paralysis and investor distrust.
Disclosure of Interest by Directors (MBP-1) – Section 184
This ensures directors disclose any conflict of interest in contracts or arrangements. It protects companies from insider abuse and related party frauds. Non-disclosure can make contracts voidable and expose directors to prosecution.
Certification of Annual Return – Section 92(2)
For larger companies, annual returns must be certified by a practicing company secretary. Independent certification assures regulators and investors of accuracy in shareholding, management, and governance disclosures. Non-certification or false certification attracts both penalties and professional liability.
XBRL Filing – Section 137
XBRL filings make financial statements machine-readable for MCA and regulators, improving transparency and analytics. Non-compliance affects corporate transparency scores and may cause difficulties during IPO or investor diligence.
Cash Flow Statement – Schedule III
Cash flow reporting shows liquidity and solvency health. Investors and lenders track this to assess repayment ability and business sustainability. Omission reduces financial clarity and may make credit harder to secure.
Annual Return (MGT-7/7A) – Section 92
This is the company’s snapshot of its structure, directors, shareholders, and key governance matters. It’s the first document regulators and investors review. Incorrect or late filing leads to penalties and raises doubts about governance discipline.
Annual Return Certification (MGT-8) – Section 92(2)
For larger companies, MGT-8 provides professional certification of statutory compliance. It is relied upon during IPOs and M&A due diligence. Missing MGT-8 or false certification can block transactions and invite heavy penalties.
Annual General Meeting (AGM) – Section 96
AGMs are shareholder democracy in action approving accounts, auditors, and dividends. Non-holding attracts penalties and creates gaps in shareholder approvals, leading to challenges on financial statements and governance credibility.
DIN KYC – Rule 12A
Keeps MCA’s database updated with accurate director information. Inactive DINs freeze filings, disrupt board functioning, and invite penalties. It’s a basic hygiene compliance every director must complete.
MSME Return – MCA Order 2019
Companies must report dues outstanding to MSMEs beyond 45 days. This protects small vendors from delayed payments. Non-filing signals poor vendor governance and can damage credit reputation with regulators and lenders.
Appointment of Auditor – Section 139
A statutory auditor ensures independent validation of accounts. Improper appointment invalidates audits and creates questions on financial reliability. This is one of the first checks in due diligence.
Resignation of Auditor – Section 140
Auditors must file their resignation reasons. Frequent resignations without explanation signal governance concerns and scare investors. Companies failing to file ADT-3 may face penalties and loss of audit trail credibility.
CARO Reporting – Section 143
CARO mandates auditors to report on loans, frauds, internal controls, etc. It strengthens audit transparency. Non-applicability or avoidance is a red flag in investor diligence.
Women Director – Section 149(1)
Promotes diversity and better governance. Studies link diverse boards with stronger decision-making and investor confidence. Non-compliance leads to penalties and weakens governance ratings.
Independent Director – Section 149(5)
Brings objectivity and protects minority shareholders. Lack of independent directors in applicable companies weakens governance, reduces investor comfort, and triggers penalties.
First Board Meeting – Section 173
Within 30 days of incorporation, this meeting establishes governance and initial resolutions (bank account, auditor appointment). Missing it leads to gaps in statutory records and penalties.
Secretarial Audit – Section 204
Secretarial Audit certifies overall legal and procedural compliance by a practicing CS. It’s a critical diligence document for regulators, bankers, and investors. Non-compliance is a major red flag in IPOs.
Vigil Mechanism Policy – Section 177
Also called Whistleblower Policy, it prevents fraud and mismanagement by enabling internal reporting. Absence can allow fraud to remain hidden and damage reputation in case of regulatory inquiry.
Stakeholder Relationship Committee – Section 178
Mandatory for listed companies to handle shareholder grievances. Effective committees improve investor confidence. Non-existence results in poor shareholder satisfaction scores and SEBI penalties.
POSH Compliance – POSH Act, 2013
Mandatory constitution of an Internal Complaints Committee (ICC) in workplaces with 10+ employees. Protects women employees, builds safe workplaces, and avoids criminal liability for the employer. Non-compliance results in penalties, reputational harm, and loss of credibility with institutional investors.

We all know that every company whether private, public, or listed, must track its statutory compliance calendar in line with the Companies Act, 2013, allied rules, and regulatory directions. Below is a structured table highlighting important compliances, their governing provisions, and applicability thresholds for paid-up capital and turnover.

Compliance Applicability Table

Sr. No.	About the Section	Section/Rule	Applicability	Paid-Up Capital	Turnover
1	Small Company	Sec. 2(85)	Private Companies (except holding, subsidiary, Sec. 8, special Act companies)	≤ Rs.4 Cr	≤ Rs.40 Cr
2	Corporate Social Responsibility (CSR)	Sec. 135	Listed, Public, and Private	Net Worth ≥ Rs.500 Cr	Turnover ≥ Rs.1,000 Cr
3	DPT-3 Return of Deposits	Sec. 73–76	All Companies	NA	NA
4	Director’s Disqualification Disclosure (DIR-8)	Sec. 164	All Companies	NA	NA
5	Director’s Interest Disclosure (MBP-1)	Sec. 184	All Companies	NA	NA
6	Certification of Annual Return	Sec. 92(2), Rule 11(2)	All Listed + Others	≥ Rs.10 Cr	≥ Rs.50 Cr
7	XBRL Filing	Sec. 137, Rule 3	All Companies	≥ Rs.5 Cr	≥ Rs.100 Cr
8	Cash Flow Statement	Sch. III	All except small/private exempted	NA	NA
9	Annual Return (MGT-7/7A)	Sec. 92	All Companies	NA	NA
10	MGT-8 (Annual Return Certification)	Sec. 92(2)	Listed + other eligible Cos.	≥ Rs.10 Cr	≥ Rs.50 Cr
11	AGM – Subsequent	Sec. 96	Public, Private, Listed	NA	NA
12	DIN KYC	Rule 12A (Appointment & Qualification of Directors)	All Companies + LLP	NA	NA
13	MSME Form I	MCA Order (22 Jan 2019), Sec. 405	All Companies	NA	NA
14	Appointment of Auditor	Sec. 139	All Companies	NA	NA
15	Resignation of Auditor	Sec. 140	All Companies	NA	NA
16	CARO	Sec. 143	Mandatory for Listed; others if thresholds met	≥ Rs.1 Cr	≥ Rs.10 Cr
17	Women Director	Sec. 149(1)	Listed + Certain Public	≥ Rs.100 Cr	≥ Rs.300 Cr
18	Independent Director	Sec. 149(5)	Listed + Certain Public	≥ Rs.10 Cr	≥ Rs.100 Cr
19	First Board Meeting	Sec. 173	All Companies	NA	NA
20	Secretarial Audit	Sec. 204, Rule 9	Listed + Certain Public	≥ Rs.50 Cr	≥ Rs.250 Cr
21	Vigil Mechanism Policy	Sec. 177	Listed, deposit-accepting, or borrowings > Rs.50 Cr	NA	NA
22	Stakeholder Relationship Committee	Sec. 178	Listed Companies	NA	NA
23	POSH Compliance	POSH Act, 2013	All entities with ≥10 employees	NA	NA

Why Each Compliance is Important Under the Companies Act, 2013

Small Company – Section 2(85)

Being classified as a Small Company provides exemptions from several compliances such as fewer board meetings, exemption from cash flow statements, and reduced penalties. It eases compliance burden for startups and SMEs. If wrongly claimed, however, it can trigger penalties and invalidate filings.

Corporate Social Responsibility (CSR) – Section 135

CSR ensures companies contribute to society beyond profit-making. For large corporates, CSR is not just regulatory it builds brand goodwill, investor confidence, and ESG ratings. Non-compliance results in penalties and reputational damage, especially with SEBI’s increasing focus on sustainability reporting.

DPT-3 Return of Deposits – Sections 73–76

This return captures company borrowings, loans, advances, and deposits. It helps regulators track potential misuse of public funds. Non-filing can trigger hefty penalties and disqualification for directors, and it becomes a major red flag in any due diligence.

Disclosure of Director’s Disqualification (DIR-8) – Section 164

Directors must annually confirm they are not disqualified. This maintains integrity in governance. If a disqualified person continues as director, every decision they take may become challengeable, leading to governance paralysis and investor distrust.

Disclosure of Interest by Directors (MBP-1) – Section 184

This ensures directors disclose any conflict of interest in contracts or arrangements. It protects companies from insider abuse and related party frauds. Non-disclosure can make contracts voidable and expose directors to prosecution.

Certification of Annual Return – Section 92(2)

For larger companies, annual returns must be certified by a practicing company secretary. Independent certification assures regulators and investors of accuracy in shareholding, management, and governance disclosures. Non-certification or false certification attracts both penalties and professional liability.

XBRL Filing – Section 137

XBRL filings make financial statements machine-readable for MCA and regulators, improving transparency and analytics. Non-compliance affects corporate transparency scores and may cause difficulties during IPO or investor diligence.

Cash Flow Statement – Schedule III

Cash flow reporting shows liquidity and solvency health. Investors and lenders track this to assess repayment ability and business sustainability. Omission reduces financial clarity and may make credit harder to secure.

Annual Return (MGT-7/7A) – Section 92

This is the company’s snapshot of its structure, directors, shareholders, and key governance matters. It’s the first document regulators and investors review. Incorrect or late filing leads to penalties and raises doubts about governance discipline.

Annual Return Certification (MGT-8) – Section 92(2)

For larger companies, MGT-8 provides professional certification of statutory compliance. It is relied upon during IPOs and M&A due diligence. Missing MGT-8 or false certification can block transactions and invite heavy penalties.

Annual General Meeting (AGM) – Section 96

AGMs are shareholder democracy in action approving accounts, auditors, and dividends. Non-holding attracts penalties and creates gaps in shareholder approvals, leading to challenges on financial statements and governance credibility.

DIN KYC – Rule 12A

Keeps MCA’s database updated with accurate director information. Inactive DINs freeze filings, disrupt board functioning, and invite penalties. It’s a basic hygiene compliance every director must complete.

MSME Return – MCA Order 2019

Companies must report dues outstanding to MSMEs beyond 45 days. This protects small vendors from delayed payments. Non-filing signals poor vendor governance and can damage credit reputation with regulators and lenders.

Appointment of Auditor – Section 139

A statutory auditor ensures independent validation of accounts. Improper appointment invalidates audits and creates questions on financial reliability. This is one of the first checks in due diligence.

Resignation of Auditor – Section 140

Auditors must file their resignation reasons. Frequent resignations without explanation signal governance concerns and scare investors. Companies failing to file ADT-3 may face penalties and loss of audit trail credibility.

CARO Reporting – Section 143

CARO mandates auditors to report on loans, frauds, internal controls, etc. It strengthens audit transparency. Non-applicability or avoidance is a red flag in investor diligence.

Women Director – Section 149(1)

Promotes diversity and better governance. Studies link diverse boards with stronger decision-making and investor confidence. Non-compliance leads to penalties and weakens governance ratings.

Independent Director – Section 149(5)

Brings objectivity and protects minority shareholders. Lack of independent directors in applicable companies weakens governance, reduces investor comfort, and triggers penalties.

First Board Meeting – Section 173

Within 30 days of incorporation, this meeting establishes governance and initial resolutions (bank account, auditor appointment). Missing it leads to gaps in statutory records and penalties.

Secretarial Audit – Section 204

Secretarial Audit certifies overall legal and procedural compliance by a practicing CS. It’s a critical diligence document for regulators, bankers, and investors. Non-compliance is a major red flag in IPOs.

Vigil Mechanism Policy – Section 177

Also called Whistleblower Policy, it prevents fraud and mismanagement by enabling internal reporting. Absence can allow fraud to remain hidden and damage reputation in case of regulatory inquiry.

Stakeholder Relationship Committee – Section 178

Mandatory for listed companies to handle shareholder grievances. Effective committees improve investor confidence. Non-existence results in poor shareholder satisfaction scores and SEBI penalties.

POSH Compliance – POSH Act, 2013

Mandatory constitution of an Internal Complaints Committee (ICC) in workplaces with 10+ employees. Protects women employees, builds safe workplaces, and avoids criminal liability for the employer. Non-compliance results in penalties, reputational harm, and loss of credibility with institutional investors.