Filing Annual Return of Company

 Every company is required to file the annual accounts and annual return as per The Companies Act, 2013 within 30 days and 60 days respectively from the conclusion of the Annual General Meeting. The ROC filing of annual accounts is governed under Section 129 (3), 137, of The Companies Act , 2013 read with Rule 12 of the Company (Accounts) Rules, 2014 and annual return is governed under Section 92 of the Companies Act, 2013 read with Rule 11 of the Companies (Management and Administration) Rules, 2014.

COMPANY LAW RELATED CHANGES DUE TO COVID-19 BY GOVT. OF INDIA

Ø  “Relaxation of additional fees and extension of last date of filing of CRA-4 (form for filing of cost audit report) for FY 2019-20 under the Companies Act, 2013”. 

Ø  The MCA department has extended the timeline for holding AGM till 31st December from 30th September.

o   “Here is the clarification for the same as the last date of conducting the AGM (Annual General meeting) is not 31.12.2020 for every company it depends on the due date of the Annual General meeting of each company”.

Ø  “Clarification on Extension of Annual General Meeting (AGM) for the financial year ended 31.03.2020, Companies Act, 2013”

Ø  “No additional fees shall be charged for late filing during a moratorium period from 01st April to 30th September 2020, in respect of any document, return, statement etc., required to be filed in the MCA-21 Registry, irrespective of its due date, which will not only reduce the compliance burden, including financial burden of companies/ LLPs at large, but also enable long-standing non-compliant companies/LLPs to make a ‘fresh start’;”

Ø  “The mandatory requirement of holding meetings of the Board of the companies within prescribed interval provided in the Companies Act (120 days), 2013, shall be extended by a period of 60 days till next two quarters i.e., till 30th September;”

Ø  “Applicability of Companies (Auditor’s Report) Order, 2020 shall be made applicable from the financial year 2020-2021 instead of from 2019-2020 notified earlier. This will significantly ease the burden on companies & their auditors for the year 2019-20.”

Ø  “As per Schedule 4 to the Companies Act, 2013, Independent Directors are required to hold at least one meeting without the attendance of non-independent directors and members of management. For the year 2019-20, if the IDs of a company have not been able to hold even one meeting, the same shall not be viewed as a violation.”

Ø  “The requirement to create a Deposit reserve of 20% of deposits maturing during the financial year 2020-21 before 30th April 2020 shall be allowed to be complied with till 30th June 2020.”

Ø  “The requirement to invest 15% of debentures maturing during a particular year in specified instruments before 30th April 2020, maybe done so before 30th June 2020.”

Ø  “Newly incorporated companies are required to file a declaration for Commencement of Business within 6 months of incorporation. An additional time of 6 more months shall be allowed.”

Ø  “Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company, under Section 149 of the Companies Act, shall not be treated as a violation.”

Ø  “Due to the emerging financial distress faced by most companies on account of the large-scale economic distress caused by COVID 19, it has been decided to raise the threshold of default under section 4 of the IBC 2016 to Rs. 1 crore (from the existing threshold of Rs. 1 lakh). This will by and large prevent triggering of insolvency proceedings against MSMEs. If the current situation continues beyond 30th of April 2020, we may consider suspending sections 7, 9 and 10 of the IBC 2016 for a period of 6 months so as to stop companies at large from being forced into insolvency proceedings in such force majeure causes of default.”

FILING ROC ANNUAL RETURN FOR FY 2019-20

The Companies (Management and Administration) Rules, 2014 requires all companies to prepare and file an annual return at the end of close of each financial year. Non-filing of annual return can attract stringent penalty and fines, hence its important for Entrepreneurs to be aware of their responsibilities and file the annual return on time. In this article, we look at all aspects of filing annual return of company in India.

Every company shall prepare a return (called the ‘Annual Return’) in the e-form MGT-7 containing the particulars as they stood on the close of the financial year regarding—

-its registered office, principal business activities, particulars of its holding, subsidiary and associate companies;

-its shares, debentures and other securities and shareholding pattern;

-its indebtedness;

-its members and debenture-holders along with changes therein since the close of the previous financial year;

-its promoters, directors, key managerial personnel along with changes therein since the close of the previous financial year;

-meetings of members or a class thereof, Board and its various committees along with attendance details;

-remuneration of directors and key managerial personnel;

-penalty or punishment imposed on the company, its directors or officers and details of compounding of offences and appeals made against such penalty or punishment;

-matters relating to certification of compliances, disclosures as may be prescribed;

-such other matters as may be prescribed in e-form.

ABRIDGED FORM OF ANNUAL RETURN

The Central Government may prescribe abridged form of annual return for One Person Company and Small Company. But as of now, Govt. has not prescribed any abridged format for OPC or Small Company.

EXTRACT OF ANNUAL RETURN 

Ministry of Corporate Affairs vide its notification dated 28^th August, 2020, amended the rule 12 of the Companies (Management and Administration) Rules, 2014 and also appoints that date for the enforcement of Section 23(ii) of the Companies Amendment Act, 2017. Now, according to this amendment: 

Every company shall place a copy of the annual return on the website of the company, if any, and the web-link of such annual return shall be disclosed in the Board’s report.

SIGNING OF ANNUAL RETURN

Annual Return shall be signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice. However, in relation to One Person Company and small company, the annual return may be signed only by the director of the company in the absence of the company secretary.

CERTIFICATE FROM COMPANY SECRETARY IN PRACTICE 

The annual return, filed by a listed company or a company having paid-up share capital of Rs. 10 Crore or more or turnover of Rs. 50 Crore or more, shall be certified by a Company Secretary in practice and the certificate shall be in Form MGT.8 stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of this Act.

FILING OF ANNUAL RETURN

Every company shall file with the Registrar a copy of the annual return, within 60 days from the date on which the annual general meeting is held or where no annual general meeting is held in any year within 60 days from the date on which the annual general meeting should have been held together with the statement specifying the reasons for not holding the annual general meeting, with such fees or additional fees.

FAILURE TO FILE ANNUAL RETURN 

Companies Amendment Act, 2020 which was published in gazette on 28^th September, 2020 reduced the penalty amount for non-filing of an annual return. If any company fails to file its annual return before the expiry of the period specified therein i.e 60 days from the date of an AGM, such company and its every officer who is in default shall be liable to a penalty of Rs. 10,000/- (Earlier, 50,000) and in case of continuing failure, with further penalty of Rs. 100/- for each day during which such failure continues, subject to a maximum of Rs. 2 lakh (Earlier, 5 lakh) in case of a company and Rs. 50,000/- in case of an officer who is in default.

Companies Amendment Act, 2020 also added proviso after the sub-section 3 of Section 454 of the Companies Act, 2013 which states that in case the default relates to non-compliance of filing an annual return or financial statement and such default has been rectified either prior to, or within 30 days of the issue of the notice by the adjudicating officer, no penalty shall be imposed in this regard and all proceedings under this section in respect of such default shall be deemed to be concluded.

PENALTY ON COMPANY SECRETARY

If a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, he shall be liable to a penalty of two lakh rupees. 

CONCLUSION

It is clear from above that preparation of extract of an annual return in the form of MGT-9 is not completely done away and it is still required to be prepared for certain companies. Companies Amendment Act, 2020 has added a provision, to comply with the notice received from adjudicating officer within 30 days. It is welcome provision as it will give an additional opportunity for corporates to get their pending statutory documents filled if it remain unfilled inadvertently.

DISCLAIMER- This write-up is based on the understanding and interpretation of the author and the same is not intended to be professional advice. 

Regards, 

Shubham Katyal 

ACS, B.COM 

Shubhamkatyal37@gmail.com