PRESENTATION & FILING OF ANNUAL RETURN
This article was last updated on 12 April 2020.
Section 92, 94, 384 and 446B of the Companies Act, 2013 read with Rule 11, 14 and 15 of The Companies (Management and Administration) Rules, 2014 along with Rule 7 of the Companies (Registration of Foreign Companies) Rules, 2014
In this article the provisions relating to Annual Return are highlighted for the benefit of readers. The companies Act, 2013 has added more impetus to it by incorporating some new requirements which are discussed in this article.
Annual Return is defined as a yearly statement which gives essential information about the firm’s composition, activities and financial position and which must be filed by every active incorporated or registered firm with an appropriate authority.
Importance Of Annual Return
Annual Return is an important document just like an audited annual accounts designed to provide information to members/other stakeholders about the company, promoters, members, meetings and remuneration of Directors and key managerial persons.
Its importance will be obvious from the fact that every company has to make arrangements to make Annual Return available for inspection by any member or debenture holder without payment of fee during working hours of the company.
What does it contain
As per section 92 of Companies Act, 2013–
Every company shall prepare an Annual Return in e-Form No. MGT-7 containing the particulars as they stood on the closure of the financial year regarding-
a) its registered office, principal business activities, particulars of its holding, subsidiary and associate companies;
b) its shares and debentures and other securities and shareholding pattern
c) its Indebtedness*
d) Its members and debenture-holders along with changes therein since the close of the previous financial year
e) its promoters, directors, key managerial personnel along with changes therein since the close of the previous financial year
f) meetings of members or a class thereof, Board and its various committees along with attendance details
g) remuneration of directors and key managerial personnel
h) 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
i) matters relating to certification of compliances, disclosures as may be prescribed
j) details, as may be prescribed, in respect of shares held by or on behalf of the Foreign Institutional Investors **indicating their names, addresses, countries of\ incorporation, registration and percentage of shareholding held by them
k) such other matters as may be prescribed.
* Omitted by the Companies (Amendment) Act, 2017 but yet to be notified by Central Government
**Omitted the Companies (Amendment) Act, 2017 but yet to be notified by Central Government
Filing of Annual Return
Every company shall file with the Registrar a copy of the annual return in Form No. MGT. 7 within sixty days from the date on which the annual general meeting is held or where no annual general meeting is held in any year within sixty 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 as may be prescribed.
The annual return, filed by a listed company or a company having paid-up share capital of ten crore rupees or more or turnover of fifty crore rupees or more, shall be certified by Practicing Company Secretary in Form No. 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) as an attachment to e-form MGT-7.
Author’s Comment: It is mandatorily required to get MGT-7 (Annual Return )signed by a practicing professional (i.e., PCS or PCA) of all company except in case of OPC and small company as per Companies Act, 2013.
Web-link of Annual Return:
*As per section 92(3) of Companies Act, 2013, 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.
* Substituted by the Companies (Amendment) Act, 2017 but yet to be notified by Central Government.
Author’s Comment: Practically, an extract of Annual Return in Form No. MGT-9 is annexed as part of Board Report till date, as there is a contradiction in the below mentioned provisions:
Pursuant to Section 134(3)(a), Board Report shall include web address, if any, where annual return referred to in sub-section (3) of section 92 has been placed instead of Extract of Annual Return annexed to Board Report (amendment effective w.e.f 31.07.2018)
Pursuant to section 92(3) of Companies Act, 2013, 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.(The aforesaid amendment mentioned in Section 92 has been Substituted by the Companies (Amendment) Act, 2017 but yet to be notified by Central Government)
Signatories 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.
In relation to One Person Company and small company, the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company.
E-Form MGT. 8 (an attachment of MGT-7 for certain companies) shall be certified by a Company Secretary in practice.
Annual Return by Foreign Company:
Pursuant to section 384(2) of the Companies Act, 2013, the provisions of section 92 shall also apply to a foreign company, subject to such exceptions, modifications and adaptations as may be made therein by rules. Rule 7 of the Companies (Registration of Foreign Companies) Rules, 2014 provides that every foreign company shall prepare and file, within a period of sixty days from the last day of its financial year, to the Registrar annual return in Form FC.4 along with fee, containing the particulars as they stood on the close of the financial year.
Pursuant to section 92(5) of Companies Act, 2013, if a company fails to file annual return with Registrar of Companies (ROC) before the expiry of period specified (i.e. within 60 days from the date of annual general meeting ), such company and its every officer who is in default shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of five lakh rupees. The company and the officers of the company who are in default, shall, without prejudice to the liability for payment of fee and additional fee, be liable for the penalty or punishment provided under this Act.
Pursuant to Section 446B of the Companies Act, 2013, Notwithstanding anything contained in this Act, if a One Person Company or a small company fails to comply with the provisions of sub-section (5) of section 92, such company and officer in default of such company shall be liable to a penalty which shall not be more than one half of the penalty specified in such section.
Penalty has been substantially increased by the Companies Act, 2013 regarding filing of Annual Return because it is perhaps the most important document required to be filed by every company with the Registrar of Companies and company secretary in practice has to certify that the company has complied with all the provisions of the Act. Scope of verification by practicing company secretary is enlarged as he/she has to confirm compliance of provisions of the companies act besides the correctness of the contents of Annual report. Thus a huge responsibility is thrust not only on the company’s directors and secretary of the company as well as on professional who signs the Annual return.
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Prepared By J. K. Gupta & Associates