MGT – 7 (v. 17Nov2015)


We live in a changing world; corporate world changing fast and Indian Corporate Law fastest. A draft of the Companies (Management and Administration) third Amendment Rules, 2015 dated 16th November 2015, which is pending for publication in Official Gazette of India amend the version of form MGT -7 once again. Though these amendment rules are not available in official gazette, new version of form MGT – 7 is made available on the MCA21 portal for filing.

Note: MGT – 7 Version 17th November 2015 is being used for writing this post. Earlier posts here and here are only historic relevance now.

REGISTRATION AND OTHER DETAILS:

Corporate Identification Number (CIN) or Global Location Number (GLN) along with Permanent Account Number (PAN). These are mandatory fields.

On clicking the Pre-Fill button, system will automatically display the name, address of the registered office, email ID of the company (If available), Telephone number with STD Code (If available), Date of incorporation and other details like Type, Category, Sub-category and Share capital type.

In case any other detail so prefilled is different as on the financial year end date entered then the same can be modified. However changes would be taken up in MCA records based on the relevant eForm filing. Website is not a mandatory filed.

In case company is listed as on end date of Financial Year, Code of Stock exchanges are required to be entered. Company shall also fill name and registered office address of Registrar and Share Transfer Agent (RTA) either manually or through corporate Identification Number, if available. CIN of RTA is optional in all cases.

Please careful, code of Calcutta Stock Exchange should be A – 4 not, A – 3 as mentioned in instruction kit issued by MCA. This is repeat error in the help file.

Financial year of the company for which Annual Return is related shall be entered. This Form is applicable for financial year started on or after 1st April 2014.

Date of Annual General Meeting if meeting held. In case Annual General meeting not held, due date and details of extension granted will be entered. If any extension for AGM was granted, enter the SRN of the application form filed for extension, extended due date of AGM after grant of extension and the reasons for such extension.

System validates the date of AGM, due date of AGM and extended due date of AGM (if any) are same as specified in other annual filing e-Form AOC-4 or e-Form AOC-4-XBRL if already filed for the entered financial year.

Where Extension is granted, Extension letter or approval letter shall be a mandatory attachment. Where AGM not held for any reason, explanation given by management shall be mandatory attachment.

In case One Person Company, fields w.r.to AGM would not be applicable.

PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY:

The Form accepts up to 10 main business activities. Company need to fill main activity group code and Business activity code based on NIC – 2008. Description shall be pre –filled by clicking pre – fill button.  Total from all these activities should be 100% according to help file. In case of more than 10 activities, company need to give complete details in optional attachment. Details of activities with contributing 10% or more should be provided in the form itself.

Accepting more than 10 activities is correction from earlier form. Interestingly, according to help file, if activities are not more than ten then percentage total should be at least 50%. This total in such case shall always be 100%.

Before filing these activities, turnover details are required to be filled in Part V of the Form.

PARTICULARS OF HOLDING, SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES

Details of 0 (Zero) to 99 (ninety – nine) companies may be given here. This is advisable to give value 0, where detail of no such company is required to give. Where CIN or FCRN is available, enter then and click pre – fill button to enter names of these companies. Thereafter Select, whether it is holding, subsidiary, associates, joint – venture or associate company. Enter percentage shareholding in case of each company.

Where number of such companies is required to be entered is more than 99, company need to give complete details in optional attachment.

SHARE CAPITAL, DEBENTURES AND OTHER SECURITIES OF THE COMPANY

There are four parts of this heading:

  • Share capital
  • Stock split/ consolidation
  • Transfers
  • Indebtness

Share Capital

First block of information in this part is required only in case of companies which has share capital.

Details of Equity share capital, Preference share capital and unclassified share capital may be given. Details of up to 10 classes of equity shares and up to 10 classes of preference shares may be given. Each row should deals with separate class of shares, where numbers and nominal value of authorised, issued, subscribed and paid – up capital of that class should be given.

In breakup of share capital, number of shares, nominal value of these shares and total paid – up amount at beginning, increase and decrease during the year and final tally at end of the year is required to be given.

Share splits and consolidation:

Details of share before and after splits and consolidation are also required to be given, if any.

Details of shares/Debentures Transfers:

Details of shares/Debentures Transfers since closure date of last financial year required to be given. If there were more than ten transfers of shares and debentures happened during the financial year then select the ‘Yes’ option and provide the details thereof in CD/Digital media acceptable to the Jurisdictional Registrar of Companies.

As this CD/Digital Media is part of a Public Document, this CD/Digital Media be made available for public inspection. However, MCA instruction kit is not clear about filing time frame and time-frame, within which this document be uploaded for public inspection.

Following Details to be provided:

  • Date of Previous AGM
  • Date of Registration of Transfer of shares (not required for debentures)
  • Type of Transfer viz. Equity, Preference, Debentures, Stock
  • Number of Shares/Debentures Transferred
  • Amount per Share (in Rs.)
  • Ledger Folio and Full Name of Transferor
  • Ledger Folio and Full Name of Transferee

Interestingly in case of stock also, form appear to ask for number of shares and amount per share.

Details of Indebtedness:

In details of indebtedness, details of all kind of debentures, loan and deposits are required to be given. In case of debenture, number of units, nominal value per unit and total value is required to be given. In case of loan and deposits, total value is required to be given. In a separate block, opening, increase, decrease and closing figures of different classes of debentures are required to be given.

Details of other securities required to be mentioned in next block. For this purpose up to 20 rows may be generated.

Turnover and net worth

Turnover and networth of company required to be given. Turnover may be zero.

Interestingly, this form fix maximum turnover limit for Indian companies to Rs. 99,99,99,99,99,99,999.00 only (nine hundred ninety-nine trillion nine hundred ninety-nine billion nine hundred ninety-nine million nine hundred ninety-nine thousand nine hundred ninety-ninth only or less than one shankh in Indian Numeral System).

Without negative feeling, why this restriction on turnover is there?

SHARE HOLDING PATTERN

There are two table:

  1. Promoters,
  2. public shareholdings.

In the table, 10 different categories (row wise) have been arranges to capture data. These ten categories are: 1. Individuals which includes Indian individuals, Non – resident Indian Individuals, and Foreign Individuals, 2. Government which includes Central Government, State Government, and Government Companies, 3. Insurance Companies, 4. Banks, 5 Financial Institutions, 6. Foreign Institutional Investors, 7. Mutual Funds, 8. Venture Capital, 9 body corporate not mentioned above and others.

Total number of shareholders is also required to be given.

NUMBER OF PROMOTERS, MEMBERS, DEBENTURE HOLDERS:

Number at beginning, addition, cessation and number at end of year are required to be given in promoters, members (other than promoters), and debenture – holders categories.

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Composition of Board of directors at beginning and end of year is required to be disclosed along with percentage of shares held by directors of that category at end of the year. Directors of each category are classified (in column) as executive and non – executive directors. Categories are A. Promoters, B. Non – promoters which includes non – independent and independent directors and C. Nominee Directors representing Banks & FIs, Investing Institutions, Government, Small shareholders, others.

I am slightly confused, whether small shareholders have any power to nominate directors? Answer to my mind is simply NO. Companies Act 2013 gives power to appoint small shareholders’ director under Section 151 is appointed by company not nominated by anyone.

Number of directors and Key Managerial Personnel (KMPs) who are not directors is required to be given as on the financial year end date. Name, DIN/PAN, Designation, number of equity shares, and date of cessation after closure of Financial Year shall be mentioned. Where key managerial person is a director, his details shall be mentioned only once.

Details of minimum one director in case of OPC, minimum two in case of private company (other than producer company), minimum three in case of public company (other than producer company) or minimum five in case of producer company must be entered.

Particulars of changes during the financial year shall be given in next block. Name, DIN/PAN, Designation, date of change, and nature of change like appointment or change in designation or cessation shall be mentioned here.

MEETINGS

MEMBERS/CLASS /REQUISITIONED/CLB/NCLT/COURT CONVENED MEETINGS:

These meetings are meetings of members or class of members. This form support details of up to 12 such meetings. In this block, details like type of meeting, date of meeting, total numbers of members entitled to attend the meeting, total numbers of members attended, and percentage of shareholdings of members attended such meeting.

BOARD MEETINGS

This form support details of up to 12 board meetings. In this block, details like date of meeting, total numbers of directors on the date of meetings, numbers of directors attended, and percentage of attendance in that meeting.

COMMITTEE MEETING

Committee meetings include meetings of all committees of the board of the company. This form support details of up to 10 committee meetings. In this block, details like type of meeting, date of meeting, total numbers of directors on the date of meetings, numbers of directors attended, and percentage of attendance in that meeting.

ATTENDANCE OF DIRECTORS

For each director, the form asks for number of Board and Committee meetings, their total attendance and percentage of attendance. Form also asks, whether the Director attended annual general meeting or not.

REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Select NIL if there is no managerial remuneration is given in entire year.

Remuneration details of up to 10 directors, Managing Directors, Whole time directors and Managers may be entered. Information required to be entered is Name, Designation, Gross Salary, Commission, Stock Option / Sweet Equity, other perquisites and Total Amount.

Remuneration details of up to 6 key managerial personnel like Chief Executive Officer, Chief Financial Officer, and Company Secretary. Information required to be entered is Name, Designation, Gross Salary, Commission, Stock Option / Sweet Equity, other perquisites and Total Amount.

Remuneration details of up to 30 other directors who are not covered earlier may also be given. Information required to be entered is Name, Designation, Gross Salary, Commission, Stock Option / Sweet Equity, other perquisites and Total Amount.

Where number of person getting remuneration in a category is more than the row generated by the form, an attachment is required.

MATTERS RELATED TO CERTIFICATION OF COMPLIANCES AND DISCLOSURES

CERTIFICATION OF COMPLIANCES:

This is “very simple” simple yes – no type question. No one know unknowingly committed non – compliances. Anyway, company need to give straight reply and if reply is no, it need to give details with reason and supporting documents.

Moot question here is, what will be position of the company if some non – compliance came to knowledge of management after filing this form MGT – 7.

Certification of compliance here in MGT – 7 de – fecto make this compliance certificate with additional liabilities under Section 447 and 448. Please sign at your own professional and personal risk and utmost reasonable care and charge professional charges, out of pocket expenses and insurance premium for any future liability risk involve. 

PENALTY AND PUNISHMENT

DETAILS OF PENALTIES / PUNISHMENT IMPOSED ON COMPANY/DIRECTORS /OFFICERS

Companies may give details of maximum 15 instances of penalties or punishments. Details required are: Name of Company/Directors/Officers, Name of Court/concerned authority, date of order, Name of Act and Section under which penalized or punished, detail of penalty or punishment and details of appeal including present status.

In case of more instances, it requires additional attachments.

DETAILS OF COMPOUNDING OF OFFENCES

Companies may give details of maximum 15 instances of penalties or punishments. Details required are: Name of Company/Directors/Officers, Name of Court/concerned authority, date of order, Name of Act and Section under which offence was committed, particular of offence, amount of compounding in Indian Rupees.

In case of more instances, it requires additional attachments.

LIST OF SHAREHOLDERS, DEBENTURE HOLDERS

Whether this list is attached with this form? If no, company need to submit it through specified method given in instruction kit. The specified method is CD or other digital media. The term digital media is not defined but may include DVD, Pen Drives, Blu – rays. This should be in non – editable format like PDF.

Interestingly, a company with no share capital needs to select YES but no need to attach the list.

COMPLIANCE OF SUB-SECTION (2) OF SECTION 92:

In case of a (a) listed company or (b) a company having paid up share capital of Ten Crore rupees or more or (c) turnover of Fifty Crore rupees or more, details of company secretary in whole time practice certifying the annual return in form MGT-8, is required to be given here. Name and Certificate of Practice number of Company Secretary certifying the annual return in form MGT – 8.

CERTIFICATION BY DIRECTORS:

  • Return stated the facts as on date of closure of financial year. Any change in facts there after should not be mentioned in the Annual Return.
  • Company has complied with all provision of the (Companies) Act (2013) during the financial year.

Any non – compliance should have been reported very well in the return.

DECLARATION BY DIRECTORS:

This is declaration of authority to sign and give declaration. The declaration is in his personal capacity not in representative capacity. I am splitting this declaration for better understanding. Declaration includes true, correct and complete information in the form. Declaration further includes no suppression or concealment of fact in the return. Declaration further includes that information is given as the original record maintained. Declaration further included that all required attachment are complete and legible.

A standard statement of warning appear in form of note appear here. Attention is also drawn to the provisions of Section 447, section 448 and 449 of the Companies Act, 2013 which provide for punishment for fraud, punishment for false statement and punishment for false evidence respectively. The placing of this note here may be very important. It may put all responsiblilty to director certifying, declaring and signing this form. This placing may or may not absolve company secretary from this warning.

Sign by company secretary:

A company secretary or company secretary in practice, in absence of company secretary shall simply signs this form. Whether signing simply make him liable for its content or such sign is just an ornament on the face of this form. Now, reading of Section 92(1) say he is placed equally with Director. Company Secretary or Company Secretary in Practice signing the form is co – signatory of above given certificates and declaration. Technically, he might be signing on warning also.

Interestingly, in case of One Person Company and small companies also, company secretary is required to sign such form.

Please note: This blog invite readers to share their comments, suggestions, hardship, queries and everything in comment section. This blog post is not a professional advice but just a knowledge sharing initiative for mutual discussion.

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One response to “MGT – 7 (v. 17Nov2015)

  1. Pingback: Index of Companies Law Posts | AishMGhrana

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