Tag Archives: Annual Return

Serious Penal Consequence of late Annual Filing – landmine ahead


[The law stated in this post is effective from the 7th day of May 2018]

There is a perception that filing of financial statements and other documents with additional fee absolve the company from consequences under section 92, section 137 and conditional exemption given to certain companies by certain notifications issued by the Ministry of Corporate Affairs.

This is also a general view of the companies that any extension granted for the filing of the financial statements and other documents without additional fee grant immunity to the companies from its liabilities under mentioned provisions.

I beg to differ, conditionally.

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Principal Business Activities


Every company must be a business organization. Being business organization, a company has business activities. In the Companies Act, 2013 “principal business activities” is a major reporting requirement. According to Section 92(1)(a), every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood on the close of the financial year regarding its principal business activities. Section 185 as amended has reference to principal business activities as a major condition for a loan to directors and related concerns.

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Notification of Sections Relevant for NCLT


Yesterday late evening, I posted here about press release issued by Ministry of Corporate Affairs. Soon thereafter, two files uploaded on Official Gazette website with two notifications in each. In earlier post here today, we discussed establishment and jurisdiction of various NCLT benches.

In this post, we will have a bird’s eye view on Sections notified on 1st June 2016 related to NCLT.

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COMPANY SECRETARY – REPORT of THE COMPANIES LAW COMMITTEE


On 1st February 2016, Ministry of Corporate Affairs uploaded the report of Companies Law Committee on its website here. In this post, I will discuss recommendations which might affect Company Secretaries.

Before reading further, I would like to disclose that I was part of two groups; Task Force on Companies Law and Research Group on Companies Law constituted by the Institute of Company Secretaries of India. All view here are personal and not of these groups or ICSI.

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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.

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MGT – 7 (v. 30Sept2015)


Recent amendment to the Companies (Management and Administration) Second Amendment Rules 2015 dated 28th August 2015 published in Official Gazette on 31st August 2015 which came into force with effect from 31st August 2015 by virtue of its Rule 1(2) replaced the Form MGT – 7 meant for Annual Return of companies. The Form MGT – 7 was released on 25th September 2015 another amendment rules to justify content of this form.

Note: MGT – 7 Version 30th September 2015 is being used for writing this post. The post is long one but to avoid confusion, i opted not to split this post. Readers may read in parts.

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EXTRACT OF ANNUAL RETURN


Section 92 of the Companies Act, 2013 as extensively discussed earlier here, requires every company to prepare an annual return in a prescribed form. According to Section 92(3), an extract of the annual return in such form as may be prescribed shall form part of the Board’s report.

According to Rule 12(1), the extract of the annual return to be attached with the Board’s Report shall be in Form MGT – 9. In this post, we will study this Form MGT – 9.

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CERTIFICATION OF ANNUAL RETURN


According to Section 92(2) discussed earlier here, the annual return, filed by a listed company or, by a company having such paid-up capital and turnover as may be prescribed, shall be certified by a company secretary in practice in the prescribed form, stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of this Act.

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ANNUAL RETURN – 4 COMPLIANCES


The Form discussed was notified in original Rules but never implemented, a new form is notified in August 2015, which is yet to be implemented  at the time of this writing.

 

PENALTIES, PUNISHMENT, COMPOUNDING OF OFFENCES:

Penalties, punishment and compounding of offences may be on three categories of persons:

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ANNUAL RETURN – 3 MANAGERIAL DETAILS


UPDATE 03 Sept 2015The Form discussed was notified in original Rules but never implemented, a new form is notified in August 2015, which is yet to be implemented  at the time of this update.

 

PROMOTERS, DIRECTORS, AND KEY MANAGERIAL PERSONNEL:

This part of Annual Return uses codes:

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ANNUAL RETURN – 2 SECURITIES HOLDERS


UPDATE 03 Sept 2015The Form discussed was notified in original Rules but never implemented, a new form is notified in August 2015, which is yet to be implemented  at the time of this update.

SHAREHOLDINGS PATTERN:

There is a requirement of detailed information in several heads regarding shareholdings pattern.

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ANNUAL RETURN – 1 CORPORATE INFORMATION


Section 92 of the Companies Act, 2013 as extensively discussed earlier here, requires every company to prepare an annual return in a prescribed form.

Sub – Rule (1) of Rule 11 of the Companies (Management and Administration) Rules 2014 seems very simple. Every company shall prepare its annual return in Form No MGT – 7.

UPDATE 03 Sept 2015The Form discussed was notified in original Rules but never implemented, a new form is notified in August 2015, which is yet to be implemented  at the time of this update.

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Ceiling on Secretarial Audit and Annual Return


Institute of Company Secretaries of India on 7th April 2015 informed its members by mail that it has put ceiling on Secretarial Audit and Annual Return. “The Council of the Institute has issued “Guidelines for Issuing Secretarial Audit Report, Signing and Certification of Annual Return” in supersession of the “Guidelines for Issuing Compliance Certificate and Signing of Annual Return” issued by the Council on 27th November, 2007”, the mailed apparently send by president of the institute declares. These new guidelines are issued on 6th April 2015.

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PRESERVATION, INSPECTION AND COPY OF REGISTERS AND RETURNS


 Section 94 of the Companies Act, 2013 prescribes the registers and their indices and the copies of all the returns shall be open for inspection by any member, debenture-holder, other security holder or beneficial owner, during business hours without payment of any fees and by any other person on payment of fees.

Rule 14 of the Companies (Management and Administration) Rules 2014 deals in detail. The registers and indices maintained pursuant to section 88 and copies of returns prepared pursuant to section 92, shall be open for inspection during business hours, at reasonable time on every working day as the board may decide, by any member, debenture holder, other security holder or beneficial owner without payment of fee. The reasonable time is a period of not less than two hours on every working day shall be considered by the company.

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ORDERS ISSUED UNDER COMPANIES ACT 2013


Until 31st march 2014, Ministry of Corporate Affairs has issued three orders. These orders were issued in exercise of the powers conferred by sub-section (1) of section 470 of the Companies Act, 2013 to remove the difficulties.

The Companies (Removal of Difficulties) Order, 2013

First order is; the Companies (Removal of Difficulties) Order, 2013 published on 20th September 2013 and come into force that day. The order reads:

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REGISTERS AND ANNUAL RETURN


In last post, we discussed about register of members, register of debenture – holders and register of other security holders. Now, we will discuss, some other provisions related to these registers and also about annual return.

PLACE OF KEEPING AND INSPECTION OF REGISTERS AND RETURNS (SECTION 94):

The registers required to be kept and maintained by a company under section 88 and copies of the annual return filed under section 92 shall be kept at the registered office of the company.

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Statement on Annual Return by company Secretary


Under Section 92 of the Companies Act, 2013, every company shall prepare annual return in the prescribed form and signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice. The annual return, filed by a listed company or, by a company having such paid-up capital and turnover as may be prescribed, shall be certified by a company secretary in practice in the prescribed form, stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of this Act.

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