Companies Annual Returns

Overview

The Companies (Management & Administration) Rules 2014 requires all companies to prepare & file annual return at the end of close of each financial year.

Non filing of Annual Returns can attract stringent penalty and fines hence its important for Entrepreneurs to be aware of their responsibilities to file the annual return on time.

In this blog let us go through the various aspects involved per se :

It is the responsibility of the management to file the annual return with the ROC. Preparation ofAnnual Return: Every company shall prepare an Annual Return in Form No. MGT-7 containing the particulars as they stood on the close of the financial year.

Annual return is the snapshot of certain company information as they stood on the close of the financial year. Section 92 of the Companies Act, 2013 deals with Annual Return of the Company.

Introduction:

Section 159,160,161,162 & Schedule V deals with the Annual Return & related provisions under Companies Act,1956. But in Companies Act, 2013 all these sections are combined together in one Section namely – 92.

Preparation of Annual Return:

Every company shall prepare a return (hereinafter referred to as the annual return) in

Form No.MGT-7 containing the particulars as they stood on the close of the financial year.

 

Objective of Filing the return: The basic purpose of filing annual return with the Registrar of Companies (‘ROC’) is to provide the annual information about the Company to the ROC and its members about the Company’s general compliances. It is the responsibility of the management to file the annual return with the ROC.

Preparation of Annual Return: Every company shall prepare an Annual Return in Form No. MGT-7 containing the particulars as they stood on the close of the financial year.

Contents of Annual Return:

  • 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;
  • 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; and
  • such other matters as may be prescribed.

Authentication of Annual Return: All Companies except OPC: Annual Return shall be signed by –

  • a director and the company secretary, or
  • where there is no company secretary, by a Practicing Company Secretary (PCS)

OPC and Small Company: Annual Return shall be signed by –

  • the company secretary, or
  • where there is no company secretary, by the director of the Company.

Certification of Annual Return by PCS: The annual return, filed by a listed company or, by a Company having paid-up capital of Rs.10 Crores or more OR turnover of Rs.50 Crores or more shall be certified by a PCS 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.

Extract of Annual Return: An extract of the annual return in Form No MGT-9 shall form part of the Board’s report.

Filing of Annual Return: Every company shall file a copy of the annual return with the Registrar. If AGM is held- File annual return within 60 days from the date on which the AGM is held or If no AGM is held in any year- File annual return within 60 days from the date on which the AGM should have been held together with the statement specifying the reasons for not holding the AGM with such fees or additional fees as may be prescribed, within the time as specified, under section 403.

Inspection of Annual Return: Copies of annual return shall be open for inspection during business hours, at such 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 and by any other person on payment of such fee as may be specified in the articles of association of the company but not exceeding fifty rupees for each inspection.

Reasonable time of not less than two hours on every working day shall be considered by the company.

Preservation of Annual Return: Copies of all annual returns and copies of all certificates and documents required to be annexed thereto shall be preserved for a period of eight ( 08 ) years from the date of filing with the Registrar.

Copies of Annual Return: Copies of the annual return shall be furnished to any member, debenture-holder, other security holder or beneficial owner of the company or any other person on payment of such fee as may be specified in the Articles of Association of the company but not exceeding rupees ten for each page and such copy shall be supplied by the company within a period of seven days from the date of deposit of fee to the company.

Due Date for Filing Annual Returns :  The due date for filing Annual Returns of the Company is 60 Days from the date on which Annual General Body Meeting is held.  Annual General Body Meeting should be held within 9 months from the date of closing of accounts of a company in case of first year of operations of the company.

In case of second year the annual general meeting should be held within 6 months of closing of accounts of the Company.

Filing “Nil” Annual Returrns: Even if the Company is not functioning operationally & there are no financial transactions during the accounting period the Company is bound to fild Annual Returns mandatorily.However the Company may opt to obtain Dormant Status in order to reduce the Complaince Burden.

Annual Return by Foreign Company: Every foreign company shall prepare and file, within a period of sixty days from the last day of its financial year, to the ROC an annual return in Form FC.4 along with such fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 containing the particulars as they stood on the close of the financial year.

Penalty for non-compliance:

Company Fine which shall not be less than Rs. 50,000/- but which may extend to Rs. 5,00,000/-
Officer Imprisonment for a term which may extend to six (06) months or Fine which shall not be less than Rs. 25,000/- but which may extend to Rs. 5,00,000/- or with both.
PCS Fine which shall not be less than Rs. 50,000/- but which may extend to Rs. 5,00,000/-

Changes in Annual Return:

Details Companies Act, 1956 Companies Act, 2013 & Rules, 2014
Provisions Section 159,160,161,162 & Schedule V Section 92 & Rule 11(1) of the Companies (Management and Administration) Rules, 2014
Return in Question As per Sec.159(1), if any of the five (05) immediately preceding returns has given the full particulars required as to past and present members and the shares held and transferred by them, the return in question may contain only changes in those particulars. No such provision
Certification Listed Company-has to be signed by two directors and PCS. Other Companies- has to be signed by two directors and by CS, if there is a CS in the Company. Has to be signed by a director and CS, or where there is no CS, by a PCS.
Certificate by PCS No such requirement. This requirement extended to the listed & unlisted companies having paid up share capital of Rs. 10 Crores or more or turnover of Rs. 50 Crores or more.
Extract of Annual Return – part of Directors Report No such provision An extract of annual return shall form part of Board’s Report.
Penalty for PCS No such provision Fine which shall not be less than Rs.50,000/- but which may extend to Rs.5,00,000/-

Note: The Ministry of Corporate Affairs has issued a notification regarding the filing of Form MGT-7 for filing Annual Return. As per the general circular, Ministry has extended the time for filing the Annual Return upto 31st October 2015 without any additional fees as the form is yet to be introduced.

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