Did you know an Indian Company was fined Rs. 3,00,000 each year for not filing the Annual Return consecutively for three financial years: 2009 to 10, 2010 to 11, and 2011 to 2012?
Filing is mandatory for all Companies in India. Annual Return is a yearly statement that is filed by every Company with the Registrar of Companies (ROC) in Form MGT-7 on the Ministry of Corporate Affairs website www.mca.gov.in. Companies are mandated under the Companies Act 2013 to file the Annual Return within 60 days from the date when the Annual General Meeting of the Company was held. Not filing the Annual Return can result in hefty penalties ranging from a fine to imprisonment. This article shall help you understand in depth the meaning and process of the Annual Return filing and the essential documents required, making the process much easier for you!
What is Annual Return Filing?
In India, the process of filing the Annual Return is governed by the Companies Act of 2013. An annual return is a yearly statement/document that reviews the Company’s financial performance. It shows the details of the Company’s business activities, including the registered office address, shareholders, director, and their details. Also includes the changes that happened in the Company during the financial year.
Importance of Filing Annual Return
Filing the Annual Return is an integral part of the business. Not only is it a statutory requirement, but it also builds trust and confidence among the company stakeholders. Below are the reasons that show the importance of filing an Annual Return:
- It is a statutory requirement mandated by the Companies Act, 2013. Non-compliance is an offence that leads to penalties.
- The Annual Return clearly shows a company’s structure, operations, and financial health. It serves as an official record of everything the Company has done over the past year, which can be really useful if any legal or financial issues arise.
- It keeps shareholders and members informed about changes in ownership, management, and financial performance. Information in the Annual Return is usually necessary for mergers, acquisitions, and capital raises. By comparing annual returns, economic analysts and strategy makers can develop strategies for the Company’s growth.
Do all Companies have to file Annual Returns?
In India, private limited companies are required to file an Annual Return, as mandated by the Companies Act of 2013. The Act applies to Limited Liability Partnerships (LLPs), non-profit organizations (NGOs), and public companies. All Companies incorporated in India have to fulfill this legal obligation in each financial year.
Documents Required for Filing Annual Return
Section 92 of the Companies Act 2013 lists the documents needed for filing the Annual Return of the Company. Here are the key documents for this process:
- Company Details:
It includes the registered address, which is the official location of the Company, and any changes in the address during the financial year, as well as the Company’s principal business activity, i.e., the activities the Company primarily engages in.
- Company Structure:
It includes information about any parent companies that control the firm, as well as details about its subsidiaries and other associated companies.
- Shares and Securities:
It includes the following:
- Total number of shares issued, subscribed, and paid up.
- The types of debentures or securities issued (e.g., secured or unsecured debentures).
- Total amount raised through debentures and shares.
- Shareholding percentage of the directors and promoters of the Company changes in the issued securities during the year.
- Financial Information:
It includes the Company’s debt, i.e., any loans or financial obligations, along with details of any new borrowings or repayments made during the financial year.
- Management Team:
It includes details about the promoters, directors, and key persons in managerial roles in the Company, as well as any changes regarding new appointments or terminations since the end of the last financial year.
- Meeting Records:
It includes information about the members’, Board of Directors’, and committee meetings that took place during the year. The record also has attendance data for the persons present at the meetings.
- Salaries:
It includes the remuneration and the payments made to the directors and key persons in managerial positions at the Company.
- Nalty Record: This section includes any penalty or punishment imposed on either the Company’s directors during the financial year. In exceptional circumstances, the company secretary or director needs to mention all the updates on legal matters, along with details of compounding offences and appeals made against the order in which penalty or punishment was imposed.
- Foreign Investors:
It includes specific details about shares held by or on behalf of Foreign Institutional Investors, such as their names, addresses, countries of incorporation, registration information, and the percentage of shares they own.
Essential Forms
- MGT-7 Form
The Annual Return is submitted through the MGT-7 form (which consists of 15 pages), available on the MCA Website. His form has to be submitted online through the MCA portal, which covers all the essential information about the Company
- m AOC-4
In addition to the MGT-7, companies are required to file their audited financial statements, balance sheets, and profit and loss statements using Form AOC-4This. His form can also be accessed on the MCA website. It must be submitted within 30 days after the winding up of the Annual General Meeting (AGM).
Deadline for filing Annual Return
Evercompany is required to submit a copy of its Annual Return through the MGT-7 form to the Registrar within sixty days after the annual general meeting (AGM). Suppose the Company doesn’t hold an Annual General Meeting (AGM) in a year. In case it should file the Annual Return within 60 (sixty) days from when the AGM was supposed to take place, along with a statement/explanation explaining the reasons for not holding an AGM.
Who Prepares Annual Returns?
The Companies Act 2013 prescribes that the Company Secretary and Directors are responsible for filing Annual Returns. The Annual Return cannot be filed without their signatures. He Company Secretary is responsible for preparing the MGT-7 form and ensuring its timely submission to the Registrar within 60 days after the Annual General Meeting (AGM). he Company Secretary also has to state that the Annual Return discloses all the information in the Annual Return correctly and that thCompany complieded with all the provisions of the Companies Act 2013Furthermorere, the Company Secretary has to coordinate with auditors to obtain the necessary financial statements for the AOC-4It’ss noteworthy that certification by a Company Secretary is mandatory for companies with a paid-up share capital of ₹10 crore or more or for a Company whose turnover exceeds ₹50 crore in a year.
EXCEPTION
There is an exception to this rule. In the case of a One-Person Company, a small company, or a private company (for example, start-ups) where there is no Company Secretary, the Annual Return shall be signed by the Company’s director.
Fee for Filing the Annual Return
Companies are required to pay prescribed fees to the Registrar of Companies (ROC) when filing their Annual Returns. The Ministry of Corporate Affairs defines the structure fee schedule on its website. The basic filing fee varies based on the Company’s share capital. For companies with a higher paid-up capital, the costs increase accordingly. If the Ann The Return is filed after the deadline, additional fees are charged on a daily basis, starting from ₹5,000 for the first month and increasing thereafter.
Exemptions and Relaxations for Small Companies:
Small companies are not mandated to provide exhaustive disclosures on specific financial information that larger companies are mandated to provide in the normal course of business. They are also exempt from giving exhaustive details/reports on the shareholding pattern, salaries, and remuneration of the directors, as well as detailed financial transactions of the Company throughout the year.
Conclusion
To sum up, filing an Annual Return is essential for all companies in India, whether public or private. Annual Return is not just a yearly statement but also serves as a tool to maintain transparency between the management of the Company and its stakeholders. The Annual Return encloses the Company’s detailed working and financial statements. t gives a clear view of operations and the status of the CCompanyyThehe accurate filing of the Annual Return of the Company is essenti;l, keeping an eye on the deadlines is equally importantMissingng any of the requirements mentioned in the statute can lead to hefty penalties ranging from a fine to imprisonmentCompanieses can treat filing annual returns as an opportunity to focus on growth and innovation while complying with the regulations. As we know, the Company Secretary is responsible for filing the Annual Return; having a smart, knowledgeable, and expert Company Secretary can make this process smoother.
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FAQs
1. What is the due date for filing the Annual Return for a Private Limited Company?
As per Section 92(4) of the Companies Act, 2013, the Annual Return must be filed within 60 days of the Company’s General Meeting (AGM).
2. What is Form MGT-7 used for?
Form MGT-7 is used to file the Company’s Annual Return.
3. Can a small company file a simplified Annual Return?
Yes, small companies are exempt from providing some detailed disclosures.
4. What is the penalty for not filing an Annual Return on time?
Penalties under Section 92(5) of the Companies Act 2013 can range from ₹50,000 to ₹5,00,000. The company officers may face further penalties or imprisonment.
5. Is certification by a Company Secretary mandatory for all companies?
Under Section 92(1) of the Companies Act, certification by the Company is mandatory for companies with a paid-up share capital of ₹ 10 (ten) crore or more or a turnover exceeding ₹50 crore.
