Annual Return Filing for Private Limited Companies
Compliance

Annual Return Filing for Private Limited Companies: A Complete Guide

6 Mins read

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 the 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 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. Annual Return a yearly statement/document that review and shows the details of the Company including the registered office address of the Company, its business activities, shareholders, directors and their details. It also includes the changes happen in the Company during the financial year.

Importance of Filing Annual Return

Filing the Annual Return is an important 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:

  1. It is statutory requirement mandated by the Companies Act, 2013. Its non-compliance is an offence that leads to penalties.
  2. The Annual Return gives a clear picture of a company’s structure, operations, and financial health. It serves as an official record of everything the company did over the past year, which can be really useful if any legal or financial issues arise.
  3. It keeps shareholders and members of the Company informed about changes in ownership, management, and financial performance of the Company.
  4. The information in the Annual Return is necessary most of the time for mergers, acquisitions, and capital raising for the Company.
  5. Financial analysts and strategy makers can develop strategies for the growth of the company by comparing annual returns.

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), and non-profit organizations (NGOs), as well as public companies. All the Companies incorporated in India have to full this legal obligation in each financial year.

Documents Required for Filing Annual Return

Section 92 of the Companies Act 2013 lists down the documents needed for filing the Annual Return of the Company. Here are the key documents for this process:

  1. Company Details:

It includes the registered address, which is the official location of the Company and any changes in the address of the Company during the financial year. Along with its principal business activities i.e., the activities of the Company in which the Company primarily engages in.

  1. Company Structure:

It includes information about any parent companies that control the firm, as well as details about its subsidiaries and other associated companies.

  1. 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.
  • Any changes to the issued securities during the year
  1. Financial Information:

It includes how much Company is in debt i.e., any loans or financial obligations that the  Company has, along with details of any new borrowings or any repayments made during the financial year.

  1. Management Team:

It includes details about the promoters, directors, and key persons in managerial roles in the Company along with any changes with respect to new appointments or termination since the end of last financial year.

  1. Meeting Records:

It includes information about the meetings of members, the Board of Directors, and committees that took place during the year. The record also has the attendance data of the persons present at the meetings.

  1. Salaries:

It includes the remuneration and the payments made to the directors and key persons in the managerial position of the Company.

  1. Penalty Record:

Any penalty or punishment imposed on either the Company or its directors during the financial year is included in this section.  In exceptional circumstances, the company secretary or director needs to mention all the updates on the legal matters along with details of compounding offences and appeals made against the order in which penalty or punishment was imposed.

  1. 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

  1. MGT-7 Form

The Annual Return is submitted through the MGT-7 form (which consists of 15 pages), available on the MCA Website. This form has to be submitted online through the MCA portal that covers all the essential information about the Company.

  1. Form 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-4. This form can also be accessed on the MCA website. It has to be submitted within 30 days after  the  wind-up of the Annual General Meeting (AGM).

Deadline for filing Annual Return

Every Company 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). If the Company doesn’t hold an Annual General Meeting (AGM) in a year, 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.  The 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). The Company Secretary also has to state that the Annual Return discloses all the information in the Annual Return correctly and that the Company has complied with all the provisions of the Companies Act 2013. Furthermore, the Company Secretary has to coordinate with auditors to obtain the necessary financial statements for the AOC-4. It is 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 case of One Person Company, small company and private company (example start-ups), where there is no Company Secretary, the Annual Return shall be signed by the Director of the company.

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 structure fee schedule is defined by the Ministry of Corporate Affairs on its website. Though the basic filing fee varies based on the paid up share capital of the Company.  For companies with a higher paid-up capital, the fees increase accordingly. If the Annual Return is filed after the deadline, additional fees are charged on a daily basis that starts 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 certain financial information that in normal course of business is mandated for larger companies. Small Companies are exempted from giving exhaustive detail/report on the shareholding pattern, salaries and remuneration of the directors, and 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 serves as a tool to maintain transparency between the management of the Company and its stakeholders. The Annual Return encloses the detailed working and financial statements of the Company that give a clear view of operations and status of the Company. While the accurate filing of the Annual Return of the Company is essential, keeping an eye on the deadlines is equally important. Missing any of the requirements mentioned in the statute can lead to hefty penalties ranging from fine to imprisonment. Companies 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 has to be filed within 60 days from the Annual General Meeting (AGM) of the Company.

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 for the Company, and 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 Secretary is mandatory for companies with a paid-up share capital of ₹ 10 (ten) crore or more or turnover exceeding ₹50 crore.

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