Last Updated on August 30, 2024 by Sachin Jaiswal
Regarding corporate governance, keeping compliance and openness are top priorities. File yearly returns—more significantly, Forms MGT-7 and MGT-7A—one of the key instruments for guaranteeing this compliance. Providing a picture of a company’s governance structure, these forms provide a complete overview of its ownership pattern, directors, and other salient features. Companies that need to avoid legal consequences and have excellent standing have to recognise the applicability, due dates, and viable fines linked with those files. We will get into the specifics of Form MGT-7 and MGT-7A in this blog so that you are knowledgeable and ready for your filing responsibilities.
MGT-7 and MGT-7A’s Applicability
Under the Company Act, numerous kinds of companies must annually submit Form MGT-7. It provides thorough records on the ownership structure of the business, details of its directors, and other relevant information. Conversely, version MGT-7A is a condensed version of MGT-7 meant primarily for One-Person Companies and small organisations.
Companies Required to File MGT-7
The following kinds of businesses depend on MGT-7:
- Public Companies: Whether small or large, every public company must submit MGT-7.
- Private Companies: Private enterprises that fall outside of small businesses or OPCs must also submit MGT-7.
Companies Required to File MGT-7A
MGT-7A is applicable to:
- OPCs: These are companies with a single member.
- Small Companies: These are companies that have a paid-up share capital of up to INR 2 crore and an income of up to 20 crore.
Due Dates
General Due Date for MGT-7 and MGT-7A
The due dates for MGT-7 and MGT-7A align with the company’s AGM. The Companies Act states that the yearly return must be turned in sixty days after the AGM. This implies that the forms have to be submitted by November 29 if a corporation has its AGM on September 30.
Explanation of AGM Deadlines
On the company’s calendar, the AGM is an important event as it is the time owners get together to discuss the agency’s future goals and progress. Usually, the AGM is six months from the end of the financial year, which is its ending date.
Filing Fees
Breakdown of Fees Based on Share Capital for MGT-7
The reporting fees for MGT-7 change based on the company’s share capital. The fee system is tiered, meaning that businesses with bigger share capital will pay higher fees. For instance:
- Businesses having up to INR 1 lakh in share capital pay a charge of 200.
- The fee is 300; if the share capital falls between INR 1 lakh and INR 5 lakh.
- This trend continues, with fees hitting INR 6,000 for companies with a share capital topping INR 5 crore.
Breakdown of Fees for MGT-7A
MGT-7A has an easier fee system, which is usually cheaper than MGT-7.
- The fee is INR 200 for OPCs and small companies with a share capital of up to INR 2 crore.
- The fee may rise for companies with a share capital topping INR 2 crore but stays lower than that of MGT-7.
Discussion on Additional Fees for Late Filing
Should a corporation neglect to submit MGT-7 or MGT-7A by the required date, it will pay extra costs. With a maximum limit on penalties, late submission results in INR 100 days of fines. This stresses the need for timely filing to prevent needless financial load.
Penalties for Non-Compliance
Overview of Penalties for Late Filing
The Companies Act 2013 harshly penalises non-compliance with filing criteria. Should a corporation neglect to submit MGT-7 or MGT-7A within the required period, it pays INR 100 for every day of delay. Especially if the delay spans many months, this may quickly become out of hand.
Maximum Penalties for Non-Filing
The highest punishment for failing to file these forms can be hefty. For MGT-7, the highest penalty can reach up to INR 1 lakh, while for MGT-7A, it may be set at INR 25,000. Additionally, company leaders, including owners and key managing staff, may also face punishments, which could include fines or removal from having an office in the company.
Consequences for Company Officials
The consequences of non-compliance reach beyond cash fines. Company leaders may face court action, which could lead to suspension from being chosen as directors in any company for a defined time. This can badly impact their professional image and future job prospects.
Required Information and Attachments
Key Information Required in MGT-7 and MGT-7A
Both MGT-7 and MGT-7A require a range of details, including:
- Details of the Company: Name, registration number, and location.
- Ownership Pattern: A complete list of shareholders, including their ownership percentages.
- Directors’ Information: Names and locations of directors, along with their titles and terms.
- Other Relevant Information: Details about the company’s registration office, main business operations, and any changes in share capital during the financial year.
List of Mandatory Attachments for Both Forms
In addition to the information given in the forms, companies must submit specific documents:
- Copy of the Financial Statements: Audited financial statements for the appropriate financial year.
- List of owners: A complete list of all owners.
- Director’s Report: A report describing the company’s success and future prospects.
It is crucial to ensure that all necessary information is correct and complete to avoid processing delays and possible fines.
Conclusion
In summary, Forms MGT-7 and MGT-7A play a critical part in maintaining company control and openness. Understanding their validity, due dates, and fines is important for company compliance. Companies must adhere to the dates set forth by the Companies Act to avoid financial fines and legal effects. By ensuring quick reporting and clarity in the information given, businesses can respect their image and contribute to a strong corporate governance framework.
Companies should examine their filing status and make sure all required documentation is in place as the due date for MGT-7 and MGT-7A approaches. Be sure to act early to fulfil your filing requirements and prevent fines. If you have concerns or need help with the filing procedure, think about seeing a professional to walk you through the criteria.
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