Every year, all companies registered in India, are required to file their Annual Returns and Income Tax Returns. Compliance is not just a legal requirement, but it is also crucial for the company’s reputation and growth. Non-compliance can lead to the company’s operations being limited, and defaulters typically face monetary fines or Imprisonment sentences. In this article, we will discuss the importance of annual returns and compliance under Section 92 of the Companies Act, 2013.
As per Section 92 of the Companies Act, 2013
A company registered in India must abide by the Companies Act, 2013. The Companies Act, 2013 covers corporate director appointment, qualification, remuneration, and retirement. It also addresses issues such as how Board Meetings and Shareholder Meetings should be run. The preparation and presentation of annual accounts, as well as the continual maintenance of accounting books, are also included.
Every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood at the close of the financial year regarding the following matters:
(a) its registered office, principal business activities, particulars of its holding, subsidiary and associate companies;
(b) its shares, debentures, and other securities and shareholding pattern;
(c) its members and debenture-holders along with changes therein since the close of the previous financial year;
(d) its promoters, directors, and key managerial personnel along with changes there in since the close of the previous financial year;
(e) meetings of members or a class thereof, Board and its various committees along with attendance details;
(f) remuneration of directors and key managerial personnel;
(g) 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;
(h) matters relating to certification of compliances, disclosures as may be prescribed;
(i) details, as may be prescribed, in respect of shares held by or on behalf of the Foreign Institutional Investors; and
(k) such other matters as may be prescribed, and signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice;
Provided that in relation to One Person Company and small company, the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company.
Provided further that the Central Government may prescribe the abridged form of annual return under MGT-7A for “One Person Company, small company and such other class or classes of companies as may be prescribed” (from the financial year 2020-21 onwards).
(2) The annual return, filed by a listed company or, by a company having such paid-up capital of ten crore rupees or more or turnover of fifty crore rupees or more, shall be certified by a Company Secretary in practice and the certificate shall be 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.
(3) Every company shall place its annual return on its website and the web link for the same shall be provided in the board report.
(4) Every company is required to file a copy of its annual return with the Registrar of Companies within sixty days from the date of the annual general meeting. In case no annual general meeting is held in a particular year, the annual return must be filed within sixty days from the date on which the meeting should have been held together with the statement specifying the reasons for not holding the annual general meeting, with such fees or additional fees as may be prescribed
Consequences of Non-Compliance:
Failure of the company: Failure to file the annual return within the specified timeframe may result in penalties for the company and its officers. The company and every officer in default may be subject to a penalty of ten thousand rupees. Furthermore, if the failure to file the annual return continues, an additional penalty of one hundred rupees per day may be imposed, subject to a maximum of two lakh rupees in the case of a company and fifty thousand rupees in the case of an officer.
Failure of company secretary in practice: If a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, he shall be liable to a penalty of two lakh rupees.
Conclusion: Section 92 of the Companies Act, 2013 plays a vital role in ensuring transparency and accountability in the functioning of companies in India. By mandating the preparation and filing of an annual return, this provision provides key information to stakeholders and helps them make informed decisions. Complying with the requirements of Section 92 is not just a legal obligation but also a means to demonstrate a company’s commitment to good corporate governance practices.
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