Annual Return (Form MGT-7/7A) in Companies: Filing & Compliance

Annual Return (Form MGT-7/7A) is a crucial statutory document that every Indian company must file with the Registrar of Companies (ROC). This document provides transparency about a company’s non-financial health, ownership structure, and management. In this article, we will delve into the purpose of the annual return, the forms involved, and the compliance requirements.

What Is Annual Return?

The annual return of a company is a statutory document that companies are required to file with the Registrar of Companies. An Annual return provides transparency about a company’s non-financial health, ownership structure, and management as on the closure of the financial year. This information is valuable to shareholders, investors, creditors, and potential business partners who want to assess the company’s stability and performance. Its importance is obvious from the fact that every company has to make arrangements to make Annual Return available for inspection by any member, debenture holder, other security holder or beneficial owner without payment of fees and to others on payment of prescribed fees during working hours. The Annual Return is the prima facie evidence of matters stated therein.

Purpose of Annual Return:

The basic purpose behind filing of annual return is to provide annual information regarding the company’s registered office, principal business activities, particulars of holding, subsidiary and associate companies, capital structure, shareholding pattern, details of directors, promoters, KMPs, their remuneration, indebtedness of the company, details of meetings of board of directors & committees, etc. to the ROC and to the members of the company.

Forms MGT-7/7A:

The e-form MGT-7A (Abridged Annual Return) is applicable to only One Person Companies (OPCs) and small companies. Other companies established under the Companies Act, 2013 Act must file e-form MGT-7 with the Registrar of Companies.

Section 2(85) of the Act defines small companies as companies, other than public companies having:

• A paid-up share capital not exceeding Rs.4 crore or such specified higher amount which shall not be more than Rs.10 crores.
• A turnover not exceeding Rs.40 crore or such a specified higher amount which shall not be more than Rs.100 crores.

However, the following companies are not considered as small companies:

• A subsidiary or holding company.
• A company registered under section 8.
• A body corporate or company governed by a special act

Table of Important Provisions:

Signing of Annual Return:

1. As per section 92(1) of the Companies Act, 2013 the Annual return needs to be signed both by the director and the Company Secretary or where there is no Company Secretary, by a Practising Company Secretary (PCS).

2. In the case of One Person company and small company, it shall be signed by the Company Secretary or where there is no Company Secretary by the Director of the company.

Certification of Annual Return:

1. As per section 92(2) of the Companies Act, 2013 read with Rule 11(2) of the Companies (Management and Administration) Rules, 2014, the annual return of a listed company having:

• Paid up share capital of Rs.10 crore or more, or
• Turnover of Rs.50 crore or more,

Shall be certified by a PCS in Form MGT-8.

2. The certificate shall state that the annual return discloses the facts correctly and adequately without any alteration or modification and that the company has complied with all the applicable provisions of this Act.

Documents To Be Verified For Conducting Certification Of Annual Return

1. MOA & AOA

2. Forms & receipts filed with ROC

3. Register of Members

4. Share transfer register

5. Register of Directors & Director’s Shareholding

6. Disclosure forms from directors for the period prior to Annual Return Certification

7. Register of charges

8. Minutes of Board, AGM, share transfer, remuneration and Audit committees

9. Copy of the latest Balance sheet along with the notice of AGM

10. Shareholder list, details of share transfer during the year, controls of the data as on the last date of financial year, as on date of AGM or the latest beneficial positions downloaded from the records of the DPs by RTA of the company on record/book closure date prior to AGM

11. Certificate from RTA stating the number of shareholders as on the closure of financial year

12. Indebtedness certificate signed by CS/CFO of the company

13. Listing and trading approvals from the Stock Exchange/Credit Confirmation from depositories namely NSDL and CDSL/confirmation from both depositories in respect of allotment of equity shares of the company during the financial year

14. Intimation to the Stock Exchanges/Confirmation from NSDL and CDSL for change of name of the company, change in face value of equity shares, change in ISIN of the company and the Scrip Code/symbol of the company, etc.

15. Change of name of the company, change in face value of equity shares, change in ISIN of the company in respect of the allotment or as a result of any change in capital structure due to any corporate action taken by the company during the financial year

16. Board resolution for any type of corporate action taken by the company

17. Corporate action forms filed by the company with Depositories

18. Equity shareholding pattern and its break up as on the last day of the financial year

19. Any orders received by the company from the High Court or from any other regulatory body

20. Register of investments of the company

Filing with ROC:

1. The annual return has to be filed with the ROC within 60 days from the date on which the AGM is held.

2. If the AGM is not held in any year, then the return has to be filed with the ROC 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.

Penalty for Non-Compliance:

1. If a company fails to file its annual return within the due date, the company shall be punishable with a fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees and

2. Every officer who is in default shall be punishable with imprisonment for a term which may extend to six months or with a fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.

Annual Return of Foreign Companies:

1. As per Section 384(2), the provisions of Section 92 shall also apply to a foreign company.

2. Rule 7 of the Companies (Registration of foreign companies) Rules, 2014 provides that every foreign company shall prepare and file, within a period of 60 days from the last day of its financial year, an annual return in Form FC-4 to the ROC containing the particulars as they stood on the closure of financial year.

Conclusion: The annual return is a critical document in the corporate compliance framework in India. It provides transparency, accountability, and valuable information to stakeholders. Companies must ensure timely and accurate filing to avoid penalties and maintain good corporate governance. Compliance with the Companies Act, 2013, and related rules is essential to fulfill this statutory requirement.

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DISCLAIMER:- This Blog is for the purposes of information/knowledge and shall not be treated as solicitation in any manner or for any other purposes whatsoever.

Feel free to contact the author for further clarification at 9953808432 or via mail at cssinghaniaandassociates@gmail.com. The author is the founder of SINGHANIA & ASSOCIATES (Practicing Company Secretaries Firm) based in Delhi.