Consequences of filing e-Form MGT-14 after 30 Days

With the replacement of the Companies Act, 1956 (‘the Old Act’) by the Companies Act, 2013 (‘the New Act’), Section 117 was adopted w.e.f. 01.04.2014 in corresponds to Section 192 of the Old Act.

However, it is pertinent to note that with the passage of time, some amendments were made in Section 117 of the New Act and rules thereof and related thereto. Now, as on the date, Section 117 of the New Act, prescribed that a copy of every resolution or any agreement, in respect of matters specified in sub-section (3) shall be filed with the Registrar of Companies (‘ROC’) within thirty days of the passing or making thereof in such manner [for this please see Rule 24 and Form No. MGT-14 of the Companies (Management and Administration) Rules, 2014] and with such fees as may be prescribed [for this please see Rule 12 and Table annexed to Companies (Registration Offices & Fees) Rules, 2014].

Statutory provisions of Section 117 of the New Act, as applicable as on date-

“(1) A copy of very resolution or any agreement, in respect of matters specified in sub-section (3) together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the Registrar within thirty days of the passing or making thereof in such manner and with such fee as may be prescribed.”

Provided that the copy of every resolution which has the effect of altering the articles and the copy of every agreement referred to in sub-section (3) shall be embodied in or annexed to every copy of the articles issued after passing of the resolution or making of the agreement.

(2) If any company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified therein, such company shall be liable to penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of twenty-five lakh rupees and every officer of the company who is in default including liquidator of the company, if any shall be liable to penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to maximum of five lakh rupees.

Rule 24 the Companies (Management and Administration) Rules, 2014

“A copy of every resolution or any agreement required to be filed, together with the explanatory statement under section 102, if any, shall be filed with the Registrar in Form No. MGT 14 along with the fee.”

Exemption:

1. In case of private company which is licensed to operate by RBI or SEBI or IRDA from the International Financial Service Centre (IFSC) located in an approved multi services SEZ set-up under the SEZ Act, in sub-section (1), of Section 117 for the words “thirty days” the words “sixty days” shall be read vide Notification No. G.S.R. 9(E) dated 04^th January, 2017.

2. On case of unlisted public company which is licensed to operate by RBI or SEBI or IRDA from the International Financial Service Centre (IFSC) located in an approved multi services SEZ set-up under the SEZ Act, in sub-section (1), of Section 117 for the words “thirty days” the words “sixty days” shall be read vide Notification No. G.S.R. 8(E) dated 04^th January, 2017.

Penalty in case of non-filing of resolution or agreement.

If any company fails to file the resolution or the agreement under subsection (1) before the expiry of the period specified therein,

• such company shall be liable to penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of twenty-five lakh rupees; and
• every officer of the company who is in default including liquidator of the company, if any shall be liable to penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to maximum of five lakh rupees.

Condonation of delay:

If company fails to file e-form MGT-14 within 30 days of passing of resolution it was required to file “Application for Condonation of Delay” with Central Government in e-form CG-1.

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SUMMARY OF AMENDMENT IN SECTION 117 OF THE NEW ACT SO FAR.

It is to be noted that there are many amendments came under this section in last three years.

I. Companies Amendment Act, 2017 (‘the Amendment Act, 2017’):-

Before the Amendment Act 2017, the statutory provisions of Section 117 of the New Act were as under:-

“(1) A copy of very resolution or any agreement, in respect of matters specified in sub-section (3) together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the Registrar within thirty days of the passing or making thereof in such manner and with such fee as may be prescribed within the time specified under Section 403.”

Provided that the copy of every resolution which has the effect of altering the articles and the copy of every agreement referred to in sub-section (3) shall be embodied in or annexed to every copy of the articles issued after passing of the resolution or making of the agreement.

(2) if a company fails to file the resolution or the agreement under sub section (1) of section 117 before expiry of the period specified under section 403 with additional fee, the company shall be punishable with fine which shall not be less than Rs. 5 lakhs but which may extend to Rs. 25 lakhs and every officer of the company who is in default, including liquidator of the company, if any, shall be punishable with fine which shall not be less than Rs. 1 lakh but which may extend to Rs. 5 lakhs.

Before the Amendment Act 2017, the statutory provisions of Section 403 of the New Act were as under:-

Fee for filling, etc.

(1) any documents, required to be submitted, filed registered or recorded or any fact or information required or authorised to be registered under this Act, shall be submitted, filed, registered or recorded within the time specified in the relevant provision on payment of such fee as may be prescribed.

Provided that any documents, fact or information may be submitted, filed, registered or recorded, after the time specified in relevant provision for such submission, filing, registering or recording, within a period of two hundred and seventy days from the date by which it should have been submitted, filed, registered or recorded, as the case may be, on payment of such additional fee as may be prescribed. [for this please see Rule 12, 13 and table annexed to Companies (Registration Offices & Fees) Rules, 2014]

Provided further that any such document, fact or information may, without prejudice to any other legal action or liability under the Act, be also submitted, filed, registered or recorded, after the first time specified in first proviso on payment of fee and additional fee specified under this section.

(2) where a company fails or commits any default to submit, file, register or record any document, fact or information under sub-section (1) before the expiry of the period specified in the first proviso to that sub-section with additional fee, the company and the officers of the company who are in default, shall, without prejudice to the liability for payment of fee and additional fee, be liable for the penalty or punishment provided under this Act for such failure or default.

Table of Additional fees which shall be applicable for delays in filing of the forms other than for increase in Nominal Share Capital:

Period of Delays	Forms including charge Documents
Upto 30 days	2 times of normal filing fees
More than 30 days and upto 60 days	4 times of normal filing fees
More than 60 days and upto 90 days	6 times of normal filing fees
More than 90 days and upto 180 days	10 times of normal filing fees
More than 180 days and upto *270 Days	12 times of normal filing fees

* Delay beyond 270 days, the second proviso of section 403(1) of the Act may be referred.

It is submitted that –

1. If the Company had failed to file prescribed resolutions/agreements in e-form MGT-14 within 30 days of passing of resolution, then additional fee will be applicable.

2. As prescribed, penalty provision of section 403 of the New Act will be applicable only when the company has not filed e-form MGT-14 within 270 days from the due date of filing along with additional fee as referred above.

3. If the company had not filed filed e-form MGT-14 within 270 days from the due date of filing along with additional fee as referred above, then compounding provisions of Section 441 of the New Act was applicable.

Now, by the Amendment Act, 2017 provision of 270 additional days removed from the New Act. MCA vide notification dated: 07 May, 2018 has notified 28 more sections of Companies Amendment Act, 2017. One of those is Section 117 of the New Act which explains Resolutions and agreements to be filed under the New Act. This amended section came into effect form 07 May, 2018.

Before 07 May, 2018 Companies was required to file e-form MGT-14 within 30 days of passing of resolution and if fails to file within 30 days then in next 270 days with additional fees. However, by amendment act w.e.f. 07 May, 2018 provision of 270 additional days removed from the New Act. It is to be noted that immunity was given to companies to file returns/documents within 270 days of the delay in certain cases and post 270 days, companies were labile for higher additional fees and prosecution/penal action. Now, immunity of 270 days has been done away with effect from 07^th May 2018 and company shall be immediately liable for punishment/penal action.

By the Amendment Act, 2017, for delay in filing of Annual Return (Section 92) and Financial Statements (Section 137), penalty of Rs.100/- per w.e.f. July 1, 2018 has been prescribed. Moreover, till the Amendment Act, 2017, in case of condonation of delay, online facility (e-forms) was not available, which has been now introduced as E-forms CG-1.

By clause 30 of the Amendment Act, 2017, the following amendments had been prescribed in Section 117 of the New Act, as under

1. in sub-section (1), the words and figures “within the time specified under section 403” shall be omitted;

2. in sub-section (2),— (a) for the words and figures “under section 403 with additional fees”, the word “therein” shall be substituted; (b) for the words “not be less than five lakh rupees”, the words “not be less than one lakh rupees” shall be substituted; (c) for the words “one lakh rupees”, the words “fifty thousand rupees” shall be substituted;

By clause 80 of the Amendment Act, 2017, some changes have been prescribed in Section 403 of the New Act, including the substituting the sub-section (2) of Section 403 with the following-

“(2) Where a company fails or commits any default to submit, file, register or record any document, fact or information under sub-section (1) before the expiry of the period specified in the relevant section, the company and the officers of the company who are in default, shall, without prejudice to the liability for the payment of fee and additional fee, be liable for the penalty or punishment provided under this Act for such failure or default.”

Crux of the relevant amendment of the Amendment Act, 2017 –

1. Provision of 270 additional days removed from the Section 117 of the New Act,

2. Fine amount has been reduced.

3. First proviso and second proviso of Section 403(1) substituted with new provisos.

4. Consequential change made in Section 403(2). Immunity provided to companies to file within additional 270 days has been done away with. Therefore, any filing beyond timeline specified in the respective section will invite additional fees as well as the condonation of delay.

Conclusive Effect: with effect from 07.05.2018 if Company fails to file e-form MGT-14 within 30 days of passing of resolution it was required to file “Application for Condonation of Delay” with Central Government in e-form CG-1.

Further, there has been also prescribed certain changes in Companies (Registration Offices and Fees) Rules, 2014 by Companies (Registration Offices and Fees) Second Amendment Rules, 2018 w.e.f. 07.05.2018. [Please refer to these for your knowledge enhancement]

II. Companies Amendment Act, 2019 (‘the Amendment Act, 2019’):-

The Companies (Amendment) Ordinance, 2018 (w.e.f. 02.11.2018) has re categorized certain offence from Fine to Penalty. Thus, Registrar of Companies (ROC) and Regional Director (RD) can now impose penalties directly after issuing SCN, instead of going to judiciary for imposing fines or for following procedure for composition of offences.

By virtue of amendments brought in vide the Ordinance, offences arising out of non-compliance or belated compliance of the aforesaid provisions will attract adjudication proceedings in terms of Adjudication Rules. The Adjudication Rules have also been amended vide Notification dated 19 February, 2019 providing for an elaborate process.

Minor non-compliances like failure to file every resolution or agreement, failure to furnish information about DIN, failure of filling of forms etc ‘Non Filing of MGT-14 within 30 days, Non filing of AOC-4 within 30 days and non-filing of MGT-7 within 60 days” are proposed to be brought within the purview of the Adjudication by Registrar of Companies.

The Amendment Act, 2019 has carried amendments notified in the Companies (Amendment) Ordinance, 2018 regarding re categorized certain offence from Fine to Penalty, w.e.f 02.11.2018.

Therefore, by clause 18 of the Amendment Act, 2019, w.e.f. 02.11.2018, Section 117(2) of the New Act has been substituted as under:-

(2) If any company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified therein, such company shall be liable to penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of twenty-five lakh rupees and every officer of the company who is in default including liquidator of the company, if any shall be liable to penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to maximum of five lakh rupees.

Crux of the relevant amendment of the Amendment Act, 2019 –

1. Fine has been converted into penalty. [Please see the effect of conversion in our other article];

2. Further penalty has been added in case of continuing failure.

Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.