The Ministry of Corporate Affairs has introduced E-Form MGT 7 (Pursuant to sub-Section(1) of section 92 of the Companies Act, 2013 and sub-rule (1) of rule 11 of the Companies (Management and Administration) Rules, 2014]. Earlier the said form was known as Form 20B. Both Forms are meant for Annual Return to be filed by every Company registered under the Provisions of Companies Act, 1956 or Companies Act, 2013 with the Respective Registrar of Companies. The E-Form can be filled and filed in both Hindi or English Languages.
The purpose of this Article is to make the readers understand various nitty gritty and aspects of form before filing the same. CIN (Corporate Identity) Number of Company, PAN Number of Company, Telephone Number of Company and Email Address of company and Company Website are basic details of company at an Initial Stage. Date of Incorporation of company, Category of company, Company having share capital and whether company is listed or not gets automatically prefilled upon insertion of a CIN Number of company. If shares are listed, details of Stock Exchanges where the Securities of the company are listed need to be mentioned. Particulars of financial year to be incorporated in the form to reflect for which financial year is to be submitted.In case of Newly Registered Company, First Financial year shall commence from Date of Incorporation to succeeding 31st March. These are the basic details to be filled up in the form.
The Form requires particulars of Annual General Meeting held during the financial year including date of Annual General Meeting and due date of Annual General Meeting pursuant to Section 96 of the Companies Act, 2013. If the Company fails to convene and hold Annual General Meeting during financial year,whether the company has applied for Extension of time for holding Annual General Meeting and has also obtained Extension Letter for holding Annual General Meeting either for One Month or Maximum three months as the case may be, the said company need to attach such Extension Letter as an attachment to the Form MGT 7. This will help company to comply with the Provisions of Section 96 of the Companies Act, 2013. Next content of Form requires details of Principal Business Activities of the company including Main Activity, Group Code, Description of Main business Activity Code, Business Activity Code, Description of business activity code. This content of form gives clear idea as to which type of business the company is carrying on in line with the Main Object mentioned in the Memorandum of Association of the company.
Further, Details about Particulars of Holding, Subsidiary, Associate Company including Joint Venture need to be provided in the Form. These details help to ascertain Group Companies, Hierarchy of shareholding and management control details to a person/stakeholder and general public. It also helps in ascertaining related party transactions. This portion of form help in Secretarial Audit of a company in a better manner.
Details about SHARE CAPITAL, DEBENTURES AND OTHER SECURITIES OF THE COMPANY : Details of shares/Debentures Transfers since closure date of last financial year (or in the case of the first return at any time since the incorporation of the company) [Details being provided in a CD/Digital Media] :
In above mentioned Category of Form, details of Securities during given period to be mentioned. If No Transfer of Securities, Option Nil to be selected.If there is any share transfer, details of share transfer like in the form of Board Resolution for share transfer to be attached as an Optional attachment to Form so that one can ascertain details of share transfer during the financial year. Separate sheet may be attached if details of share Transfer are in large Number.
Indebtedness including debentures (Outstanding as at the end of financial year):
Details about Debentures outstanding as on 31st March and reflected in audited signed Balance Sheet like Non Convertible, Partly convertible debentures, and fully convertible debentures mentioning Number of Units and Nominal Value per debentures need to be mentioned in Form to reflect Debenture holders status wherever applicable. Particulars about Secured Loans (including interest outstanding/accrued but not due for payment) excluding deposits Unsecured Loans (including interest outstanding/accrued but not due for payment) excluding deposits need to be mentioned so that correct financial position with respect to Overall debts and Liabilities of company can be ascertained at a glance. Details mentioned in this form can be cross verified with audited balance sheet for better understanding of financial position of a company. The E-Form also requires details of Securities other than shares and debentures. It may include Issue of Commercial paper, Bonds, Global Depository Receipts and other financial Instrument.
Turnover and net worth of the company (as defined in the Companies Act, 2013) :
Section 2(91) of the Companies Act, 2013 defines “turnover” to mean the aggregate value of the realisation of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year.
As per Companies Act, 2013 Section 2(57) defines Net Worth means the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation.
Above mentioned definitions need to be considered before filing details about Turnover and Net Worth in E-Form MGT 7 and also audited signed balance sheet as at 31st March need to be verified.Turnover and Net Worth figures mentioned are important from Bankers and Creditors point of view.
NUMBER OF PROMOTERS, MEMBERS, DEBENTURE HOLDERS
(Details, Promoters, Members (other than promoters), Debenture holders) :
Above details to be entered in the E-Form MGT 7 need to be mentioned at the beginning of the financial year and also at the end of financial year. This column of form help in ascertaining number of members added or reduced during the financial year indirectly covering share transfer during the financial year.
DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL :
Composition of Board of Directors : The Company is an artificial person created by Law, having perpetual succession. Since the company form of Organiation is an artificial person, it need to be operated through natural persons like Directors appointed by shareholders of the company. Board of Directors act in a fiduciary capacity with the company. Various Categories of persons can be appointed by the company based upon case to case basis like Promoter and Non Promoter, Independent and Non Independent Directors, Nominee representing Banks & Financial Institutions, Investing institutions, Government Authorities, Small share holders. E-Form required details about Executive and Non Executive Directors appointed at the beginning of the financial year and at the end of financial year. This column help in ascertaining whether any new Director was appointed during the financial year and any Director resigned/ceased to be a Director of the company during the financial year. Details of Shares/Securities held by Directors at the end of financial year should also be mentioned in the form. Details about Managerial personnel other than Directors like Company Secretary, Chief Financial Officer and Manager if any of the company need to be mentioned in this column of Form.
MEETINGS OF MEMBERS/CLASS OF MEMBERS/BOARD/COMMITTEES OF THE BOARD OF DIRECTORS
A. MEMBERS/CLASS /REQUISITIONED/NCLT/COURT CONVENED MEETINGS
Various Stakeholders/ Shareholders of the company need to assemble at one place called a Meeting to decide important decisions and ascertain voting of shares/securities for passing of resolutions or rejecting the resolutions. Meetings provide a Platform to members of company to decide future course of action for the benefit of the company. Annual General Meeting, Extra Ordinary General Meeting, Class Meeting, Meeting by Requistionist and meeting convened by Court, National Company Law Tribunal are types of meeting to be held by companies. E-Form requires Number of Meetings held during the period, Date of Meeting, Total Number of Members entitled to attend meeting, Members attended and their Percentage of Shares held by them shall also be mentioned in the form.
B) Details about Board Meetings and Committee Meetings held, Number of Board Meetings/Committee Meetings held, Dates of Board Meetings/Committee Meetings held, Total Number of Directors associated as on date of meeting, Number of Directors attended at the meeting need to be mentioned in the Form. The purpose of this column is to reflect decision making process by Board of Directors and meetings attended by them during the financial year. Details about both Executive Director and Non Executive Director need to be mentioned in the Form.
REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL :
E-Form need to mention details of remuneration to Directors and Key Managerial personnel need to be mentioned. Key Managerial Personnel include Company Secretary, Chief Financial Officer or any such person appointed by Board of Directors as Key Managerial Personnel need to be mentioned. Managing Director/Whole Time Director/Manager/Other Directors are covered.
MATTERS RELATED TO CERTIFICATION OF COMPLIANCES AND DISCLOSURES
Whether the company has made compliances and disclosures in respect of applicable provisions of the Companies Act, 2013 during the Financial Year
Above mentioned Column is very important aspect from the point of view of Compliances by the Companies. Compliance Part covers whole gamut of the Provisions of the Companies Act, 2013. Care should be taken while filling this column. If the company has complied with all provisions of the Companies Act, 2013, Yes should be selected. If there is any non compliance on the part of company, the said non compliance should be clearly mentioned. Non Compliance may include non payment of amount towards Corporate Social Responsibility as per Section 135 of the Companies Act, 2013, Non appointment of Cost Auditor within the meaning of Section 148 of the Companies Act, 2013, Non appointment of Company Secretary required to be appointed as per the latest Provisions of the Companies Act, 2013.
PENALTY AND PUNISHMENT – DETAILS THEREOF
(A) DETAILS OF PENALTIES / PUNISHMENT IMPOSED ON COMPANY/DIRECTORS /OFFICERS : Details include penalty levied on company or Directors for non compliance of any applicable Law like The Companies Act, 2013, Environment Protection Laws, The Factories Act 1948 or such other laws applicable from time to time. Following details to be entered if any information is to be provided :
(B) DETAILS OF PENALTIES / PUNISHMENT IMPOSED ON COMPANY/DIRECTORS /OFFICERS : Name of the company/ directors/officers, Name of the court/concerned, Authority, Date of Order, Name of the Act and section under which penalised / punished, Details of penalty/punishment, Details of appeal (if any) including present status need to be mentioned if applicable.This will improve transparency in the working of the company to the Stakeholders at large.
(C) DETAILS OF COMPOUNDING OF OFFENCES : Name of the company/ directors/officers, Name of the court/concerned Authority, Date of Order, Name of the Act and section under which offence committed, Particulars of offence Amount of compounding (in Rupees) are details to be entered in the form if clause is in negative. All particulars of offences and status of Offences to be mentioned in the form.
COMPLIANCE OF SUB-SECTION (2) OF SECTION 92, IN CASE OF LISTED COMPANIES :
In case of a listed company or a company having paid up share capital of Ten Crore rupees or more or turnover of Fifty Crore rupees or more, details of company secretary in whole time practice certifying the annual return in Form MGT-8 need to be attached to the E-Form MGT 7. It is mandatory provision.
Documents to be attached with E-Form MGT 7 include List of Shareholders or Debenture holders (along with Folio Numbers) as the case may be as at 31st March of a given financial year. Further, if company has applied for extension of time for holding Annual general meeting and obtained extension of time letter from respective Registrar of Companies, such letter need to be attached to Form MGT 7 whenever applicable. A copy of Board Resolution authorizing a Director to digitally sign E-Form MGT 7 need to be attached though not mandatory.
Any one of the Director of th company duly authorized by a Board Resolution can digitally sign Form MGT 7. When all details are filled up properly, a certification by a Practicing Company Secretary only. Provisions of Section 447, Section 448 and Section 449 of the Companies Act, 2013 need to be kept in mind before certification of Form MGT 7. Wherever applicable, a Company Secretary in employment of the company need to digitally sign Form MGT 7 whenever applicable. 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. In case a Company is Liquidated and final Order has been passed, all Annual filings including Form MGT 7 can be filed by a Resolution professional appointed for this purpose.
Form MGT-7 is to be filed within 60 days from the date of Annual General Meeting of the company. The due date for regulating annual general meeting is on or before the 30th day of September following the close of every financial year unless otherwise an extension for holding annual general meeting obtained from Registrar of Companies. Therefore, the last date for filing form MGT-7 is generally 29th of November every year.Any filing of Form MGT 7 after due date, additional Fees of Rs. 100/- per day shall be paid by the company until the default is made good.
Section 92 of the Companies Act, 2013 states that If a company fails to file its annual return under sub-section (4), before the expiry of the period specified under section 403 with additional fee, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakhs rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both. 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 punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
From the above, it can be concluded that E-Form MGT 7 is a total compliance in toto.
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