Corporate law and governance provide the cradle in which companies are born, operate their business and grow organically as well as inorganically and eventually fade into memory. Companies Act, 2013 is the key legislation which provides the framework of governance and compliances for companies in India. At present, there are around 1.62 million corporate entities in India. It is of utmost importance that the company management and professionals must file the required forms and documents on time and always on time. Ministry of Corporate Affairs (MCA) keeps a tab on the filings being done by corporates
In the present article, let us explore the compliances through filing of various forms and penalty for non-compliance. For convenience, we have categorized the compliances under generic mandatory and event-based compliances:
(A) Generic Mandatory compliances:
| S. No | Description | Forms and Timelines | Penalty for non-compliance |
| 1 | Annual Return Filing (Sec 92) | MGT-7
Within 60 days of holding annual general meeting |
₹10,000 for the company and its officers, plus a daily ₹100 penalty until compliance, capped at ₹2 lakh for the company and ₹50,000 for officers. |
| 2 | Financial Statements
(Sec 129) |
AOC-4
Within 30 days of holding annual general meeting |
₹10,000 penalty for the company, reaching up to ₹2 lakh, and a ₹10,000 penalty for directors, escalating to ₹50,000 if non-compliance continues. |
| 3 | Appointment of auditor (Sec 139) | ADT-1
Within 30 days of incorporation |
Not less than INR 25,000 and may extend to INR 5,00,000. Not less than 10,000 for each defaulting officer. |
| 4 | Disclosure of interest by Directors
(Sec 184) |
MBP-1
First meeting in which he participates as director. |
Penalty extends to INR 1,00,000 |
| 5 | Board meeting
(Sec 173) |
MGT-14
Within 30 days of incorporation |
INR 25,000 for the company and INR 5,000 for each defaulting officer. |
| 6 | General meeting
(Sec 96) |
MGT-14
On or before 30th September |
INR 25,000 for the company and INR 5,000 for each defaulting officer. |
| 7 | Declaration of commencement of business
(Sec 10A) |
INC-20 A
Within 180 days of incorporation |
INR 50,000 for company and INR 1,000 per day for each defaulting officer. |
| 8 | Statutory Registers | MGT-1 (members)
SH-7 (shareholders) |
INR 1,00,000 and may extend to INR 10,00,000. |
| 9 | Maintain Books of Accounts
(Sec 128) |
INR 50,000 and may extend to INR 5,00,000 |
(B) Event Based Compliances
| S. No | Description | Forms and Timelines | Penalty for non-compliance |
| 1 | Change in registered office
(sec 13(4)) |
INC-22
Within 15 days of such change |
INR 1,000 per day until default continues but not exceeding INR 1,00,000. |
| 2 | Change in Directors or KMP | DIR-12
Within 30 days of such change |
Not less than INR 50,000 and may extend to INR 5,00,000. |
| 3 | Increase in Authorized Share capital
(sec 61(1)) |
SH-7
Within 30 days of passing ordinary resolution |
daily penalty of INR 500 for the company and each defaulting officer, with a maximum limit of INR 5 lakh for the company and INR 1 lakh for an individual officer. |
| 4 | Increase in Paid up share capital (Issue of security) | PAS-3
Within 15 days from date of allotment |
Depends on the number of days delayed and the company’s paid-up capital. |
| 5 | Application for KYC of Directors | DIR-3
On or before 30th April of immediate next Financial year |
There is no penalty but Din will marked as deactivated.
INR 5000 for delayed filing. |
| 6 | Alteration of Memorandum or Articles of Association
(Sec 13, 14) |
MGT-14
Within 30 days of passing the resolution |
1 thousand rupees for every copy of the memorandum or articles issued |
| 7 | Change or modification of charge (Sec 77) | CHG-1 /
CHG-9 Within 30 days of its creation |
Not less than INR 1,00,000 and may extend to INR 10,00,000. |
| 8 | Change in companies Name
(Sec 16) |
INC-24
Within 60 days of approval name from registrar or within 30 days of passing resolution. |
A fine of 1000 rupees per day for non-compliance with the default, with officers facing penalties ranging from 5000 to 100,000 rupees. |
| 9 | Change in place of books
(Sec 128) |
AOC-5
Within 7 days of passing the board resolution |
The whole-time director, CFO, or designated individual of the company faces fines ranging from INR 50,000 to INR 500,000 |
Looking at the amount of monetary penalties, it is advisable to comply than to pay heavy fines. Now a days, MCA is quite active and frequently it comes in press that so and so companies have been penalized cumulatively to the extent of Rs. 5 lakhs to even Rs. 50 lakhs or more.
Please note that company law compliance is a separate domain and it should not be treated as if finance professionals know everything and can also do these compliances, unless skilled and trained in that domain.
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In case you have any concern and queries or need any support in corporate compliances/NCLT, you may like to contact us.
Abhinarayan Mishra, FCA, FCS; Managing Partner, KPAM & Associates, Chartered Accountants, Dwarka, New Delhi; +9910744992, [email protected]/[email protected]
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