Form MGT-8: Essential Guide to Annual Return Certification

Annual return certification is a critical compliance requirement for companies in India, particularly those with substantial paid-up capital or turnover. Form MGT-8 plays a vital role in this process, acting as an abridged secretarial audit report that accompanies the Annual Return in Form MGT-7. In this comprehensive guide, we will delve into the significance, requirements, and implications of Form MGT-8 under the Companies Act, 2013.

FORM MGT-8

Form MGT-8 is like an abridged secretarial audit report which is submitted as an attachment to the Annual Return in Form MGT-7. 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 or a 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 stating 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 such as:

1. Maintenance of registers/records & making entries therein;

2. Filing of necessary forms/returns;

3. Calling/convening/holding of meetings of the Board of Directors/ its committees, the proceedings including the circular resolutions and the resolutions passed by postal ballot, if any, have been properly recorded in the Minutes Book;

4. Closure of Register of Members/ security holders, as the case may be;

5. Loans/advances to its directors;

6. Contracts/arrangements with related parties as per Section 188 of the Act;

7. Issue/allotment/transfer/transmission/buy-back of securities/ redemption of preference shares or debentures/ alteration or reduction of share capital/conversion of shares/securities and issue of security certificates in all cases;

8. Keeping in abeyance the rights to dividends, right shares and bonus shares pending registration of transfer;

9. Declaration/payment of dividend;

10. Signing of audited financial statements;

11. Constitution/appointment/re-appointment/retirement/ filling up casual vacancy/disclosures of the directors/KMPs and the remuneration paid to them;

12. Appointment/re-appointment/ filling up casual vacancy of auditor;

13. Approvals required to be taken from the Central Government/ Tribunal/ Regional Director/ court or other such authority;

14. Acceptance/ renewal/ repayment of deposits;

15. Borrowing from Directors, members, public financial institutions, banks and others and creation/ modification/ satisfaction of charge;

16. Alteration of MOA/AOA.

FORMAT OF FORM MGT-8

 FORM NO. MGT-8

[Pursuant to Section 92(2) of the Companies Act, 2013 and Rule 11(2) of the Companies (Management and Administration) Rules, 2014]

CERTIFICATE BY A COMPANY SECRETARY IN PRACTICE

I/We have examined the registers, records an d books and papers of [NAME OF THE COMPANY] (the Company) as required to be maintained under the Companies Act, 2013 (the Act) and the rules made thereunder for the financial year ended on March 31^st, 20….. In my/our opinion and to the best of my information and according to the examinations carried out by me/us and explanations furnished to me/us by the company, its officers and agents, I/We certify that:

A. The Annual Return states the facts as at the close of the aforesaid financial year correctly and adequately.

B. During the aforesaid financial year the company has complied with provisions of the Act and Rules made thereunder in respect of:

1. Its status under the Act;

2. Maintenance of registers/records & making entries therein within the time prescribed therefor;

3. Filing of necessary forms/returns as stated in the Annual Return, with the Registrar of Companies, Regional Director, Central Government, Tribunal, Court or other authorities within/ beyond the prescribed time;

4. Calling/convening/holding of meetings of the Board of Directors or its committees, if any, and the meetings of members of the company on due dates as stated in the Annual Return in respect of which meetings, proper notices were given and the proceedings including the circular resolutions and the resolutions passed by postal ballot, if any, have been properly recorded in the Minutes Book/registers maintained for the purpose and the same have been signed;

5. Closure of Register of Members/ security holders, as the case may be;

6. Loans/advances to its directors and/or persons or firms or companies referred to in Section 185 of the Act;

7. Contracts/arrangements with related parties as specified in Section 188 of the Act;

8. Issue or allotment or transfer or transmission or buy-back of securities/ redemption of preference shares or debentures/ alteration or reduction of share capital/conversion of shares/securities and issue of security certificates in all instances;

9. Keeping in abeyance the rights to dividends, right shares and bonus shares pending registration of transfer of shares in compliance with the provisions of the Act;

10. Declaration/payment of dividend; transfer of unpaid/ unclaimed dividend/ other amounts as applicable to the Investor Education and Protection Fund in accordance with Section 125 of the Act;

11. Signing of audited financial statements as per the provisions of Section 134 of the Act and report of Directors is as per sub-section (3),(4) and (5) thereof;

12. Constitution/appointment/re-appointment/retirement/ filling up casual vacancies/disclosures of the directors/Key Managerial Personnel and the remuneration paid to them;

13. Appointment/re-appointment/ filling up casual vacancies of auditors as per the provisions of Section 139 of the Act;

14. Approvals required to be taken from the Central Government/ Tribunal/ Regional Director/ Registrar/ court or other such other authorities under the various provisions of the Act;

15. Acceptance/ renewal/ repayment of deposits;

16. Borrowing from Directors, members, public financial institutions, banks and others and creation/ modification/ satisfaction of charges in that respect, wherever applicable;

17. Loans and investments or guarantees given or providing of securities to other bodies corporate or persons falling under the provisions of Section 186 of the Act;

18. Alteration of the provisions of the Memorandum and/or Articles of Association of the Company.

NOTE: The qualification, reservation or adverse remarks, if any, may be stated at relevant place(s).

PENALTY PROVISION FOR PCS

As per section 92(6) of the Companies Act, 2013, 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, shall be punishable with a fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.

Conclusion

Form MGT-8, a crucial document under the Companies Act, 2013, ensures that companies with substantial capital or turnover adhere to legal requirements diligently. The certification process, while meticulous, helps maintain transparency and accountability in corporate operations. Company Secretaries in Practice play a pivotal role in this process, safeguarding the interests of stakeholders and upholding regulatory standards. Understanding the importance of Form MGT-8 and complying with its requirements is essential for every eligible company to avoid penalties and maintain good corporate governance.

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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 [email protected]. The author is the founder of SINGHANIA & ASSOCIATES (Practicing Company Secretaries Firm) based in Delhi.