Pallavi Moonka

BRIEF

Companies (Amendment) Bill, 2017 having received the President’s Assent on the 3rd Day of January, 2018 was published in the Official Gazette for general information to the Public on the same date, i.e., on the 3rd Day of January, 2018 as COMPANIES (AMENDMENT) ACT, 2017 further amending the Companies Act, 2013.

The Amendment Act provided 93 amendments to various provisions of Companies Act, 2013.

Out of which the major amendments include a change in the definition of significant influence, related party and small company, defining the term joint venture, making the members severally liable in case the number of members falls below the prescribed level for a period beyond six month, simplification of private placement process, allowing the Companies to issue shares at a discount to its creditors, allowing companies to extend loan to their directors or related persons after fulfilling certain criteria, relaxation for consolidating the financials of Joint Venture with the Financials of the Company, relaxation with regard to taking condonation of delay in filing satisfaction of charges, providing for maintaining a Register of Significant beneficial owners in a company, relaxation to unlisted public companies regarding the place of AGM, omission of certain disclosures from the Annual Report, introduction of abridged form of annual return for one person company and small company, replacing the requirement of approval of central government for managerial remuneration above prescribed limits by approval through special resolution, aligning disclosure requirements in the prospectus with SEBI regulations and stringent penalties in case of non-filing of financial statements and annual return.

Out of the major amendments provided above, the one that is going to affect all the companies is amendment to Section 403 that deals with fees for filing of any document with the Registrar and shifting of the additional fees from a slab based structure to a day based defaulting structure.

This article aims to provide a detailed analysis about the sections on which the impact of the amendment shall fall upon and their consequent effect upon the companies.

SECTION 92

Section 92 deals with the filing of Annual Return with the Registrar of Companies by “Every” Company. The relevant provisions read as follows:

Section 92 (4) : Every company shall file with the Registrar a copy of the annual return, within sixty days from the date on which the annual general meeting is held or where no annual general meeting is held in any year within sixty days from the date on which the annual general meeting should have been held together with the statement specifying the reasons for not holding the annual general meeting, with such fees or additional fees as may be prescribed, within the time as specified, under section 403.

Thus, the Companies are required to file their Annual Return within 60 days from the Date or Due Date of AGM.

SECTION 137

Section 137 deals with the filing of Adopted or Provisional Financial Statements with the Registrar of Companies by “Every” Company. The relevant provisions read as follows:

(1) A copy of the financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general meeting in such manner, with such fees or additional fees as may be prescribed within the time specified under section 403:

Provided that where the financial statements under sub-section (1) are not adopted at annual general meeting or adjourned annual general meeting, such unadopted financial statements along with the required documents under sub-section (1) shall be filed with the Registrar within thirty days of the date of annual general meeting and the Registrar shall take them in his records as provisional till the financial statements are filed with him after their adoption in the adjourned annual general meeting for that purpose:

Provided further that financial statements adopted in the adjourned annual general meeting shall be filed with the Registrar within thirty days of the date of such adjourned annual general meeting with such fees or such additional fees as may be prescribed within the time specified under section 40.

Thus, the Companies are required to file their Financial Statements within 30 days from the Date or Due Date of AGM.

SECTION 403

Section 403 deals with the fee required to be paid by companies in case they fail to submit, file, register or record any document with the Registrar of Companies.

THE COMPANIES (AMENDMENT) ACT, 2017 that received the assent of the President on the 3rd January, 2018 amended Section 403 bringing about stringent penalties for non-filing of Annual Return and Financial Statements. The provisos to Sub-section 1 of Section 403 stands substituted by way of the amendment. After the Amendment gets notified, Section 403 shall read as under:

(1) Any document, required to be submitted, filed, registered or recorded, or any fact or information required or authorized 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 where any document, fact or information required to be submitted, filed, registered or recorded, as the case may be, under section 92 or 137 is not submitted, filed, registered or recorded, as the case may be, within the period provided in those sections, without prejudice to any other legal action or liability under this Act, it may be submitted, filed, registered or recorded, as the case may be, after expiry of the period so provided in those sections, on payment of such additional fee as may be prescribed, which shall not be less than one hundred rupees per day and different amounts may be prescribed for different classes of companies:

Provided further that where the document, fact or information, as the case may be, in cases other than referred to in the first proviso, is not submitted, filed, registered or recorded, as the case may be, within the period provided in the relevant section, it may, without prejudice to any other legal action or liability under this Act, be submitted, filed, registered or recorded as the case may be, on payment of such additional fee as may be prescribed and different fees may be prescribed for different classes of companies:

Provided also that where there is default on two or more occasions in submitting, filing, registering or recording of the document, fact or information, it may, without prejudice to any other legal action or liability under this Act, be submitted, filed, registered or recorded, as the case may be, on payment of a higher additional fee, as may be prescribed and which shall not be lesser than twice the additional fee provided under the first or the second proviso as applicable.”

“(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.”.

A brief analysis of the above sections provides that in case the amendment gets effective, the companies shall have to pay an additional fees of Rs. 100 per day starting from the day succeeding the Due Date of Filing of Form AOC-4 (pursuant to Section 137, i.e., Financial Statements) & Form MGT-7 (pursuant to Section 92, i.e., Annual Return). In case such default continues for two or more financial years, the additional fees shall become Rs. 200 per day starting from the day succeeding the Due Date of Filing of Form AOC-4 (pursuant to Section 137, i.e., Financial Statements) & Form MGT-7 (pursuant to Section 92, i.e., Annual Return). In addition to the fees, the company and officers in default shall be liable for penalty or punishment.

For Example,

ABC Limited is a Company. The Due Date for Filing the Accounts and Return of ABC Limited for the FY 2017-18 according to Companies Act, 2013 shall be as follows:

AOC-4 30/10/2018

MGT-7 29/11/2018

In case the amendment to the Section 403 gets notified and the company fails to file the forms within the date specified herein above, it shall pay a penalty of Rs 100 from 01/11/2018 till the date of filing of Form AOC-4 and from 30/11/2018 till the date of filing of Form MGT-7.

CONCLUSION

Hence, before the above stated provision gets its effective date, all the companies who have defaulted in filing of their Financial Statements and Annual Returns for any number of years are advised to take immediate steps for making their default good and file all the pending Financial Statement pursuant to Section 137 and Annual Return pursuant to 92 to avoid the ill consequence of applicability of amendment to Section 403 and avoid the payment of increased additional fees.

(The author can be reached at pal.moonka99@gmail.com)

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Category : Company Law (4013)
Type : Articles (17631)
Tags : Companies Act (2477) Companies Act 2013 (2250)

6 responses to “Impact of Amendment to Section 403 of Companies Act, 2013”

  1. Sherry Matharoo says:

    I have a doubt. When sec 137 already has its own penalty of Rs 1000/ day up to max of Rs 1000000 and also person responsible for complying with this sec, why is additional penalty u/s 403 charged?

  2. abhay says:

    Has the amended section 403 come into force?

  3. PallaviMoonka says:

    The Amendment Act 2017 has been notified by the Govt of India, but the amendment to the Section 403 has not yet been made effective.
    Hence, the words “in case the amendment to the Section 403 gets notified” be read as “the amendment to the Section 403 comes to force”

  4. BHASKARAN CHAKRAPANI WARRIER says:

    Read. Thanks.

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