CA CS – Suresh Agarwal April 23, 2015

Contents

What is Annual Return?  Annual Return of a company is a yearly statement to be filled with Register of Companies (RO C ) which highlights the information about company’s various aspects pertaining to its composition, activities, and financial position.  An Annual Return is a snapshot of company’s specific information as they stood on the close of the financial year. [Section 92(1)]

Annual Return at a Glance Section:92 Effective Date:1 st –April Rules :11,12 Form: MGT-7, MGT-8, MGT-9 Other Section Referred:4 0 3 Corresponding Section in Companies Act, ,1 6 0,1 6 1,1 6 2

Clubbing of Forms

 The single format of annual return is now divided into three formats. They are: 1.Form MGT-7- Annual Return 2.Form MGR-8- Certification by P C S 3.Form MGT-9- Extract of Annual Return  Every Company shall prepare its annual return in Form MGT-7.  The annual return filled by a listed company or company having paid up share capital of Rs. 10 crore or more or turnover of Rs. 50 crore or more shall be certified by P C S and certificate shall be in Form MGT-8.  The extract of annual report to be attached with the Board’s Report shall be in the Form MGT-9. Different formats

C OMPANIES ACT, 1956C OMPANIES ACT, Section 159, 1 6 0, 1 6 1, and Schedule-V of the CompaniesAct,1956 contains the provisions regarding Annual Return. Section 92 and Rules 11 to16 of Companies (Management and Administration) Rules, 2014 of Companies Act, 2013 contains the provisions regarding Annual Return. 2. Annual return was prepared AGM to AGM. Annual return is prepared financial year to financial year. 3. Contents of annual return were very less. Contents of annual return are more. 4. E-FORMS filed under 1956 were E-form 20B or E-form 21A E-FORMS filed under the new act are MGT-7, MGT-8 and MGT-9 A Brief Comparison

COMPANIES ACT, 1956COMPANIES ACT, Details regarding remuneration of directors and other KMPs was not mentioned. Details regarding remuneration of directors and other KMPs is to be mentioned. 6. Annual Return was not a part of Director’s Report under Companies Act,1956. Annual Return forms a part of Board’s Report under Companies Act, Annual return was prepared and filed within 60 days of AGM. Annual return to be filed in 60 days of AGM, [but in all it has to be prepared within 30 days because it forms a part of board report which is filed within 30 days of AGM.] 8. Penalty for non filing of Annual Return was Rs.500 per day during which the default continues. Penalty for non filing of Annual Return; Minimum – Rs. 50,000 Maximum – Rs.5,00,000 A Brief Comparison contd.

Copies of annual returns maintained under section 94 shall be prima facie evidence of any matter directed or authorised to be inserted therein by or under this Act. [Section 95] Annual return as evidence

Signing of Annual return To be signed by- Whole time CS or where there is no whole time CS, by Director Small Company and One Person Company To be signed by – Director and Whole Time CS or where there is no whole time CS, by a PCS Others [Section 92( 1)( k) read with proviso to Section 92( 1)]

Additional information to be provided The new format requires certain additional information to be provided in addition to information to be provided under the earlier Act. The following are some of the important additional information to be provided in the new format: 1.Principal business activities of the company; 2.Particulars of holding; subsidiary and associate companies; 3.Details of other securities issued in addition to share capital and debentures; 4.Turnover and net worth of the company; 5.Promoters, directors, key managerial personnel along with changes therein since the last annual return; 6.Dates of Meetings of members, directors and various committees of directors along with attendance details; 7.Remuneration of directors and key managerial personnel; 8.Penalties and punishment imposed on the company, its directors and key managerial personnel;

9. Particulars of compounding of offences, appeals made against any penalty or prosecution; 10. Details of certification of compliances and disclosures; 11. Disclosures further go in providing particulars of declaration of dividend, inter-corporate loans and investments and related party transactions etc.; 12. Details in of shares held by or on behalf of the Foreign Institutional Investors (FII) with full particulars of such institutions; 13. Separate disclosures on corporate social responsibility; 14. Disclosures of directors; 15. Confirmation about appointment of auditors. The providing of above mentioned information such as turnover, net worth, and remuneration to directors and key managerial personnel, loans, investments, related party transactions needs the support of Chief Officer (CFO) and his team. Additional information to be provided

Modification in the format of Annual return The format of annual has not only clubbed two formats and added various additional information to be provided therein; it has also undergone some modifications from the earlier format of annual return. 1.The effective date of annual return as explained above is the date of closure of financial instead of date of annual general meeting. 2. When providing information such as Yes or No, for whatever shares listed on recognized stock exchanges, now add the particulars of names of stock exchange at which shares are listed with its code. 3.Besides providing the date of annual general meeting, if there is any extension granted by the registrar of Companies, particulars of such extension are also to be provided in the annual return. 4.Shareholding pattern underwent a major modification thereby providing particulars of promoters with their names and holding, changes in promoters holding and so on. 5.Signing of annual return by one director instead of two directors. 6.Severe increase in penal provisions.

Filling of Annual return Filling to ROC AGM Held A copy of the annual return, within 60 days from the date on which the annual general meeting is held No AGM Held A copy of the annual return, within 60 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, along with the applicable fees, or along with the additional fee within the additional time of 270 days. [Section 92(4) & 403 read with Rule 12(2) of Companies (Management and Administration)Rules, 2014]

Place for keeping Annual return Normally At Registrar office of the company. At other Place At any other place in India in which more than 1/10 of the total number of members entered in the register of members reside. Approval by a special resolution passed at the general meeting of the company Submit a copy of the proposed special resolution to ROC in advance at least one day before the date of general meeting of the company in Form MGT-14. [Section 94(1) read with Rule 15(6) of Companies (Management and Administration)Rules, 2014]

Presentation of Annual return Copies of all annual returns prepared under section 92 and copies of all documents required to be annexed thereto shall be preserved for a period of 8 years from the date of filing with ROC. [Rules 15 (3) of Companies (Management and Administration) Rules, 2014]

Signing an extract of Annual return as part of Board report An extract of the annual return in the Form MGT-9 shall form part of the Board‘s report. [Section 92(3) read with Rule 12(1) of Companies (Management and Administration)Rules, 2014]

Inspection Annual report Inspection without any payment of fees. [Section 94(2) read with Rule 14(1) of Companies (Management and Administration)Rules, 2014] May take extracts from the annual return without payment of any fee. [Section 94(3) read with Rule 14(2) &16 of Companies (Management and Administration)Rules, 2014] By any member, debenture holder, security holder, or beneficial owner Inspection with fees as per Articles of Association not exceeding Rs.50 for each inspection. [Section 94(2) read with Rule 14(1) of Companies (Management and Administration)Rules, 2014] May also take copies of any such return on payment of such fees as may be specified in the articles of company, but not exceeding Rs. 10 for each page. Such Copies of return shall be supplied within 7 days of deposit of such fee. [Section 94(3) read with Rule 14(2) &16 of Companies (Management and Administration)Rules, 2014] By any other person The Central Government (Power delegated to Regional Director of respective region by way of notification dated 31 st March, 2015) may also, by order, direct an immediate inspection of the document, or direct that the extract required shall forthwith be allowed to be taken by the person requiring it. [Section 94(5)] By Central Government

Documents to be verified For Conducting Annual Return Certification Evidence 1.Memorandum and Articles of Association 2.Forms and receipts filed with the Registrar of Companies 3.Register of Members 4.Share Transfer Registers 5.Register of Directors & Directors shareholding 6.Disclosure forms from directors for the period prior to Annual Return Certification 7.Register of charges 8.Minutes of Board, AGM, Share Transfer, Remuneration, Audit Committees 9.Copy of latest Balance sheet along with notice of AGM

10.Shareholder list in PDF format, Details of share transfers taken place between previous AGM date and current AGM date, controls of the data as on the date of AGM of the company or the latest beneficial positions downloaded from the records of the depository participants by Registrar & Transfer Agent (RTA) of the Company on record /book closure date prior to AGM. 11.Certificate from RTA stating the number of shareholders as on the close of the financial year. 12.Indebtedness Certificate signed by the Company Secretary / CFO of the Company. 13.Listing and trading approval(s) from Stock Exchanges, credit confirmation from depositories namely NSDL and CDSL respectively / confirmation from both depositories in respect of allotment of equity shares of the Company during the period between the previous AGM date and current AGM date. Documents to be verified For Conducting Annual Return Certification Evidence

14.Intimation to Stock Exchanges,confirmation from National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for the change of the name of the company, change in face value of equity shares, change in ISIN of the company and the Scrip code / symbol of the company etc. 15.Board resolution for any type of corporate actions taken by the company 16.Corporate action forms filed by the company with the depositories. 17.Equity shareholding pattern and its breakup as on the AGM date. 18.Any orders received by the company from the High Court or from any other regulatory body. 19.Registers of investments of the company. 20.Any other documents as may be required. Documents to be verified For Conducting Annual Return Certification Evidence

Penal Provisions FailurePenalties 1. Certification of annual return by Company Secretary otherwise than in conformity with the requirements of the Companies Act, 2013 or the Rules there under. Section 92(6) of Companies Act 2013 ; Minimum – Rs. 50,000 Maximum – Rs. 5,00, Failure to File annual return on time and additional time specified. Section 92(5) of Companies Act 2013 ; Company fine- Minimum – Rs. 50,000 Maximum – Rs. 5,00,000 Every Officer of Company who is in default- Minimum – Rs. 50,000 Maximum – Rs. 5,00,000 Imprisonment for a term which may extend to 6 months or Fine or Imprisonment both 3. Refusal for inspection or making any extract or taking required copy Section 94(4) of Companies Act 2013 ; Penalty of Rs.1,000 for every day subject to a maximum of Rs.1,00,000 during which the refusal or default continues.

Other Provisions  Provision for Foreign Company  Every foreign company shall prepare and file to ROC, within a period of 60 days from the last day of its financial year, annual return in Form FC-4 along with the applicable fee containing particulars as they stood on the close of the financial year. [ Section 384 read with Rule 7 of Companies (Registration of Foreign Companies)Rules, 2014]

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