Annual Filings: Annual Status of Companies

In India, Ministry of Corporate Affairs (MCA) is the supreme authority which regulates the working and management of the Companies through the Companies Act, 2013 (“Act”) and erstwhile Act. To update the database of Companies and to keep record of progress of Companies after incorporation, various provisions of the Act call for annual submission of information and documents by the Companies.

All Companies registered with the MCA are required submit below given details mandatorily on annual basis:

1. Annual Return of the Company with ROC
2. Copy of Financial Statements of the Company to be submitted with ROC

In this Article we will discuss above said mandatory filings which Companies are required to make on annual basis.

A. ROC Annual Return of the Company

ROC Return of the Company is primarily summary of all activities of the Company during the financial year for which ROC annual return in being filed.

As per Section 92 of the Act, every company shall prepare an annual return in the E Form MGT 7 containing the particulars as they stood on the close of the financial year.

E Form MGT 7 includes following details:

1. Registered office, principal business activities, particulars of its holding, subsidiary and associate companies.
2. Shares, debentures and other securities and shareholding pattern.
3. Members and debenture-holders along with changes therein since the close of the previous financial year.
4. Promoters, directors, key managerial personnel along with changes therein since the close of the previous financial year.
5. Meetings of members or a class thereof, board and its various committees along with attendance details.
6. Remuneration of directors and key managerial personnel.
7. Penalty or punishment imposed on the Company, its directors or officers and details of compounding of offences and appeals made against such penalty or punishment.
8. Matters relating to certification of compliances, disclosures.
   

Signing of MCA Annual Return

– Company having Company Secretary: Director & Company Secretary

– Company not having Company Secretary: Director & company secretary in practice

 

Additional Certification in Annual Return: MGT 8

As per section 92(2) of the Act, below given Companies are required to attach with their Annual Return, a certificate from a Company Secretary in Practice regarding Compliance of the Company.

1. All Listed Companies
2. Company having paid-up share capital of ten crore rupees or more.
3. Company having turnover of fifty crore rupees or more.

Format of Certification will be in Form of MGT 8 which includes certification on compliances like:

1. Filing of Forms and Return within prescribed time limit.
2. Maintenance of registers/records & making entries therein within the time prescribed.
3. Appointment/resignation of Director, KMP, Auditor.
4. Loans and investments or guarantee given or providing of securities to other bodies corporate or persons falling under the provisions of Section 186 of the Act.
5. Alteration of the provisions of the Memorandum and/ or Articles of Association of the Company etc.

 

What is the liability of Company Secretary in Practice in case of wrong certification?

As per section 92(6), if any Company Secretary in Practice made any default in certification of provisions given in the Act, then he/she should be punished in following manner:

Fine not less than Rs. 50,000 which may extend to Rs. 5 Lakh.

 

Timeline to submit Annual Return

• If Annual General Meeting of Company held: 

Annual Return to be filed within 60 days from the date on which Annual General Meeting was held.

• If Annual General Meeting of Company NOT held in any year:

Annual Return to be filed within 60 days from the date on which Annual General Meeting should have held and annual return should be filed with reason for not holding Annual General Meeting

 

What is the Penalty for Non-Submission of Annual Return?

As per section 92(5) of the Act, penalty will be imposed as below:

Company & its Officer in Default: Penalty of Rs. 50,000

For continuing default: Further penalty of Rs. 100 per day subject to maximum Rs. 5 Lakh.

Display of Annual Return on Website

As per section 92(3) of the Act, every company shall place a copy of the annual return on the website of the Company, if any, and the web-link of such annual return shall be disclosed in the Board’s report.

B. Financial Statements of the Company 

Provisions with respect to submission of financial statement of the Company is given under Section 129, 134, 137 of the Act.

Preparation of Financial Statement: As per section 129(1) of the Act, the financial statement of the Company should:

• Reflect true & fair view of the state of affairs of the Company.
• Be in accordance with accounting standard notified by the Central Government.
• Should follow instructions given in schedule III of the Act.

 If any Company does not comply with accounting standard, then it shall disclose the deviation and reason thereof in the Financial Statement.

 

Board Report of the Company

As per section 134 of the Act, every Company has to prepare a detailed report called as Board Report of the Company and which should be placed at the Annual General Meeting of the Members for their Adoption along with the Financial Statements of the Company. 

Some of the particulars which are mentioned in Board Report are given below:

1. State of Affairs of the Company
2. Any transfer of amount to reserve
3. Recommendation of Dividend
4. Material changes throughout the year
5. Corporate Social Responsibility Policy if any
6. Web address of the Company if it is maintaining website
7. Number of meetings of Board and Committees
8. Statement on Directors Responsibility.
9. Details of Fraud if any
10. Statement of declaration of Independent Director
11. Explanation on comments of Statutory of secretarial auditor given in its report
12. Particulars of loans, guarantees or investments
13. Particulars of contracts or arrangements with related parties in Form AOC-2
14. Particular of Energy Conservation, Technology Absorption, Foreign Outgo etc.

 

Signing of Board Report

• Chairperson of the Company if he is authorised by the Board

                                                        Else           

• At least two directors, one of whom shall be a managing director (If appointed)

 

Filing of Financial Statement with the Registrar 

In accordance with Section 137 of the Act, every Company is required to submit its financial statement, including consolidated financial statement, within 30 days from the date of Annual General Meeting.

 

What is Consolidated Financial Statement?

Consolidate Financial Statements are presentation of combined accounts of Company with its subsidiary or associates.

As per section 129(3), when Company has one or more:

• Subsidiaries Company
• Associate Company

Such Company shall file:

• Standalone Financial Statement of the Company
• Consolidate Financial Statement of the Company

Earlier this provision was applicable on Companies which are having subsidiaries but Companies (Amendment) Act, 2017 which got effective from May 7, 2018 includes “Associates” in the purview and Companies are now required to consolidate accounts of both subsidiary and associates.

All provisions as applicable on preparation, adoption and audit of the financial statements of a holding company.

As per section 137 of the Act Company shall also file accounts of subsidiary which are incorporated outside India and which have not established their place of business in India. If as per law of such country accounts need not be audited then holding company should attach unaudited financial along with a declaration to this effect.

Signing of Financial Statement

• Company having KMP: Chairperson (If authorised by board)
  Two Director, one to be Managing Director, (if any)
  CEO (Chief Executive Officer)
  CFO & CS (Chief Financial Officer & Company Secretary)
• Company not having KMP: Any two Directors on behalf of Board

Form for Filing

Companies are required to submit financial in below manner:

E Form AOC 4: Financial Statements

E Form AOC 4 CFS: Consolidated Financial Statement

For NBFC Companies complying IND AS:

E Form AOC 4 NBFC (IND AS): Financial Statements

E Form AOC 4 CFS NBFC (IND AS): Consolidated Financial Statement 

E Form AOC 4 XBRL: Financial Statements

 

Timeline to submit financial statement

• If Financial are  adopted at Annual General Meeting of Company :

Within 30 days from the date on which Annual General Meeting was held.

• If Financials are not adopted at Annual General Meeting /adjourned AGM

Un adopted Financial Statement within 30 days from date of AGM/adjourned AGM

After adoption Final Statement will be filed within 30 days.

• If Annual General Meeting did not held in any year

Financial Statement to be filed within 30 days from the date on which Annual General Meeting should have held and annual return should be filed with reason for not holding Annual General Meeting.

 

What is the Penalty for Non-Submission of Financial Statement?

As per section 137(3) of the Act, penalty will be imposed as below:

Company & its Officer in Default (In particular MD and CFO if any): Penalty of Rs. 1 lakh with fine of Rs. 100 per day maximum up to Rs. 5 Lakh.

For continuing default: Further penalty of Rs. 1000 per day subject to maximum Rs. 10 Lakh.

Forms at Glance

Annual Return
E Form MGT 7	Annual Return
Form MGT 8	Certification by Company Secretary in Practice
Financial Statement
E Form AOC 4	Financial Statement
E Form AOC 4 CFS	Consolidated Financial Statement
E Form AOC 4 IND AS	For IND AS Accounts
E Form AOC 4 IND AS CFS	For Consolidated IND AS Accounts
AOC 4 XBRL	For applicable Companies: Listed Companies Company having Paid up capital> = RS. 5 crores. Companies having Turnover> = Rs. 100 crores. Companies who have adopted Companies (Indian Accounting Standards) Rules, 2015.