Annual Return Filing of a company

For any company registered in India, it is mandatory to complete their ROC Filing every year on time when AGM is help. Even in OPC, where AGM is not mandatory, annual filings are required to be done. In the annual filings, two basic forms AOC-4 and MGT-7/7A are a must. Whereas AOC-4 talks about financials, annual return filing is a kind of annual return, ensuring transparency and adherence to corporate governance standards. Forms MGT-7 and MGT-7A are the forms filed to www.mca.gov.in 

This article by CA Manish Mishra breaks down their purpose, preparation, and filing process, helping businesses meet their legal obligations efficiently.

Annual Return Filing

Annual return filing involves submitting comprehensive information about a company’s operations, governance, and financial status to the Registrar of Companies (ROC). Governed by Section 92 of the Companies Act, 2013, it ensures stakeholders and regulatory bodies have access to essential corporate data.

What Are Forms MGT-7 and MGT-7A?

• MGT-7: The primary form used by companies to file their annual return.
• MGT-7A: A simplified version designed for small companies and One Person Companies (OPCs).

Both forms serve the same purpose but cater to different categories of companies to streamline compliance.

Applicability of MGT-7 and MGT-7

- MGT-7:

Applicable to all companies except small companies and OPCs.

- MGT-7A:

Exclusively for small companies and OPCs.

Exemptions:

Foreign companies and certain government entities may have different compliance norms.

Key Differences Between MGT-7 and MGT-7A

Documents Required for Filing

Prepare the following documents:

- Board Meeting Details: Dates and resolutions passed.

- Shareholding Pattern: List of shareholders and their holdings.

- Financial Statements: Audited profit and loss statement and balance sheet.

- Director Details: List of directors and key managerial personnel.

Step-by-Step Guide to Filing MGT-7

- Download Form MGT-7: Access the form from the MCA portal.

- Fill Company Details: Enter CIN, company name, and registration details.

- Provide Shareholding Information: Include details of equity and preference shares.

- Enter Financial Data: Report income, expenses, and financial position.

- Upload Attachments: Attach required documents in PDF format.

- Submit Form: File through the MCA portal and pay the requisite fee.

Step-by-Step Guide to Filing MGT-7A

- Log in to MCA Portal: Download Form MGT-7A.

- Complete Basic Details: Input company name, CIN, and financial year.

- Provide Simplified Data: Focus on fewer fields for small companies and OPCs.

- Attach Required Documents: Upload documents in the prescribed format.

- Pay and Submit: Make payment and submit the form online.

Important Details to Include in MGT-7 and MGT-7A

- Corporate Identification Number (CIN)

- Principal Business Activities

- Details of Directors and Shareholders

- Key Resolutions Passed During the Year

- Financial Highlights

Timeline for Filing Annual Returns

• Due Date:
  Within 60 days of the AGM for most companies.
• For Small Companies/OPCs:
  File within 60 days of the end of the financial year.

Common Mistakes to Avoid

- Incorrect CIN: Double-check the company’s identification number.

- Missing Attachments: Ensure all required documents are included.

- Late Filing: Adhere to deadlines to avoid penalties.

- Inconsistent Data: Cross-verify financial and shareholder details.

Penalties for Non-Filing or Incorrect Filing

Failure to file annual returns may result in:

- Company Penalty: Up to INR 5,00,000.

- Director Penalty: Up to INR 50,000 per director.

- Additional Fines: Daily penalties for continued default.

Role of Professionals in Annual Return Filing

Professionals like Company Secretaries (CS) and Chartered Accountants (CA) ensure:

- Accurate Data Entry: Minimizing errors in forms.

- Timely Compliance: Adhering to deadlines.

- Legal Guidance: Navigating complexities of compliance.

FAQs on MGT-7 and MGT-7A Filing

- Who must file MGT-7?

All companies except small companies and OPCs.

- What is MGT-7A used for?

It is for small companies and OPCs to simplify compliance.

- Can I file MGT-7 offline?

No, it must be filed online through the MCA portal.

- What happens if I miss the filing deadline?

Late fees and penalties are imposed for delays.

- Who can sign MGT-7?

A director and a Company Secretary (if applicable).

- Is an audit mandatory for filing MGT-7?

Yes, audited financial statements are required.

Benefits of Compliance with Annual Return Filing

- Legal Protection: Avoid penalties and legal scrutiny.

- Enhanced Reputation: Boost stakeholder confidence.

- Smooth Operations: Ensures alignment with corporate laws.

GenZCFO Advice

Annual return filing through Forms MGT-7 and MGT-7A is a critical compliance requirement for Indian companies. Understanding the distinctions, requirements, and filing processes ensures adherence to legal standards, avoiding penalties, and building trust with stakeholders. Timely and accurate filing reflects a company’s commitment to transparency and governance. Feel free to contact us if you have any queries.