Introduction: The Companies Act, 2013 will now replace the old Companies Act, 1956 and will come into full operation when the Central Government notifies the operation of all sections and finalizes the Rules which are now on display for comments. Very recently about 98 Sections have been notified by the Central Government and a clarification has also been issued stating that those sections will come into force with effect from 12.09.2013. Undoubtedly some confusion has been created by the piecemeal notification.
In this article the provisions relating to Annual return are highlighted for the benefit of readers. The New Act has added more impetus to it by incorporating some new requirements which are discussed in this article.
Importance of Annual return:
Annual return is an important document just like an audited Annual accounts designed to provide information to members/ other stakeholders about the company, promoters, members, meetings and remuneration of directors and key managerial persons (KMP). Its importance will be obvious from the fact that every company has to make arrangements to make Annual returns available for inspection by any member or debenture holder without payment of fee and to others on payment of prescribed fee during working hours of the company (Section 94). The certification by directors and company secretary/company secretary in practice prima facie establish the correctness of particulars stated therein (Section 95).
Annual Return under the Old Act: It is very useful to glance quickly the requirements specified for preparation and filing of the Annual return under the old 1956 Act (Sections 159- 161).Briefly stated these are as follows:
1. Every company is required to file an Annual return with the Registrar of companies within 60 days from the date of Annual general meeting (AGM) in prescribed format i.e, Part-II of Schedule V. Even if AGM is not held, the return has to be filed with reference to the latest day on or before which AGM aught to have been held.
2. Annual return should contain the following information as on the date of AGM:
- Company registration, Name and situation of registered office, particulars of issue of shares or debentures,
- Particulars of past and present directors. Register of members of shares and debentures (full return once in 5years).In case of part return, transfers of shares and debentures in between previous AGM and current AGM will be sufficient. The data of shareholders can be filed in soft copy.
- Indebtedness figure.
- Break up of shareholding under specified heads.
3. Besides the above, certificates confirming the correctness of details and transfer of unpaid dividend to Investor Education Protection Fund are to be provided. In the case of Private Ltd Company, it has to confirm that no invitation has been given to public for subscribing to shares or debentures and no fixed deposits are accepted from public.
4. Return has to be signed(digitally) by two directors (if there is no secretary), company secretary and director (Managing director/Whole time director if any).Listed companies have to get the return verified and signed (digitally)by a company secretary in practice in addition to certification by directors. Such signed return has to be uploaded in MCA portal by using duly filled in Form no.20-B. Form No.21A is applicable for companies not having share capital.
Annual Return under New Act (Section 92):
The notable change is that the Annual return is to be made in the prescribed form to give the details as they stood on the close of the financial year instead of on the Annual General Meeting date. Certain additional information has been made mandatory. Let us now go through the requirements under the Act, 2013 for noting the requirements as well as new requirements incorporated in comparison to Old Act, 1956.
1. Prescribed Form to be used for giving details.
2. Details of its registered office, principal business activities(new), particulars of its holding, subsidiary and associate companies,(new) its shares, debentures and other securities and shareholding pattern, its indebtedness, its members and debenture-holders along with changes therein since the close of the previous financial year.
3. Details of its promoters, directors,key managerial personnel along with changes therein since the close of the previous financial year(Promoters and key managerial persons are added )
4. Meetings of members or a class thereof, Board and its various committees along with attendance details ( new requirement)
5. Remuneration of directors and key managerial personnel. Penalties or punishments imposed on directors/officers or on company, steps taken for compounding or appeals made against alleged offence.(new requirement)
6. Details of 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.(new requirement)
7. Matters relating certification of compliances, disclosures as may be prescribed. It will be clear only after the Rules are finalized. Readers may notice that some additional information may be added for certification by both management and Company secretary in practice.
8. Details, as may be prescribed, in respect of shares held by or on behalf of the Foreign Institutional Investors indicating their names, addresses, countries of incorporation, registration and percentage of shareholding held by them(new requirement)
9. Any other matters as may be prescribed. (new requirement)
10. Annual Return has to be signed by a director and the company secretary, or where there is no company secretary by a company secretary in practice. In the case of one person company either by director or by company secretary, if appointed
11. In the case of a listed company or companies having such paid-up capital and turnover as may be prescribed, the return has to be certified by a company secretary in practice confirming that the annual return discloses the facts correctly and adequately and company has complied with all the provisions of this Act. It appears that certain new requirements /compliances by the company will also have to be certified.
12. The company has to annex an extract of the annual return in such form as may be prescribed to its Directors Report {Section 134(3) (a)}
13. The time limit for filing has been the same as in the case of return under old act i.e 60 days from the date of AGM. In case the AGM is not held, return has to be filed within time allowed u/s 403(270 days) with additional fee along with a statement giving the reasons for not holding AGM.
14. Other requirements:
- As per Section 94, copies of annual return shall be kept at the registered office along with other registers required to be kept under the Act. Annual return can be kept at other place by passing a special resolution.
- Annual returns shall be open for inspection by any member, debenture holder, other security holder or beneficial owner during business hours without payment of fee. Inspection is permitted by any other person subject to payment of prescribed fee as may be notified. Extracts can be taken without any payment of fee but copies of return can be had only on payment of such fee as may be prescribed. If a company fails to facilitate inspection or copies, company and every defaulting officer shall be liable for fine of 1000/- rupees for every days of default subject to a limit of one lakh rupees during which default continues.
Retention period: Central Government may specify the period for which the Annual returns are to be preserved.
Penalty for non compliance of Section 92:
i) By Company: The Company shall be punishable with a fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
ii) By Officers in default: Every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.
iii) By Company Secretary in practice: If a company secretary in practice wrongly certifies the correctness of annual return, he shall be punishable with a fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
Conclusion:
Penalty has been substantially increased by the new Act,2013 and Company Secretary in Practice has to certify that company has complied with all provisions of the Act. Scope of verification by practicing Secretary is enlarged as he has to confirm compliance of provisions of the companies Act besides the correctness of contents of Annual Return. Thus a huge responsibility is thrust not only on the company’s detectors and secretary of the company as well as on the professional who signs the Annual return. Professionals will certainly hike their fees and at the same time bound to exercise their diligence for avoiding any penalties.
G S Rao,
DGM(Legal),OCL India Limited
Tags: Annual return, Companies Act,2013
CAclubindia
