All you need to know about Form MGT-7
A mandate from the Central Government, Ministry of Corporate Affairs, prescribes an amendment in the filing of annual returns for One Person Company (OPC) and small companies.
According to the Companies (Management and Administration) Amendment Rules 2021, every company shall file its annual return in Form No. MGT-7 except for one person Company (OPC) and small company. A new Form No. MGT-7A has been prescribed in respect of annual return of OPC and small companies. These forms shall be available for filing under MCA-21 Company forms.
This is a change from the earlier mandate where all the companies (public/ private/ OPC) were required to file annual returns in Form No. MGT-7 according to Companies (Management and Administration) Rules, 2014. Before we analyse the rules and associated amendments, let us delve into the details of Form MGT-7.
What is Form MGT-7?
All companies are required to electronically file details of their annual return to the Ministry of Corporate Affairs. Form MGT- 7 is what they will have to fill out and submit through electronic mode to comply with this regulation of the Ministry.
Who is required to file Form MGT-7?
Both private and public registered companies are required to file their annual returns through Form MGT-7 every year.
Why was Form MGT-7 introduced?
Although filed for annual returns, this Form holds all information about a company that is required to feature in year-end financial submissions. This includes details about:
- Place of Operation: The registered office of the primary business, details of its holding, subsidiary, and associate companies
- Financial Obligations: The shares, bonds, and other securities and shareholding pattern of the company
- People: The members and debenture-keepers, along with changes associated with them since the end of the last financial year
- Management: The promoters, directors, key managerial personnel along with changes associated with them since the end of the last financial year;
- General Assembly: Meetings of members or a class thereof, Board and its various committees along with attendance details
- Remuneration: Payment of directors and principal managerial personnel;
- Misdemeanour: Details of penalty or punishment imposed on the company, its directors or officers and facts of the composition of offences and appeals made against such penalty or punishment
- Regulation: The issues related to certification of compliances and disclosures as may be specified
What are the documents required to file Form MGT-7?
A scanned copy of the following must be attached towards the end of the Form:
- List of investors, debenture holders
- Approval letter for augmentation of AGM
- MGT-8 copy if applicable
- Optional Attachment(s), if any
What is the deadline to file Form MGT-7?
The company is required to file Form MGT 7 within 60 days from the Annual General Meeting date. The last date for conducting the annual general meeting is on or before the 30th day of September after the closing of every financial year.
For the financial year of 2020-21, the last date to file Form MGT-7 is the 29th of November 2021.
What are the consequences of not filing Form MGT-7?
As a default, not filing Form MGT-7 on time attracts a late penalty of Rs.100 for every unfiled day. However, it is to be noted that some levied penalties are at the discretion of the MCA and have increased monumentally since 2018. Therefore, it is advisable to file annual returns on time, before the deadline.
Below is a summary and analysis of various rules under the Companies (Management and Administration) Rules, 2014, and the associated amendments introduced in 2021.
- Rule 11(1) of the Companies (Management and Administration) Rules, 2014
Every company was required to prepare and submit its annual return through Form MGT-7.
All companies, with the exception of One Person Company (OPC) and Small Company, will continue to file their annual returns using MFT-7. OPCs and small companies will use Form MGT-7A to file their annual returns from 2021.
- Rule 12 of the Companies (Management and Administration) Rules, 2014
When submitting Form MGT-9, an extract of the annual return has to be attached with the Board’s Report. If the web link of this extract has already been disclosed in the Board’s Report, in compliance with sub-section (3) of section 92 of the Companies Act, 2013, then this rule need not be followed. A copy of the annual return should also be filed with the Registrar, along with the specified fee.
It is sufficient if a copy of the annual return is filed with the Registrar along with the specified fee. The requirement of attaching the extract of the annual return with the Board’s Report through Form MGT-9 has been omitted.
- Rule 20, after proviso in sub-rule (2) of the Companies (Management and Administration) Rules, 2014
The government had issued only Explanation 1 with regards to this sub-rule “ ‘Nidhi’ means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from and lending to its members only, for their mutual benefit, and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies.”
In this change, the Ministry has extrapolated Explanation 1 to Explanation 2, which defines the following expressions:
- Cut-off date
- Cyber security
- Electronic voting system
- Remote e-voting
- Secured system
- Voting by electronic means
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