ANNUAL FILING

Annual Filing

Every company registered in India, including private limited, limited liability partnership, one person company and section 8 company must file annual returns with ROC every year. It requires conducting an Annual General Meeting (AGM) and filing annual accounts with ROC. AGM must be held within 6 months from the end of the financial year i.e., 30th September every year. In the case of new companies, first AGM should be held within 18 months from the date of incorporation or 9 months from the close of financial year whichever is earlier. Companies Act 2013 mandates that your financial year should start from 1st April and end on 31st March.
Annual return consists of information and documents that include the Balance Sheet of the Company, Profit & Loss Account, Compliance Certificate, Registered Office Address, Register of Member, Shares and Debentures details, Debt details and information about the Management of the Company. The annual return would also disclose the shareholding structure of the Company, changes in Directorship and details of transfers of securities.

Importance of Annual Filing

Mandatory

Preparation of Annual Financial Accounts are mandatory for every Company.

Accounts Audited

Every Company has to get the accounts audited by a Chartered Accountant in Practice.

Form AOC-4 and MGT-7

Every Company has to file Form AOC-4 and MGT-7 with ROC every year even if the Company is not carrying on any business.

Non-Filing

Non-Filing of Accounts and Annual Return for more than 2 years would result in Closure of Company by ROC.

Annual Return

Non-Filing of Accounts and Annual Return for more than 3 years will result in Disqualification of Directors u/s 164 of Companies Act.

Consequences of Annual Filing

Consequences for Company

Where the company fails to comply with the filing requirement of annual returns for the continuous period of 2 years, the authority may flag such company as an “inactive company”. Once that happens, the company’s bank account could cease to exist. Moreover, the RoC can discard the company’s name from the MCA records after rendering an opportunity of being heard.

Consequences for directors

Non filing of annual return via AOC-4 and MGT-7 for continuous three years would be detrimental for the person serving directorship post. Under such default, they would attenuate their rights of being re-elected as a director in the same company or being appointed as a director in the new company for the next five years. Such a penalty would come to effect from the date of the default.

Documents Required for Annual Filing

Form AOC-4 : It is an e-form used for filing financial statement and director’s report.
Form AOC4-CFS: It is an e-form for filing statement reflecting relevant details of consolidated financial statement of a group.
Form AOC4-XBRL: It is an e-form for filing XBRL documents relating to financial data and other documents.
Form MGT-7: It is used for filing company’s annual return.

Penalties Criteria of Annual Filing

Form MGT-7

According to Section 92(4) of the Companies Act, 2013 every MCA-regulated entity is required to file annual returns via Form MGT-7 and standard fees with the RoC within sixty days from the holding of the AGM. Failure to file would compel the company to pay a per-day penalty of Rs. 100 without any exemption.
Further, the non-filing of such a return would incur penalties for every director administering different affairs in the company.
The said section compels the company and its every serving officer in default to pay a penalty of Rs. 50,000. In case of continuing failure, with further penalty amounting to Rs. 100/day during which such non-compliance continues, subject to a maximum penalty of Rs. 5,00,000. (It’s worth noting that the submission of the said penalties should only be done after receiving the notification from the RoC and the same would be imposed after due adjudication by AO otherwise the standard penalty of Rs. 100/day is sufficed.)

AOC-4

As per the aforesaid Act, every MCA–regulated entity is liable to file a copy of the financial statements, including financial statement, in addition to the relevant documentation cited under the Act with the RoC within thirty days of the date of AGM in form AOC-4 with standard fees. Any failure in this context would pose a monetary penalty against the company and its directors. A fine amounting to Rs. 1000/day shall be imposed which can go up to Rs. 10,00,000. The company’s MDs and CFO (if any), and an absence of them any other director who has been vested with the obligations to comply with the norms of the section relating to Form AOC-4 and, in absence of such a director rest of the directors are liable to pay a charge of Rs. 1,00,000. If the said default prevails further, a penalty of Rs. 1000/day shall be imposed which cannot exceed the max threshold of Rs 5,00,000 in total.

FAQs

Q. Who files the annual return?

The Annual Return can be submitted by any of its directors but it shall be duly signed by both the directors of the company and by the manager or company secretary. There are certain cases when there is no Manager / CS in a company in such situations signature of both the directors is compulsory.

Q. Which companies are required to file annual return?

All companies (private limited company, one person company, limited company, section 8 company, etc) are required to file an annual return with the MCA every year. In addition to filing MCA annual return, companies would also be required to file income tax return.