All About Form MGT-9 & its filling requirement
Brief Introduction
At the end of each financial year, companies in India should file an annual return. There are numerous amendments associated with the filing of annual returns. There has also been lots of uncertainty regarding the need of Form MGT-9. The MCA has made attempts to scale back the lengthy documentation and resolve these uncertainties. During this article, we would be discussing about the format of form MGT-9, along with the recent developments and the requirement of Form MGT-9 in India.
Meaning of Form MGT-9
- An annual return could be a comprehensive document of the corporate having a close overview of the company’s financial and non-financial disclosures. it's to be submitted to the Registrar within 60 days from the annual general meeting. Companies must submit the annual return to confirm transparency in business operations.
- According to section 92(3) and section 134 of Companies Act, 2013, every company is required to attach a copy of their annual return in Form No. MGT-9. It's prepared when the director’s report is approved within the committee meeting.
Format of Form MGT-9
- At the time of filing Form MGT-9, an organization is required to submit its registration and other details like CIN, registration date, name of the corporate entity, along with their registered office address, and details of the registrar and transfer agent.
- Furthermore, they need to say the principal business activities of the corporate. there's a separate column for mentioning particulars of holding, subsidiary, and associate companies and therefore the shareholding pattern. the corporate also should fill within the details about the indebtedness of the corporate including their outstanding or accrued interest but undue for payment.
- Additionally, they need to provide the details about the remuneration of directors and other key managerial personnel. Lastly, they need to fill in details if they need incurred any penalties or punishment.
Recent Developments related with MGT -9
- As per the companies Act, 2013, section 134, the businesses were required to submit MGT-9 together with the extract of the annual return and director’s report. Section 134 states that the statement within the general meeting together with a report of the board of directors shall be included within the extract of the annual return as given under section 92(3). in line with section 92(3), the extract of the annual return shall form a part of the report.
- But this provision was amended in 2018 by the MCA and a new provision was added which stated that if an organization encompasses a website, they need to publish the annual return in Form MGT-7 on the company’s website and MGT-9 isn't required to be published on the web site. Thus, after the amendment passed in 2018, there does not exist any requirement of Form MGT-9.
- However, section 92(3) wasn't amended by the govt, and therefore the law under section 92(3) stated that the extract of annual return still formed the a part of the board’s report in Form MGT-9.
- Therefore, now the corporate should befit both the legal requirement. This anomaly creates a responsibility for the publication of annual returns on the websites.
- As per Rule 12 of the Companies Rules, 2014, it has been provided that the annual return of the corporate entity shall be attached with the board’s report in MGT-9. If the corporate has already disclosed the annual return within the board’s report in step with section 92(3) of the companies Act, then they're not required to connect the annual return extract in Form MGT-9.
- Later, section 23(ii) and section 36 of the companies (Amendment) Act, 2017 notified on August 28th, 2020 geared toward amending section 92(3) and section 134 of the companies Act respectively to settle the dispute between all the foundations. After the amendment, every company had to put a replica of the annual return on the company’s website and also the web link of the annual return has got to be disclosed with the board’s report. The MCA has given the businesses which are unable to put a copy on the web site right to annex the annual return extract with the board’s report.
- After the amendment in company rules in 2020, Rule 12(1) stands substituted and the corporates weren’t required to connect their annual return with the board’s report in MGT-9 provided the online link for the same has been disclosed within the board’s report.
- But now with the recent legal development in 2021 the necessity of Form No. MGT-9 is totally changed. Under the Companies Amendment Rules, 2021 each and every company excluding OPC and small company, shall file the annual return in Form No. MGT-7. The OPCs and small companies need to file the annual report in Form No. MGT-7A. This way MGT-7A has been introduced by MCA as an abridged form for filing the annual returns by every OPCs and tiny company.
- Companies (Management and Administration) Amendment Rules, 2021 have omitted the necessity of attaching annual return extract together with the board’s report under Rule 12 of the said rules. However, after 5th March 2021, Rule 12 stands substituted and the same provides that the companies shall not be required to annex their annual return extract along with their board’s report.
Whether Form MGT -9 is mandatary to be file or not ?
It is confusion amongst Company sectary or chartered Accountants or any other professionals regarding need to preparing Form MGT-9 for Financial Year 2020-2021. In this matter, let’s take into consideration the recent changes made by MCA from time to time.
Earlier, preparing the annual return extract was removed from section 134(3)(a) and section 92(3). But the same was sustained within the Companies (Management and Administration) Rules, 2014.
Later a proviso was added in Rule 12 stating that if an online link of the annual return is disclosed within the board’s report then there's no requirement for attaching MGT-9.
But now the law is evident after the recent introduction of Companies (Management and Administration) Amendment Rules, 2021. However, after many amendments the requirement as to filing of Form MGT-9 under any provision of any Act as been completely discontinued.
On the basis of above change in latest amendment of 5th March, 2021 in particular along with its immediate applicability, this is to be summarised that, with effect from the Financial Year 2020-21 thereafter, there is no needed of complication & making ROC form MGT-9. But it is also to be taken care that in case Company has a website, then as per specific applicability of Sec 92(3) and Sec 134(3)(a), it is compulsory to provide web-link of Company annual return in the Board of Directors Report.
Conclusion
- With the most recent development regarding the need of Form MGT-9, it is concluded that from the financial year 2020-2021,
- Initially, the requirement of complaining extract of Annual Return i.e MGT-9 was taken down from the provisions of Section 134(3)(a) company act 2013.
- thereafter second change, need to preparing extract of annual return i.e. MGT-9 was taken down from the provisions of Section 92(3) as well however the above sustained in Rule 12 of Companies (Management and Administration) Rules, 2014.
- later stage third time change come, they adding the proviso in Rule 12 of Companies (Management and Administration) Rules, 2014, which stated that if the web-link of company annual return is attached & discloser linked in the Board of Director Report then It is no need to make & attaching the extract of MGT-9.
- Final fourth amendment, it all and withdrawn the needed of making form MGT-9 from Rule 12 of Companies (Management and Administration) Rules, 2014 as well, it is become clear that Form MGT-9 is not needed by any compliance requirement of the Company Act or related Rules.
- With the removal of Form MGT-9 and introduction of MGT-7A in respect of small companies and OPCs, the same acts as a decent move by the govt, since the same would be very helpful for the new start-ups in doing business in India.
- there's no requirement of Form MGT-9 regardless of the fact whether the corporate incorporates a website or not. The current amendment brings clarity regarding MGT-9.
- Lastly, under section 92(3) and section 134(3)(a) of the companies Act, if the corporate features a website, then it's mandatory for the corporate to supply a web link of the annual return extract within the board’s report.
