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Board Meeting Authorisation to sign Annual Return (Corporate Law)

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This query is : Resolved



( Author )
27 March 2009

This is to share with you all:

Kindly appreciate As Balance Sheet & Profit & Loss are required to be signed in accordance with Section-215. In the board meeting which approve the balance sheet and profit & loss account we authorise directors to sign the BS & PL A/c as desired by section 215 and record the same in board minutes.

Question: Do we also need to authorise the signatories of Annual Return as required by section 161(1) through board resolution??. If Yes, what would be the date of board meeting to make such authorisation.

Since annual return contain the info as on the date of AGM. If we authorise someone to sign AR in the board meeting which approve the BS & PL A/c (Advance authorisation), then what would be your reaction.

OR since annual return is in the nature of a return only it does not require specific authorisation to sign like BS & PL A/c.
Please share your views….


CA. B.SRINIVASULU

( Expert )
27 March 2009

Please note that the form for filing of annual return it is clearly mentioned there that I am authorised to sign the return vide board resolution no.________ and dated ____ . Therefore for signing of the annual return resolution authorising the director is must.

The directors will be present at the date of AGM. The particulars on that day can be filled in one day advance as the share transfer register will be closed at the date of the agm. The Board meeting will be conducted immediately after the AGM at the same place which is allowed under company law.

The draft Annual return should be placed in the Board meeting which is being conducted after AGM, and based on the discussions the board has to authorise the diretor to sign the same. Since the officials of the company will be present at agm the details required or annual return clarification can be clarified.

I have give the practical answer which is permissable under law and complies with mca efiling requirements.


Neha Singhi

( Expert )
27 March 2009

In my view and as per the practical exposure I have-we do not require a resolution for authorizing signatory of Annual Return.

One reason could be that- all the information in Annual Return are factual in nature and certification by two directors is sound alibi to prove the authenticity.
Contents of Annual Return
1. AGM date- can be proved by minutes signed by chairman
2. Shareholders list-Members register
3. Directors list- Director's Register
4. Change in shareholders- Transfer approved by Board or TCM
5. Change in Directors- Form 32 filed
6. Indebtedness-verified from Accounts signed by authorised Directors

More or less it is reiteration of information for the company, and to some extent to ROC

Rgds
Neha
(neha@nehasinghi.com)


CA. B.SRINIVASULU

( Expert )
27 March 2009


If resolution is not passed to sign annual return what can we fill in the mca e-form the resolution no _______ and date _____.



Neha Singhi

( Expert )
27 March 2009

As regards to MCA requirement of Board resolution no., my take would be to have single resolution passed for all Annual filing of forms(B/s, Pl and Annual Return, Form 66 etc) passed in a Board meeting which calls AGM- that should suffice.

Signatories of Annual filing forms would certainly not imply signatories of document.

Practically it is difficult to hold a BM just after AGM.

But certainly we all can have different views as long as we dont step over the law.

Thanks
Neha


CA. B.SRINIVASULU

( Expert )
27 March 2009

But the practical problem is if you say x and y are the directors authorised to sign the annual resolution.

X is a person who is going to retire by rotation and he is eligible for re appointment. Due to some factors he has not reappointed.

Then who will sign the annual return.

If you authorise the directors who are not retiring by rotation and they should be persons available for signing which is again impracticable.

Because all companies will have regular directros who will be available for supervision and signing.

Please suggest your views on the same.


Neha Singhi

( Expert )
27 March 2009

I suggest that no resolution be passed for authorising any Director to sign Annual Return.

Authorisation to fill up the Annual forms (20B for filing Annual Return) may be given to the compliance officer, who may not even be a Director in the Company. Or else any regularly available Director who may not be physically signing Annual Return but is authorised to file Form 20B with ROC.

The existing Directors may sign the Annual Return without any authorisation, as the same is not required by law.

This problem wont arise in case of Balance Sheet as they would again be approved on the date of AGM by the existing Directors.

Rgds
Neha


CA. B.SRINIVASULU

( Expert )
27 March 2009

But practically if we analayse without proper authority of the Board entrusted to directors the directors signing the annual return is suggestiable. Which may easily lead to fraud.

Two directors out of 10 can join hands and they can do whatever they want at the filing of annual return.



Neha Singhi

( Expert )
27 March 2009

Each Director have some responsibility, some power and he binds the company by his acts.

If a Director is bent on cheating, its tuff luck for the company. Who knows if the one who is authorised acts malafide.. then ??

However as my first reply says the information in the Annual Return is based on facts, and Annual Return is more or less certifying the facts to be true or submitting the facts to ROC.

If an incorrect Annual Return is filed, the other directors can challenge the same, and require the documents on basis of which Annual Return is filed. Annual Return is more in the nature of informational document.

However this is my personal opinion based on my understanding


B.Chackrapani Warrier

( Expert )
27 March 2009

Ms. Neha, you may reconsider the suggestion expressed above in view of the specific wordings in the E-form reproduced by Mr.Srinivasalu.


Neha Singhi

( Expert )
27 March 2009

Thanks Mr. B. Chackraparni
The exact wordings of the eform is as below:
"I have been authorised by the Board of directors’ resolution number * dated *
to sign and submit this form."

As you would note it requires authorisation to sign and submit the form and certainly not the authorisation for signing physical annual return.

Shall happily accept if my interpretation is wrong anyhow.

Thanks & rgds
Neha


B.Chackrapani Warrier

( Expert )
27 March 2009

Ms.Neha, I didn't say and will never say that your interpretation is wrong.
But looking at the wordings in the e-form,....authorised........to sign and submit this form.
What does that mean is the issue. As I understood, it is an e-form, it should be digitally signed, it should be uploaded to the MCA Portal. Under What authority these has to be done? Answer likely is,an approval by way of a resolution to that effect in a Board Meeting. This is only my simple understanding of the issue ie all.


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