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In accordance with the general practices, every company is required to prepare the extract of the annual return in Form MGT-9 and that too before the preparation of actual Annual Return in E-form MGT-7 which is submitted to ROC within 60 days of AGM.

Form MGT-9 is an extract of the annual return which contains the following details of the Company for one Financial Year and it is annexed to the Board's Report of the Company:

  • Basic details of Company (CIN, address, principal business activity);
  • Principal Business Activities of the Company;
  • Details of Holding, Subsidiary and Associate Company;
  • Share Holding Pattern;
  • Indebtedness of the Company;
  • Remuneration of Directors and Key Managerial Personnel; and
  • Penalties/Punishment/Compounding of offences.

The Companies (Amendment) Act, 2017 ('Amendment Act, 2017') published in the Official Gazette as on 03.01.2018, brought major changes in various provisions of the Companies Act, 2013 ('CA, 2013') including omission of Form MGT-9 and placing of Annual Return in Form MGT-7 on the website of the company.

In this article, we will discuss biggest question of annual filing i.e. whether there is any requirement to prepare Form MGT-9 (Extract of the Annual Return) for Financial Year 2020-21 & onwards thereof?

Chronological order of Amendments in Form MGT-9 are as follows

1, The Ministry of Corporate Affairs ('MCA') vide Notification dated 31.07.2018 has specified the same date as the effective date of Section 36 of the Amendment Act, 2017 and substituted Section 134(3)(a) of the CA, 2013 as follows:

Extract of Annual Return in Form MGT-9 for FY 2020-21 and Onwards

'the web address, if any, where annual return referred to in sub-section (3) of section 92 has been placed'.

2. MCA vide Notification dated 28.08.2020 has specified the same date as the effective date of Section 23(ii) of the Amendment Act, 2017 and substituted Section 92(3) of the CA, 2013 as follows:

'Every company shall place a copy of the annual return on the website of the company, if any, and the web-link of such annual return shall be disclosed in the Board's report".

3. MCA vide Notification dated 28.08.2020 has amended Rule 12(1) of the Companies (Management and Administration), Rules, 2014 by inserting the following proviso:

'Provided that a company shall not be required to attach the extract of the annual return with the Board's report in Form No MGT.9, in case the web link of such annual return has been disclosed in the Board's report in accordance with sub-section (3) of section 92 of the Companies Act, 2013'.

4. MCA vide Notification dated 05.03.2021 (effective from same date) has substituted Rule 12 of Companies (Management and Administration), Rules, 2014 as follows:

'A copy of the annual return shall be filed with the Registrar with such fees as may be specified for this purpose'.

 

Summary of the above amendments

MCA Notification Date

Effect of the Amendment

Prior Amendment

Post Amendment

31.07.2018

Substituted Section 134(3)(a) w.e.f. 31.07.2018

The extract of the annual return as provided under sub-section (3) of Section 92.

The web address, if any, where annual return referred to in sub-section (3) of section 92 has been placed.

28.08.2020

Substituted Section 92(3) w.e.f. 28.08.2020

An extract of the annual return in such form as may be prescribed in Rule 12 shall form part of the Board's Report.

Every company shall place a copy of the annual return on the website of the company, if any, and the web-link of such annual return shall be disclosed in the Board's Report.

28.08.2020

Inserted proviso to Rule 12(1) w.e.f. 28.08.2020

(1) The extract of the annual return to be attached with the Board's Report shall be in Form MGT-9.

(1) The extract of the annual return to be attached with the Board's Report shall be in Form MGT-9.

Provided that a company shall not be required to attach the extract of the annual return with the Board's report in Form MGT-9, in case the web link of such annual return has been disclosed in the Board's report in accordance with sub-section (3) of section 92 of the Companies Act, 2013.

05.03.2021

Substituted Rule 12 w.e.f. 05.03.2021

(1) The extract of the annual return to be attached with the Board's Report shall be in Form MGT-9.

Provided that a company shall not be required to attach the extract of the annual return with the Board's report in Form MGT-9, in case the web link of such annual return has been disclosed in the Board's report in accordance with sub-section (3) of section 92 of the Companies Act, 2013.

(2) A copy of the annual return shall be filed with the Registrar with such fee as may be specified for the purpose.

A copy of the annual return shall be filed with the Registrar with such fees as may be specified for this purpose.

Now, the word termed as 'Form MGT-9' doesn't exist in the Companies Act, 2013 and has been completely removed from the Act. Every company is required to place a copy of the annual return in Form MGT-7/Form MGT-7A (as per the applicability) on the website of the company, if any, and the web-link of such annual return shall be disclosed in the Board's Report.

Thus, the Form MGT-9 is not required to be prepared from the Financial Year 2020-21 & onwards irrespective of the fact that whether the Company has website or not.

Effects of the above amendments

The effects of the above amendments in Section 92, Section 134 and Rule 12 can be understood in two ways:

  • If Company does not have Website: The Company is not required to prepare Form MGT-9. Hence, there is no requirement to attach the Extract of the Annual Return in the Board's Report.
  • If Company has Website: The Company shall place a copy of the annual return in Form MGT-7/Form MGT-7A (as per the applicability) on its website and the web-link of such annual return shall be disclosed in the Board's Report of the Company.

Effect of Amendment

How to give web link of Annual Return in the Board's Report before Annual General Meeting (AGM)

The Annual Return in Form MGT-7 is prepared after the date of Annual General Meeting ('AGM') of the Company as it contains details of AGM held and attendance of Directors in AGM. It has to be filed to ROC within 60 days from the date of AGM. The Sections i.e. 92(3) and 134 has made mandatory to provide web link of the Annual Return in the Board's Report of the Company.

Practically, it is impossible to give web link of the annual return filed to ROC in the Board's Report before the AGM as annual return contains details of AGM held and attendance of the Directors in AGM. But, the language used in Section 92(3) states 'copy of annual return' which means annual return prepared in Form MGT-7 and it does not necessarily mean annual return filed by the Company to ROC. So, the interpretation which can be considered and practices followed by many Companies is that Company shall prepare an annual return in Form MGT-7/Form MGT-7A providing information till the date of approval of Board's Report and upload the same at Company's Website then give link of such web page in the Board's Report of the Company and thereafter the same can be viewed by the members and stakeholders.

 

The draft text for giving web link in the Board's Report of the Company

Annual Return

Pursuant to the amendments to Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return (Form MGT-7) for the financial year ended March 31, 2021, is available on the Company's website and can be accessed at................ (web link).

Important FAQs

Q.1 What should be mentioned by the Companies in Form MGT-7 w.r.t. details of the AGM held (whether AGM held, date of AGM, due date of AGM etc.)?

Ans. The Companies can provide the details in the below mentioned manner:

Whether AGM held

Select 'No'

Due Date of AGM

Mentioned due date as per Section 96.

The Due Date of AGM shall be within 15 months from the date of last AGM or 6 months from the closure of the financial year, whichever is earlier

Whether any extension for AGM granted

Select 'No'

Specify the reason for not holding AGM

Write 'AGM will be held on or before Due Date'.

Q.2 What should be mentioned by the Companies in the column pertaining to the Attendance of Directors related to AGM in the Form MGT-7?

Ans. The AGM is still yet to be held so these columns can be left blank.

Q.3 What time period can be considered by the company in Form MGT-7 related to the column viz. the details of cessation of Directors and KMPs after closure of Financial Year?

Ans. The company can provide details related to the same till the date of approval of the Board's Report.

Q.4 Whether there is any mandatory requirement for Certification of Form MGT-7 from PCS before date of approval of Board's Report?

Ans. Section 92(2) read with Rule 11 provides that the annual return filed by specified Companies shall be certified by a Company Secretary in practice and the certificate shall be in Form MGT-8. Therefore, there is no requirement for certification of Form MGT-7 from PCS before date of approval of Board's Report and Company can upload Form MGT-7 without attaching certificate from PCS in Form MGT-8.

Q.5 Whether these new provisions are applicable to all Companies including Private Companies and Small Companies?

Ans. Yes, these provisions are applicable to all Companies; if such Companies have website then they have to prepare Form MGT-7/Form MGT-7A (as applicable) and are necessarily required to give web link of annual return in the Board's Report.

Q.6 What would happen if website has been created by the company after the end of the Financial Year?

Ans. If Company has created Website after the end of the Financial Year but before the date of the approval of the Board's Report then Company has to give web link of annual return in the Board's Report.

Q.7 What would happen in case the company has website but it is not functional?

Ans. If company has website then irrespective of the fact that whether it is functional or not, the company has to comply these new provisions.

Q.8 Whether there is any mandatory requirement for all classes of the companies to maintain the website?

Ans. No, but if in case the company maintains the website voluntarily, the requirement of disclosing web link of the annual return in the Board's report would arises to be applicable on them.

Q.9 Is it required to mention on the mandatory basis that the company does not have website in the Board's Report under the required head 'Annual Return'?

Ans. No, but it can be considered as a good practice if company mentions the same in the following manner:

Annual Return: Pursuant to Section 92(3), Company does not have website so there is no requirement to give web link of Annual Return.

Q.10 What would be the scenario if in case the company is filing its Board's Report for the financial year 2019-20 or backwards after March 5th, 2021?

Ans. If in case the company has finalized its Board's Report before March 5th, 2021 for financial year 2019-20 or backwards but the company is filing the same after March 5th, 2021 then in such case these provisions would not be applicable to the company.

Q.11 What should be the tenure for display of Annual Return on the website?

Ans. If the Company is listed; SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 are need to be complied with. If the Company is unlisted; it entirely depends upon the practices adopted & followed by the companies.

The authors can also be reached at kumarbraj7@gmail.com and acsmittaldisha@gmail.com

DISCLAIMER: The information given in this document has been made on the basis of the provisions of the Companies Act, 2013 and Rules made thereunder. It is based on the analysis and interpretation of applicable laws as on date. The information in this document is for general informational purposes only and is not a legal advice or a legal opinion. You should seek the advice of legal counsel of your choice before acting upon any of the information in this document. Under no circumstances whatsoever, we are not responsible for any loss, claim, liability, damage(s) resulting from the use, omission or inability to use the information provided in the document.

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