Whether MGT-9 is required or not?

There's confusion amongst Professionals regarding the requirement of preparing form MGT-9 for F.Y. 2020-21.

For that matter, let's take into consideration the developments made by the Ministry from time to time.

1. Section 36 of the Companies (Amendment) Act, 2017 notified vide notification no. S.O. ___(E). dtd. 31^stJuly, 2018

Section 36 was intended to amend the provisions of Section 134 of the main Act, accordingly, it was notified by the Ministry to come into force, on the above-mentioned date.

For the purpose of annual return, an amendment in Section 134(3)(a) is relevant.

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

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

2. Section 23 clause (ii) of the Companies (Amendment) Act, 2017notified vide notification no. S.O. ___(E). dtd. 28^th August, 2020

Section 23 clause (ii) was intended to amend the provisions of Section 92(3) of the main Act, accordingly it was notified by the Ministry to come into force, on the above-mentioned date.

Existing provision: An extract of the annual return in such form as may be prescribed shall form part of the Board's report.

Substituted provision: 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. Companies (Management and Administration) Amendment Rules, 2020 notified vide notification no. G.S.R. ___(E). dtd. 28^th August, 2020:

In Rule 12 (1) a proviso was inserted, accordingly the Rule stands as follows:

(1) The extract of the annual return to be attached with the Board's Report shall be in Form No. 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 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.

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

These amendments came into effect on the date of its publication.

4. Companies (Management and Administration) Amendment Rules, 2021 notified vide notification no. G.S.R. 159(E). dtd. 05^th March, 2021

Rule 12 was substituted, accordingly, the Rule stands as follows:

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

These amendments came into effect on the date of their publication.

POINTS OF INFERENCE

Here, it is pertinent to note the above developments in chronological order:

1. With the advent of first development, the requirement of preparing extract of annual return (MGT-9) was taken down from the provisions of Section 134(3)(a).
2. With the advent of second development, the requirement of preparing extract of annual return (MGT-9) was taken down from the provisions of Section 92(3) as well but the same sustained in Rule 12 of Companies (Management and Administration) Rules, 2014.
3. With the advent of third development, a proviso in Rule 12 was added which provided that if the web-link of annual return is disclosed in the Board Report then there is no requirement of preparing and attaching MGT-9.
4. Fourth development changed it all and wiped off the requirement of preparing MGT-9 from Rule 12 as well, making it clear that MGT-9 is not required by any provision of the Act or Rules.

CONCLUSION

Keeping in view the above developments in general and latest amendment of 5^th March, 2021 in particular along with its immediate applicability, it can be concluded that, from F.Y. 2020-21 onwards, there is no requirement of preparing MGT-9 (irrespective of the fact whether the co. has a website or not). However, it is also pertinent to note that if the Company has a website, then in accordance with the provisions of Section 92(3) & Section 134(3)(a), it is mandatory to provide web-link of annual return in the Board Report.

Disclaimer: The author is based in Jabalpur and is a Practicing Company Secretary dealing in Corporate, Legal & Taxation services. The information contained in this write up, as provided by the author, is to provide a general guidance to the intended user. The information should not be used as a substitute for specific consultations. Author recommends that professional advice is sought before taking any action on specific issues.

The author can also be reached at cstanveersaluja@gmail.com