Setindiabiz Team |Updated : August 31, 2024

Filing Annual Return of Company: Everything You Need to Know

Overview :Every company incorporated under the Companies Act 2013 or any earlier company law of India, such as a Private Limited Company, OPC, Limited Company, etc, is required to file annual returns every year. This guide will help you understand the process, requirements, and due dates for filing the annual returns after the end of the financial year. It also provides detailed information on what are the prerequisites to file the annual return, including how to prepare the return and what to expect during the filing process.

The Annual reporting by the companies to the regulators, such as ROC, Income Tax Department, RBI, etc, is a statutory obligation on the directors of the company and should be filed within its due date. Annual returns are annual statements that contain essential information about a company’s composition, operations, and financial position. All active companies registered in India with the Registrar of Companies must submit annual returns after the end of the financial statement ending on 31st March.

Purpose

The annual return is a document that provides information about the company’s authorised capital, debts, shareholders, changes in dictatorships, directors, information on the company’s management, etc and the financial information of the company. The Companies Act 2013 states that every company is required to prepare and submit the annual return to the registrar of companies in a designated fiscal year. In this article, we take a detailed look at the information the company provides in its annual report.

Legal Provisions and Steps Involved in Filing Annual Return

The companies are regulated under the provisions of the Companies Act, Income Tax Act, FEMA, GST, etc. Each such regulator has prescribed a set of rules that companies need to adhere to. This article discusses the annual filing requirements as per the Companies Act 2013. The detailed process of filing an annual return for a registered company involves various steps, which are as follows:

Maintaining the Book of Accounts:

According to the Section 128 of the Companies Act, 2023, all companies are required to maintain a proper book of accounts in the double entry system, which records all the transactions as and when they occur. The book of account is one of the most important mandatory documents relied upon by stakeholders. It is also the basis for following the tax laws. It should contain information about the company’s cash transactions, assets and liabilities, sales and purchases, and other financial or business transactions.

In case the books of account are prepared in electronic version, Rule 3 of the Companies (Accounts) Rules, 2014, requires that servers on which the information is stored must be present in India and the audit trail is maintained for verification by the auditor. Account books should be retained for eight years.

Preparation of the Financial Statements of the Company:

Based on the Books of Accounts, the financial statements are prepared at the end of the financial year. The financial statements give the details of the financial position, performance, and changes in the financial position of a registered company. The directors of the company are obligated, under section 133 of the Companies Act, to prepare and finalise the Financial Statements within a period of 180 Days from the end of the financial year.

The financial statements consist of the balance sheet, other statements or explanatory notes, and the company’s profit and loss account. The Ministry of Corporate Affairs (MCA) has issued Schedule III, which is the format in which companies’ financial statements must be prepared. The key components of Financial Statements are as follows;

• Balance Sheet
• Statement of Profit and Loss
• Cash Flow Statement
• Statement of Changes in Equity
• Notes to Accounts

AConducting the Audit of the Financial Statements:

A statutory audit is a process in which an appointed auditor verifies the financial statements, books of accounts, and related documents and expresses his opinion on the financial statements. The statutory auditor’s opinion is presented in an Audit Report, where he reports whether the financial statement represents a true and fair picture of the company’s financial position.

The board appoints the company’s first auditor to conduct the first audit, and in the first AGM, the auditor is appointed for the next five years by the shareholders. The auditor has to be in full-time practice as a Chartered Accountant.

Commencement of the Annual General Meeting (AGM):

The AGM of shareholders is an annual meeting of the company’s shareholders. Additionally, as per the Companies Act 2013, all companies, except One Person Company, are required to hold an AGM every year. The first AGM can be held within 9 months of the end of the financial year, i.e., on or before the forthcoming 31st December, and the Subsequent AGM needs to be held within 6 months of the end of the financial year, i.,e 30th September. The Companies Act states that there is no provision that specifies a gap between two AGMs.

Filing the Annual Return:

The Companies Act requires two reports to be filed after the conclusion of the AGM to the company registrar. The directors’ DSC files the ROC returns online with digital authentication. The company’s financial statements are filed in the prescribed form AOC-4 to the ROC within 30 days of the conclusion of the AGM. The companies are also required to file Annual Returns in the prescribed form MGT-7 within 60 days of the conclusion of the AGM.

Drafting for AGM

The annual return of the company must include the following mentioned details:

• Details of the Company Registration
• The details of the Company’s registered office
• The details of principal business activities pursued by the company
• The details of the holding, associate and subsidiary companies
• The details of the debentures, shares and all other securities of the company
• The details of net worth and turnover of the company
• The details of the pattern of the shareholdings
• The details of indebtedness
• The details of all the members, debenture holders and other securities holder
• The details of the promoter
• The details of the director
• The details of the remuneration of the directors
• The detail of the shares and debentures transfer of a particular fiscal year
• The details of the managerial personnel
• The particulars related to the penalties and punishments compounding offences of the company, director and other responsible officers
• The particulars of all other pertinent disclosures
• The details of the meeting of members of boards, directors
• The particulars of the matter related to certification of disclosure and compliance
• The particulars related to shared held by or on behalf of FII (Foreign Institutional Investor)

Penalty of Non-Compliance

As per section 403 of the Companies Act 2013, if the annual return of a company is not filed within the prescribed time period, penalties will be imposed on the company and on the directors of the company. The penalty imposed on the company and its directors will be around 50,000 INR. If there is a continuous failure, a further penalty will be imposed, which will be 100 INR each day, and if such failure continues, the penalty goes to a maximum of 5 00,000 INR.

Conclusion

In conclusion, filing a company annual return is a statutory obligation on the directors of the company that involves the preparation of the financial statements, getting the audits done, and then the annual general meeting followed by the ROC filing of AOC-4 and MGT-7. The provisions of the Companies Act 2013 need to be complied with along with the secretarial standards. Setindiabiz’s expert team assists you in filing the annual returns for your company smoothly and hassle-free.

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