Company Annual Filing

Overview

When compared to other companies, annual compliances for OPCs, Small Companies, and Dormant Companies are comparatively less (they need not file Cash Flow Statements) as compared to private limited companies. Similarly, company annual filing for private limited firms is fewer if one compares it with public companies.

Let’s take a brief look at the annual compliances such as ITR, annual returns, and financial statements, among others, applicable to companies incorporated in India under the Companies Act 2013.

Annual Compliances for Companies in India

As per the Companies Act 2013, a company is required to make certain disclosures and take certain steps within the prescribed time frame, known as company annual filing. In includes filing of income tax returns, appointment of auditor within a particular period, conducting board meetings, director KYC, filing of annual returns, submission of director reports, and approval of financial statements. In addition, it includes the conduct of statutory audits and submission of other event-based records.

What is Annual Return Mandatory for Every Company?

As per the company law, every company is mandated to prepare and submit annual returns in Form MGT 7 containing particulars as prescribed at the end of the financial year. The MCA annual return providing insights into the company’s activity and other key aspects includes the following information:

• Information regarding the registered office, details about associate, holding, and subsidiary company, along with the company’s principal business activities
• Company’s shareholding pattern, shares, debentures, and other securities
• Board meetings, meetings of members, and other committee meetings along with their attendance details
• Indebtedness of the company
• Details concerning debenture-holders and members and changes made therein since the end of the last financial year
• Information pertaining to directors, promoters, KMPs (Key Managerial Personnel) along with changes made in these since the end of the preceding financial year
• Remuneration of KMPs and directors
• Penalty and punishment imposed on the directors, officer, and the company itself, along with appeals made against these penalties and punishment
• Shares held by FIIs (Foreign Institutional Investors) including their name, address, registration of shareholding, percentage of shareholding, and country of incorporation
• Certification of compliance as prescribed

Key Aspects of MCA Annual Return for a Company

The MCA annual return must provide information regarding the date and number of board meetings and committee meetings held in the financial year and which director attended which of the meetings.

The annual return must be signed by two people, first by the director and another by the company secretary. In the case of a small company and OPC, if the company has a Company Secretary, he/she can sign the annual return. However, the company has not appointed a company secretary, the returns have to be signed by the directors only.

Companies who are listed or have paid-up share capital of Rs. 10 crore or more or turnover of Rs. 50 crore or more, should get their returns certified by a company secretary in practice. The certification, created through Form MGT 8, is provided to show that the facts mentioned in the annual return are correct and adequate and comply with the provisions of the company law.

Failing to file the MCA annual return can attract a penalty of Rs. 5 Lakhs. Along with this, every officer of the company involved in the default will be imprisoned for up to 6 months or imposed a fine, or both. In addition, if a company fails to file their MCA annual return or income tax returns continuously, it can lead to striking off by the ROC (Registrar of Companies) and may get their bank accounts frozen. In case the strike-off happens, the director of the company will become ineligible to act as a director in any other company for a period of 5 years.

Other Compliances for Private Limited Companies in India

Every company, including private limited company, incorporated under the Companies Act 2013 is mandated to annually file their returns using the Form MGT-9 with ROC. Similarly, companies are also required to fulfill other Company compliances, including submission of E-Form AOC 4, AOC 4 CFS, and ADT 1.

• AOC – 4: Each company is required to file with ROC their financial statements using Form AOC 4. Financial statements include a Balance Sheet, Profit and Loss Statement, Cash Flow Statement (if applicable), and other relevant required documents such as statement of change in equity and notes to financial statements. The form has to be filed within 30 days of the conclusion of the company’s AGM (Annual General Meeting).

  Note: In case a company fails to submit its financial statements using Form AOC 4, both the company and its directors will be penalized.

• AOC 4 XBRL: In India, all the companies listed on a recognized stock exchange and their Indian subsidiaries are mandated to prepare financial statements and submit them using AOC 4 XBRL (Extensible Business Reporting Language). Similarly, companies that have paid-up capital of INR 5 crore or more and have a turnover of INR 100 crore or more are also required to file their statements using e-Form AOC 4 XBRL.
• AOC 4 CFS: Every company that has one or more subsidiaries is mandated to prepare and submit the CFS (Consolidated Financial Statements) of its company and all the other subsidiaries. It should be filed within 30 days from the date of the AGM.

Major Financial Statements under AOC 4 for Business annual filing

Financial statements of the company include the following three major written records that illustrate the company’s financial performance and business activities in the given year.

1. Balance Sheet: A balance sheet of the company shows its assets, liabilities, and shareholder’s equity at a given point in time. It takes a snapshot of the company’s financial status and is prepared on a flow basis. Generally, in a balance sheet, the company’s total liabilities (what the company owes) should be equal to its total assets (what the company owns).
2. Profit and Loss Statement: A P&L statement summarizes the company’s expenses, revenues, and costs incurred during a specific period, i.e., a year or a quarter. It gives insights into the company’s profitability and how the company performed in the particular financial year.
3. Cash Flow Statement: One of the major financial statements in Business annual filing is the cash flow statement. The statement reports how much cash is flown out and into the business during a specific period. It is categorized into three sections namely investing activities, operating activities, and financing activities.

Important Forms for Company Annual Compliances in India

As part of the filing process, a company is mandated to make certain disclosures with regard to their business activity and other aspects. For instance, a company has to inform the ROC about changes in directors or KMPs, submit annual financial statements, and report the appointment of auditors to the ROC. In this, a company is required to use the following forms to ensure submission of annual filings (applicability may vary from company to company):