Practical issues pertaining to Annual Return ICSI Bengaluru

Practical issues pertaining to Annual Return ICSI Bengaluru Chapter- Half day interactive session August 29, 2015 By CS Thirupal Gorige PCS- Bengaluru

Annual Return (MGT-7) Scope of Discussion ØApplicability ØPreparation ØContent ( Incl. MGT-9) ØSigning ØCertification by PCS in MGT-8 ØFiling

Applicability Sections/Rule -Section 92 of Companies Act, 2013 (Sections under old Act: 159, 160, 161, 162 and Sch. V) -Rule No. 11 of The Companies (Management & Administration) Rules, 2013 - For foreign Companies - Section 383(2) in form FC-4

Applicable to all com. including following Companies üOne Person Company üUnlimited Company üSmall Company üSection 8 Com. üGovernment Company üGuarantee Company

Points to note • First - document to prepare and last- document to file (Annually) • Details as on the closing of the financial year (against earlier annual return from AGM to AGM) • First year – repetition of facts from 1 st April to date of last AGM • An extract of annual return in form MGT-9 to be attached to Board’s Report • E-form and digital signing (against physical form & physical signing)

Content (MGT-7) • Registration and other details -General information about company like previous return -New things • Valid and current email-id of the dealing officer • Name of the Police Station • Address for correspondence, if different from RO • Reasons for not holding AGM as mentioned in return itself. • R&T details (incl. email ID) • Foreign Company- to provide principal place of business in India ?

Content (MGT-7) • Registration and other details Docs to be referred Form 22 Previous Annual Return COI; MOA; AOA Listing document Stock exchange code list as per old Sch. V. SME stock exchange code not available AGM extension permission given by ROC, if any. AGM Notice & Minutes

Content (MGT-7) • PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY -All the business activities contributing 10 % or more of the total turnover of the company shall be stated Docs to be referred -Balance Sheet, statement of Profit & Loss, segment report (product /service wise)/ XBRL product classification NIC codes must be as NIC 2008 codes

Content (MGT-7) • PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES -Name -CIN/GLN -Status (Holding or Subsidiary) (MNC need not to give detail of parent company as it is not a holding company as per definition) -Shareholding -Applicable section Docs to be referred -Balance Sheet -MBP-2 [Section 186(9)] - on its own name -MBP-3 [Section 187(3)]- not on its own name -COI; MOA & AOA of holding/ subsidiary/ associate Com.

Content (MGT-7) • SHARE CAPITAL, DEBENTURES AND OTHER SECURITIES OF THE COMPANY Share capital -Details of authorised/issued/subscribed/paid-up capital as usual New things -Separately for each class and type within the class -Beginning- changes (increase/decrease)-closing -Type of increase/decrease/ consolidation/split Docs to be referred -Balance Sheet -SH-7; PAS-3; SH-11 (Return of Buy Back)/ INC-28 (Reduction of capital – court order) -Board Resolutions passed forfeiture.

Debenture Content (MGT-7) Details of Non-convertible/Partly/fully convertible New things -Separately for each class and type within the class -Beginning- changes (increase/decrease)-closing -Type of increase/decrease (including converted) Docs to be referred -Balance Sheet -PAS-3

Content (MGT-7) Other Securities New things -There is no reference made as to what would be “other securities”. However explanation (ii) provided under rule 13 (1) of Companies (Share capital and Debentures) Rules, 2014 says “share or other securities” means……. . “any other securities which would be convertible into or exchanged with equity ……” There is no other section supporting issue of “other securities”.

Content (MGT-7) Securities Premium Account New things Opening-changes (increase/ decrease) –closing Break-up of securities premium received on issue of equity or other securities to be maintained at books of account. -TURNOVER AND NET WORTH OF THE COMPANY One should arrive the “turnover [2(91)] “and “networth [2(57)]” based on definitions provided.

Content (MGT-7) SHARE HOLDING PATTERN Opening- changes- cumulative -Equity Share Capital Breakup as percentage of Total Equity -Shareholding of Promoters (incl. changes)* -Shareholding Pattern of each of top ten Shareholders* (excld. Directors, Promoters) -Shareholding of Directors and KMP* * Changes should be given date wise with reason for entire year MGT-10 may be useful

INDEBTEDNESS Content (MGT-7) Opening- changes- closing -Secured -Unsecured -Deposits -Principal -Interest due but not paid payment -Interest accrued but not due Documents to be referred: Ledger accounts/Balance sheets/Charge Register/charge forms/Loan documentation

Content (MGT-7) DETAILS OF MEMBERS, DEBENTURE HOLDERS AND OTHER SECURITIES HOLDER -General details like: folio, name, FN/Mother Name /SN, Ty S /Nominal value/Date of becoming a member or debenture/security holder/address Documents to be referred: MGT-1 & MGT-2 (Register of members/debenture/security holder)

Content (MGT-7) Details of transfer of shares / debentures -General details of transfer – No change Period covered: Financial year (FY) wise – April to March -In the case of the first return, since the incorporation of the Company to end of March. Documents to be referred: -MGT-1 & MGT-2 (Register of members/debenture/security holder) -Register of share transfer

Content (MGT-7) PROMOTERS/DIRECTORS / KEY MANAGERIAL PERSONNEL AND CHANGES Promoter – Definition [2(69)] -Named in prospectus or indentified at AR -Controls affairs directly/indirectly as shareholder/director or otherwise -Whose advise, directions, instructions- Board accustoms to act Documents to be referred: -Prospectus -Register of Member -Board minutes -AOA

Content (MGT-7) Details of Directors Composition of Board of Directors At the beginning and at end of the year Promoter/Non-promoter -Executive & Non-executive/ independent/nominee Details of Individual Directors -General details including other directorships-changes Documents to be referred: -Register of Directors -Forms filed for directors -MCA-Website- at Service- other directorship

Details of KMPs Content (MGT-7) MD/WTD/M/CEO/CS/CFO/others General details Documents to be referred: -Register of Directors -Forms filed for directors

Content (MGT-7) MEETINGS OF MEMBERS / CLASS OF MEMBERS General meetings (creditors meetings not covered) -Type of meetings (EGM/AGM/Requisite/Court etc) -Date of meeting -Total no. of persons entitled to attend -No of persons attended -% of attendance to total shareholding Documents to be referred: -Register of Members -Attendance registers -Minutes of meeting

Content (MGT-7) BOARD / COMMITTEES OF THE BOARD OF DIRECTORS -Type of meeting (BM/CM) -Total no. of meetings held -Date of meetings -Total No. of Directors on the date of meeting -No of directors attended -% of attendance to total board Documents to be referred: -Attendance registers -Minutes of meeting/committee

Content (MGT-7) ATTENDANCE OF INDIVIDUAL DIRECTOR BM/CM/AGM (EGMs not covered) -Meetings held -Meetings attended -% of his attendance to total BM/CM held Documents to be referred: -Attendance registers -Minutes of meeting/committee

Content (MGT-7) REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL (Individual wise) -Gross Salary -Salary [Section 17 (1) of IT] -Perquisites [Section 17(2) of IT] -Lieu of salary [Section 17(3) of IT] -Stock Option/Sweat Equity -Commission/Others/sitting fee -Total remuneration Vs. Ceiling as per the Act Documents to be referred: -Form 16 issued under IT Act -Minutes of meeting/committee -Forms filed

Content (MGT-7) PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES On Company/directors/other officers in default -Section of Act -Description -Amount imposed -By Authority -Appeal made, if any Documents to be referred: Inward register Show cause notices Orders passed

Content (MGT-7) MATTERS RELATED TO CERTIFICATION OF COMPLIANCES AND DISCLOSURES Filings of event based Forms and returns/Compliance -Brief details of the events/matters -Date of the event /matter -Section with Rules thereunder -Due date for filing or compliance -Filing of forms & SRN No. -With ROC/NCLT/Court -Reasons for delay, if any Documents to be referred: Minutes of meetings Forms filed with filing receipts

Content (MGT-7) DISCLOSURES- other important issues (1)Closure of Register of Member/debenture holders (2) Declaration of dividends (3) Delisting of securities (4) Change in Nominal Value of Shares (5) Particulars of inter-corporate loans, investments, etc (6) Contracts or arrangements in which directors are interested / RPTs (7) Details of resolutions passed by postal ballot Documents to be referred: Minutes of meetings Forms filed with filing receipts Various registers

Content (MGT-7) Details in respect of shares held by or on behalf of the FII Name/address/country of inc. /SEBI/RBI Rgd. No/% of holding Direct & Indirect holdings covered Documents to be referred: Minutes of meetings Register of Members Forms filed/FG-GPR /FC-TRS /FIPB approval/RBI approval

Content (MGT-7) OTHER DISCLOSURES (i)CSR- Amount actually spent Vs. Needs to be spent (% of profits) (ii) Limits u/s 180 & 186 (iii) Disclosure of Directors ( Interest disclosures & criteria of independence) (iv) Appointment/re-appointment of Auditors Documents to be referred: Minutes of meetings Forms filed MBP-1/ADT-1/Disclosures made by IDs

Digital Signing of MGT-7 While signing to make statement -Facts mentioned at AR are correct and adequate. -Unpaid/ unclaimed dividend/other amounts have been transferred -Maintained all the registers -Complied with the applicable provisions of Act Further to state for Pvt. Com. No invitation made to the public to subscribe for any securities. -Members not exceeding 200 (Excl. past & present Empls) -Continues to be a Private Company

While signing further to state for OPC/small company -Continues to be one person company / Small Com. Digital Signing- MGT-7 OPC & Small Com. : by Director & CS where there is CS or another director. All other Companies –by Director & CS where there is CS or PCS Issue of certificate in MGT-8 by PCS -All listed Companies -Other Companies having Rs. 10 Cr paid-up or Rs. 50 Cr turnover.

Digital Signing- MGT-7 Vs Issue of certificate in MGT-8 by PCS. Filing of MGT-7 Within 60 days from date of AGM Penalty for non /delay filing On company- Rs. 50, 000 to Rs. 5, 000 & Ever Officer in default –imprisonment- upto 6 months or Rs. 50, 000 to Rs. 5, 000 or both

Kind attention Section 448 read 447 -Punishment 6 months to 10 years & fine upto 3 times of money involved if any - for making false statements/ omission etc made by any person on any doc - covers form/return/ certificate/financial statement/ prospectus under the Act or rules

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