Avoid Penalties: File Annual Returns with ROC on Time

What happens when a company delays in filing annual returns with ROC?

WHAT IS ANNUAL FILING?

All companies incorporated under the Companies Act 1956 or Companies Act 2013 must file the annual returns, i.e., AOC-4, MGT-7/MGT-7A, to the Registrar of Companies (ROC) for every financial year.

As a part of the annual filing, the entities operating under the Companies Act 2013 are required to file the following e-forms with ROC:

Form AOC-4: It is an e-form used for filing a financial statement and director’s report within 30 days from the date of the AGM.
Form MGT-7/MGT-7A: It is used for filing the company’s annual return within 60 days from the date of the AGM.

Non-filing of annual returns is an offence.

Hence, it is indispensable for any company to file an annual return with the MCA.

PENALTIES FOR NON-FILING OF ANNUAL RETURNS:

Form AOC-4:

In case of non-compliance of Section 137 of the Companies Act 2013, the penalty imposed u/s 137(3) is as follows –

Defaulting Party	Penalty Imposed
Company	Rs. 10,000 + in case of continuing failure Rs. 100 for each day of default subject to a max of Rs. 2 Lakhs.
1. Managing Director/ CFO 2. In case of the absence of M.D/CFO- any other director whom the Board assigns responsibility 3. In case of the absence of any such director- All the directors of the Company	Rs. 10,000 + in case of continuing failure Rs. 100 for each day of default subject max of Rs. 50,000.

Form MGT-7:

In case of non-compliance of Section 92 of the Companies Act 2013, the penalty-imposed u/s 92 (5) is as follows –

Defaulting Party	Penalty Imposed
Company as well as the directors who are at fault	Rs. 10,000 + in case of continuing failure Rs. 100 for each day of default subject to a max of Rs. 2 Lakhs in case of the company and Rs. 50,000 in case of the officer who is in default.

OTHER CONSEQUENCES OF NOT FILING ANNUAL RETURNS:

In case of defaults in filing the annual returns, the consequences are to be faced by both the company and its officers (the directors).

– For Company

By Section 248(1)(c’) of the Companies Act, 2013, When the Company fails to comply with the filing requirement of annual returns for a continuous period of 2 immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company, then Registrar may issue the notice to the company for striking off (remove the name) of company from the register of companies.

– For Directors

Non-filing annual returns consecutively for three years would be detrimental for the person serving a directorship post.

By Section 164(2) of the Companies Act 2013, the company’s directors shall be disqualified for 5 years. They would not be eligible to be appointed or re-appointed directors in any other company.

GOVERNAMENT VS BYJU’S- REASONS FOR THE DELAY IN FILING AUDITED ACCOUNTS

The Ministry of Affairs sent a letter to Byju’s parent company, ‘Think & Learn’ asking them to explain the seventeen-month delay in filing audited accounts.

The delay in filing is due to consolidating the accounts of several companies that Byju’s acquired during the accounting year; the company has replied to MCA.

As per the Act, an unlisted company has to file its annual accounts within seven months of the financial year-end.

Beyond this period, they must pay an additional fee for each day of delay. The prosecution by the ministry is then filed when the delay exceeds two years .

The firm and its directors are liable for fines and prosecution in case of excessive delays in filing annual accounts.

To investigate the finances of Byju’s, Karti Chidambaram called for a probe into Byju’s for not filing its 2020-21 (FY21) financial results.

The timely filing of annual forms enables companies to avoid penalties, as mentioned above and keep their credibility intact in the eyes of investors.

Ensuring adherence to filing-related compliances is not really a choice but more like a legal compulsion.

Therefore, non-filing of annual returns can damage companies from a compliance and goodwill standpoint.

So, don’t make the same mistake as Byju’s and let Master Brains Company Law Consultants take care of these complications. Our consultants have domain expertise in annual company & LLP compliances, requirements, laws and filing of ROC forms.

We offer amazing customised packages covering end-to-end professional services of Accounting, Income Tax Compliances, GST Compliances & ROC Compliances. Call or Whatsapp us today at +91-8595867402.

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FAQs on Avoid Penalties: File Annual Returns with ROC on Time

What is meant by the annual filing of a company?

The annual filing refers to submitting of a company’s financial statements, annual returns, and other relevant documents to the Registrar of Companies (ROC) every financial year, as mandated by the Companies Act 1956 or Companies Act 2013. These filings are an overview of the company’s financial activities and its compliance with the legal requirements and may vary depending on the type of company.

What are the forms that need to be filed as a part of the annual filing?

Companies must file Form AOC-4 (financial statement and director’s report) and Form MGT-7/MGT-7A (annual return) as part of the annual filing process.

What happens if a company fails to file its annual returns?

Failure to file annual returns can result in penalties/fines, disqualification of the directors, and even striking off the company’s name from the register of companies. Non-filing of annual returns can negatively impact the company’s reputation and creditworthiness.

How can a timely filing of annual forms benefit a company?

Timely filing of annual forms helps companies avoid penalties, maintain their credibility in the eyes of investors, and comply with legal requirements.

How can professional services help with annual company and LLP compliances?

rofessional services help to assess the specific compliance requirements applicable to the entity and offer expert guidance in accounting, income tax compliances, GST compliances, and ROC compliances, ensuring that companies meet all legal requirements and avoid fines and penalties. They also help ensure timely and accurate filings of such compliances.

What is the role of ROC in annual company filing?

The Registrar of Companies (ROC) is responsible for overseeing and maintaining the register of companies, ensuring that companies comply with the Companies Act’s filing requirements and taking appropriate action in case of non-compliance.

How can the failure of annual return filing impact a company's credibility?

Failure to file annual returns can damage a company’s credibility among investors and other stakeholders, reflecting non-compliance with legal requirements and potential financial instability. It could also result in penalties and legal actions that could harm the company’s reputation.

The best way to avoid penalties is to ensure the timely filing of all required annual returns and financial statements, as mandated by the Companies Act. Seeking8 professional services can also ensure compliance with all legal requirements and deadlines.

Team Master Brains