AMENDMENTS IN ANNUAL FILING OF COMPANY

Annual Return is a significant document for the stakeholders of a company as it provides in a nutshell, very comprehensive information about various aspects of a company and as per the section 92 of the Companies Act, 2013, every company is required to prepare their Annual Return in Form No. MGT-7 and file the same with the Registrar within 60 days from the date on which Annual General Meeting (herein after AGM) is actually held or from the last day on which AGM should have been held.

But, during the year 2021 there has been some amendments pertaining to Annual Returns which shall be effective from the annual filing of Financial Year 2020-21 & onwards.

• Abridged Form of Annual Return For One Person Company and Small Company

The MCA, vide its notification, has notified March 05, 2021 as the commencement date of provision of clause (i) of Section 23 of the Companies (Amendment) Act, 2017 which seeks to amend the Section 92 of the Companies Act, 2013.

The amendment states the introduction of abridged annual return for the small companies and one person companies from the financial year 2020-21 onwards. Now, the annual return for the small companies and one person companies shall be filed in Form MGT-7A whereas the other companies will continue to file their returns in form MGT 7.

• Changes in small companies’ threshold

As per Union Budget presented on 1^st February 2021, MCA has revised the limit of paid-up capital & Turnover of small companies under Companies Act, 2013

1. The Threshold for paid-up capital has been changed from “not exceeding INR 50 Lakhs” to “Not Exceeding INR 2 Crores”.
2. The Threshold for Turnover has been changed from “not exceeding INR 2 Crore to “Not Exceeding INR 20 Crores”.

• Amendment in One Person Companies (OPC) Rules

Ministry of Corporate Affairs (MCA) has amended the ‘Companies (Incorporation) Rules, 2014 to make changes in the definition of One Person Company. The new rules are called as ‘Companies (Incorporation) Second Amendment Rules, 2021 and has come into force from April 1, 2021. The decision was announced during the presentation of Union Budget 2021-2022.

1. The residency period for being considered as a Resident in India has reduced from 182 days to 120 days during the immediately preceding financial year.
2. Before, OPC could only be incorporated by a natural person who is an Indian citizen and resident in India but now, OPC can also be incorporated by Non- Resident Indian (NRI)
3. The limitation of Paid Capital & Turnover which used to be applicable for OPCs i.e. paid up share capital of Rupees 50 Lakhs & annual turnover of Rupees 2 Crore has been removed.
4. Now, an OPC can voluntarily convert itself into any kind of company at any time without meeting any of the criteria’s as to paid up share capital and average annual turnover.

• Removal of Form MGT-9

The Form MGT-9 refers to an extract of the annual return, which used to form part of the Board’s report of the company before the amendment dated 05^th March, 2021.  It provided that the company shall not be required to attach the extract of the annual return with the Board’s report in Form 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.

But on March 05^th 2021, The MCA, vide its notification, has completely removed the Form MGT-9 from the Companies Act, 2013. Thus, the Form MGT-9 is not required to be prepared from the Financial Year 2020-21 & onwards irrespective of the fact that whether the Company has website or not.

Therefore now, every company is required to just file a copy of annual return in Form MGT-7/Form MGT-7A (as per the applicability) with the Registrar with such fees as may be specified and to place a copy of such 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.