Secretarial Annual Compliances under the Companies Act, 2013: A Practical Guide for Every Company

 Secretarial Annual Compliances under the Companies Act, 2013: A Practical Guide for Every Company

 

The Companies Act, 2013, stands as the foundation for corporate governance in India, setting forth mandatory annual compliances that companies must adhere to. These legal requirements are designed to ensure accountability, financial transparency, and responsible corporate practices. Meeting these annual compliances not only helps businesses avoid penalties but also fosters trust among stakeholders.

 In this article, we explore the key annual compliances required under the Companies Act, 2013, for companies of all kinds—public, private, and listed.

 1. Annual General Meeting (AGM)

The AGM is a cornerstone for corporate governance, providing a platform for the company’s shareholders to review performance, approve financial statements, appoint directors, and make other key decisions. All companies, except One Person Companies (OPCs), must hold an AGM every financial year. The first AGM should occur within nine months of the company’s first financial year-end, while all subsequent AGMs should be held within six months of the financial year’s close, with no more than a 15-month gap between two AGMs.

 2. Filing of Financial Statements (Form AOC-4)

Each company is required to submit its financial statements to the Registrar of Companies (ROC) using Form AOC-4 within 30 days of the AGM. This filing includes the balance sheet, profit and loss statement, and other financial documents, providing the ROC with a snapshot of the company’s financial health. Timely filing is crucial, as late submissions incur penalties.

3. Filing of Annual Return (Forms MGT-7 / MGT-7A)

An annual return summarizes the company’s performance and key details, including shareholder information, director details, and the company’s financial status. Companies must file this return within 60 days of the AGM, using Form MGT-7 for public and private companies or MGT-7A for small companies and OPCs. This return gives regulatory authorities a complete picture of the company’s standing and helps ensure corporate transparency.

4. Directors’ Report

The Directors' Report is an important disclosure document summarizing the company’s performance, governance policies, and future outlook. It includes risk management policies, changes in the board, CSR activities (if applicable), and dividend distribution information. This report, which must be presented to shareholders at the AGM, offers a transparent view of the company’s operations.

 

5. Auditor Appointment and Filing of Form ADT-1

Under Section 139, every company must appoint or reappoint an auditor during its AGM, for a term of five years. Form ADT-1 must be submitted to the ROC within 15 days of the auditor’s appointment. The auditor’s role in verifying the company’s financials is essential to meet statutory and compliance obligations.

6. Maintenance of Statutory Registers

Maintaining statutory registers is crucial for record-keeping and legal compliance. Essential registers include:

   - Register of Members (Form MGT-1)

   - Register of Directors and Key Managerial Personnel (KMP)

   - Register of Charges (Form CHG-7)

   - Register of Loans and Guarantees (Form MBP-2)

These records provide a clear overview of the company’s structure and can be inspected by authorities when needed.

7. Secretarial Compliance Certificate (Form MGT-8)

Listed companies and certain public companies with specific financial thresholds must obtain a compliance certificate (Form MGT-8) from a Company Secretary, confirming adherence to statutory requirements. This certificate, filed with the annual return, demonstrates the company’s compliance and strengthens corporate credibility.

8. Secretarial Audit Report (Form MR-3)

A secretarial audit, conducted by a qualified Company Secretary, is mandatory for listed companies and large public companies. The audit checks compliance with laws, rules, and policies, providing shareholders with an independent assurance that the company is following all necessary legal requirements. Findings are documented in Form MR-3 and included in the Directors’ Report.

9. Compliance Certificate from Practicing Company Secretary

Public companies with a paid-up capital of ₹10 crore or more, or with an annual turnover of ₹50 crore or more, must obtain a compliance certificate from a practicing Company Secretary. This certificate assures regulators that the company follows good governance practices.

10. Disclosure of Interest by Directors (Form MBP-1)

To avoid conflicts of interest, directors must disclose any interests in other entities at the start of each financial year using Form MBP-1. This transparency helps the board make objective decisions and avoids potential issues related to conflicting interests.

 

11. Corporate Social Responsibility (CSR) Compliance

Companies meeting CSR eligibility criteria—such as a net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more—are required to invest a portion of their profits in CSR activities. Companies must disclose these activities in their annual report and file Form CSR-2 with the MCA to provide details of their CSR spending.

12. Form DPT-3 (Return of Deposits)

Form DPT-3 must be filed annually by companies that accept deposits or unsecured loans. This filing provides the ROC with data on the company’s deposits and financial health. It must be submitted by June 30 each year to maintain transparency in handling deposits.

13. Compliance for Foreign Liabilities and Assets (FLA Return)

Companies that receive foreign investment or hold foreign assets or liabilities must file an FLA return annually with the Reserve Bank of India by July 15. This compliance is essential to monitor and regulate foreign investments and economic data.

14. Filing MSME Form (MSME-1)

To safeguard the interests of Micro, Small, and Medium Enterprises (MSMEs), companies are required to file Form MSME-1 semi-annually if they have payments pending to MSMEs for more than 45 days. The government uses this data to track delays and promote timely payments to MSMEs.

15. Form PAS-6 (Reconciliation of Share Capital)

Unlisted public companies must file Form PAS-6 twice a year to reconcile the share capital between shares held in demat form and physical form. This form is due within 60 days from each half-year’s end and is essential to maintain accuracy in the company’s shareholding records.

16. Director KYC (Form DIR-3 KYC)

Directors must annually verify and update their personal and contact details with the MCA through Form DIR-3 KYC by September 30. Failure to file this form deactivates the Director Identification Number (DIN) and incurs a ₹5,000 penalty.

Consequences of Non-Compliance

Failure to meet annual compliances can result in financial penalties, restrictions on business operations, and even legal consequences for the company and its directors. Non-compliance may also affect a company’s credibility and ability to attract investors.

 

1. Set Reminders and Plan Ahead: Use task management tools or compliance software to stay on top of deadlines.

2. Work with Professionals

3. Conduct Periodic Audits: Regular audits help companies identify and address potential compliance issues early.

Conclusion

Meeting secretarial annual compliance requirements under the Companies Act, 2013, may seem overwhelming, but these obligations are designed to promote transparency, accountability, and sound governance. By prioritizing compliance, companies can stay in good standing and focus on growth with confidence. Leveraging professional expertise and timely reminders can simplify the compliance process, ensuring a successful and sustainable business trajectory.


Author:.
CS Ashwini Gupta
+91 8600629115
guptaashwin761@gmail.com