Importance of Annual Returns and Compliance under Section 92 of the Companies Act, 2013

Every year, companies registered in India are required to file their Annual Returns and Income Tax Returns. Compliance with these regulations is not only a legal requirement but also crucial for a company's reputation and growth. Failure to comply can result in limitations on operations, monetary fines, or even imprisonment. In this article, we will delve into the significance of annual returns and compliance under Section 92 of the Companies Act, 2013.

Section 92 of the Companies Act, 2013:

Section 92 of the Companies Act, 2013 mandates that every company registered in India must abide by the provisions outlined in the Act. The Act covers various aspects of corporate governance, including director appointment, qualification, remuneration, and retirement. It also addresses the conduct of Board Meetings and Shareholder Meetings, the preparation and presentation of annual accounts, and the maintenance of accounting books.

Preparation of Annual Return:

According to Section 92, every company is required to prepare an annual return containing specific particulars as of the close of the financial year. These particulars include details about the company's registered office, principal business activities, holding, subsidiary and associate companies, shares, debentures, and other securities, shareholding pattern, members and debenture-holders, and changes in key personnel and stakeholders since the previous financial year. The annual return should also include information about meetings, remuneration of directors and key managerial personnel, penalties imposed on the company, and matters relating to compliance and disclosure. The return must be signed by a director and the company secretary or a company secretary in practice.

Compliance and Certification:

The annual return filed by listed companies or those meeting certain financial thresholds must be certified by a Company Secretary in practice using Form No. MGT.8. The certification ensures that the annual return discloses facts correctly, adequately, and in compliance with the provisions of the Companies Act, 2013.

Public Disclosure and Filing:

Under Section 92(3), every company is required to place its annual return on its website and provide the web link in the board report. Additionally, the company must file a copy of its annual return with the Registrar of Companies within sixty days from the date of the annual general meeting. If no annual general meeting is held in a particular year, the annual return should be filed within sixty days from the date on which the meeting should have been held, along with a statement specifying the reasons for not holding the meeting.

Consequences of Non-Compliance:

Failure to file the annual return within the specified timeframe can lead to penalties for the company and its officers. The company and every officer in default may be subject to a penalty of ten thousand rupees. Continued failure to file the annual return can result in an additional penalty of one hundred rupees per day, with a maximum of two lakh rupees for a company and fifty thousand rupees for an officer. Furthermore, a company secretary in practice who certifies the annual return incorrectly may be liable to a penalty of two lakh rupees.

Conclusion:

Section 92 of the Companies Act, 2013 plays a vital role in ensuring transparency and accountability in the functioning of companies in India. By mandating the preparation and filing of an annual return, this provision provides crucial information to stakeholders, enabling them to make informed decisions. Complying with the requirements of Section 92 is not only a legal obligation but also a demonstration of a company's commitment to good corporate governance practices.