Returns & Financial Statements: Impact & Fixes


Fulfilling certain responsibilities is crucial for businesses in India. Companies must file their annual returns and financial statements on time to follow the law. If they fail to do so, they might face legal trouble and financial penalties. This article highlights the importance of timely filing, the necessary forms to submit to the Registrar of Companies (ROC), and the potential negative outcomes if these requirements are not met.

  • Every day, numerous companies are established in India without knowing the future costs and consequences of not following the rules, either in terms of money or other consequences.
  • One way to ensure compliance is by submitting financial statements and annual returns to the ROC.
  • It’s a requirement for a company to submit these documents to the Ministry of Corporate Affairs (MCA) each year.
  • According to the Companies Act of 2013, not submitting an annual return is considered an offense.
  • Therefore, it’s crucial for a company to submit its annual return to the MCA within 60 days after the Annual General Meeting, and within 30 days for financial statements.
  • This article explores the potential results and penalties, along with solutions, if a company doesn’t file its annual return.

After a company’s annual general meeting, specific forms need to be submitted to the ROC:

  1. Financial Statement: As stated in section 137(1) of the Companies Act 2013, every company needs to file a copy of their financial statements (form AOC-4), which includes consolidated financial statements. This should be done along with all the necessary documents, adopted during the annual general meeting, within 30 days from the AGM date (usually September 30th, except for the first AGM which can be within 15 months, i.e., by December 31st) with regular fees. For One Person Companies, the financial statements should be filed within 180 days from the end of the financial year.
  2. Annual Return: Listed companies or those with a paid-up share capital of ten crore rupees or more, or a turnover of fifty crore rupees or more, need to file an annual return. This return must be certified by a practicing Company Secretary and submitted in Form No. MGT.8.
  3. MGT-14: According to Section 179(3) clause g, public companies must file form MGT-14 for the adoption and approval of financial statements and the Board Report within 30 days of passing the resolution.
  4. ADT-1 (Only for Auditor Appointment): Form ADT-1 should be submitted to the Registrar of Companies within fifteen days after the auditor’s appointment. For instance, if a company’s AGM was held on September 30th, Form ADT-1 should be filed by October 15th.
  5. DIN KYC: Anyone (like a director) with a Director Identification Number (DIN) must file the DIE-3 KYC form or complete WEB KYC every year within 6 months after the end of the financial year.

Failure to submit annual returns and financial statements can have consequences for a company-

  • The directors of a company are responsible for ensuring compliance with applicable laws and regulations.
  • If a company doesn’t comply, directors can be held accountable. As per the Companies Act 2013, if a company doesn’t conduct any business for two consecutive financial years and hasn’t applied to be a dormant company, the directors can face consequences.
  • Additionally, if a company continuously doesn’t file annual returns for three financial years, directors could be affected. If a company misses the deadline for annual return submission, they need to pay extra fees of Rs. 100 per day per form.
  • If a company consistently fails to file annual returns for two financial years and doesn’t apply to be a dormant company, the Registrar might issue a notice for closing the company.
  • To avoid disqualification of directors and legal action, a company that hasn’t conducted any business can apply for closure without filing any returns using Form STK-2 before receiving a notice from the Registrar.
  • However, if a company has created a charge on assets, it can’t file STK-2 until that charge is satisfied.
  • It’s also possible to file STK-2 before filling Form INC-20A, which must be submitted within 180 days from the incorporation date after one year has passed.

In conclusion, timely filing of annual returns and financial statements is crucial for companies to remain compliant with the law. This not only helps avoid legal issues and penalties but also maintains the company’s reputation and accountability. Directors must understand their responsibilities and ensure the company follows all filing requirements to stay in good standing with the Registrar of Companies.

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