Repercussion on Non-Filing of Statutory Document with ROC

Soumya Bajpai

23 Mar, 2020

The Companies Act 2013, has the provisions which contain certain rules and regulations that the ‘company’ whether public or private limited has to abide by, right from the initial stage of incorporation to the final stage of dissolution. This is to be done in order to encourage transparency and high standards of corporate governance. The directors of the company coordinate and inform the Registrar of Companies (ROC) of any material change in the financial, legal or managerial status of the company. The Companies Act has provisions for the mandatory filing of the annual return and financial statement and other statutory documents of the company with the ROC within a stipulated time that has been prescribed under the Act. The changes are made in the provision of filing of the e-forms or non-filing of the statutory document with ROC by introducing Companies Amendment Act 2017 and Companies Amendment Ordinance Act 2018.

Provisions Relating to annual filings made to ROC

Section 92 of the Act is about the filing of the annual return to ROC.  The company requires to file a copy of the annual return within 60 days from the date on which Annual General Meeting (AGM) is conducted or 60 days within the date on which the AGM was to be held.

• In the case when a company fails to conduct an AGM along with the statement mentioning the reason for the same accompanied with the fine imposed on non-filing of the statutory document under Section 403 of the Act.
• The annual return of the company must contain information in the Form MGT-7 (e-form) as has been prescribed under the Act. The information includes such as the registered office of the company, information about its holding, subsidiary and associate companies and principal business activities, the indebtedness of the company. The other matters related to the company as may be mentioned and must be signed by a director and the company secretary, or by a company secretary in practice.
• In the case when the annual return is filed by a company having paid-up turnover or by a listed company as may be allowed under the Act, that company shall obtain certification by a company secretary in the mentioned form under the Act, declaring that the annual return mentions the facts correctly and ensuring that the company has followed all the provisions of this Act.

Provisions Relating to Financial statement with the ROC

• Section 137 is about the filing of the financial statement by a company. The copy of the financial statement which includes consolidated financial statement approved and adopted at AGM of the company, with all the other documents required to be attached with such statement and that must be filed before the office of ROC within 30 days of the date of the AGM held by the company. The filing must be done through Form AOC-4 (e-form).
• In the case, when there is no AGM held by the company, then it may file the financial statement with such additional late fees within the time prescribed under Section 403 of the Act.

Penalty imposed on Non-Filing of Statutory Document

Section 403 of the Act is concerned with the fees required for non-filing of the statutory documents such as the annual return or financial statement under section 92 and 137 with the ROC. The section also specifies the time period within which any statutory document, is required to be filed, submitted recorded or registered with the ROC under the Act. The time period specified is 270 days after that on non-filing of statutory document charged the late fees or imposed fine as prescribed.  

Non-compliance with Section 92 and Section 137

• Section 403(2) of the Companies Act states that when a company commits any default or fails or non-filing of the statutory document within a prescribed time along with the prescribed additional fee, the company and its officers are responsible for such default will be held liable for the penalty or punishment on account of that failure. Therefore, if a company does not comply with the certain provisions, then penalty or prosecution under Section 92 (5) and Section 137 (3) shall be initiated against the company.
• Section 92 (5) have the penal provision for the companies. According to it if a company fails to file its annual return under sub-section (4), before the prescribed period specified under section 403 with an additional fee, the company shall be liable to pay the fine which can be imposed not less than ₹50,000 and it may extend to ₹5,00,000. The officers of the company who is in default shall be punished with imprisonment for a term maximum to 6 months or imposed with fine not be less than ₹50,000 which may further extend to ₹5,00,000 or both.
• Section 92(6) has the penal provisions for the officers in the company. According to it if the company secretary in practice with the company certifies the annual return and advises against the provisions provided under the act, then he shall be labile to pay the fine which shall not be less than ₹50,000 and which may extend to ₹5, 00,000.
• Section 441(1) of the Act, any offence punishable under the Companies Act whether committed by a company or its office charged with fine either before or after the institution of any prosecution and compounded by the Tribunal. The maximum amount of fine which can be imposed for such offence shall not exceed ₹5,00,000 by the Regional Director or any officer authorized by the Central Government.

Conclusion

It can be concluded that various provisions regulate the conduct of the company in matters of filing of information.  The annual return and financial statement under Sections 92 and 137 respectively, provides the guidelines for filing and also lays down the penalties and prosecution on the non-filing of a statutory document in the prescribed form. However, a company can be also be dissolved because of such penalties and compounding of an offence under Section 441(1). Therefore, it is necessary that a company if fails to make filings before ROC within 300 days must go for compounding of the offence i.e. a compromise or settlement with the regulating authorities in order to save itself from future prosecutions. However, the government has also tried to provide some relief to the companies and reduce some complexities of the former Act by introducing amendments in the form of Companies (Amendment) Act, 2017.