Companies Act, 2013 - Salient features of annual return – Part one - Dr S. Chandrasekaran - Article published in Business Advisor, dated January 10, 2015 http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/

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Companies Act, 2013: Salient features of
annual return – Part one
Dr S. Chandrasekaran
Annual return is one of the two important documents to
be filed by every company with the Registrar of
Companies. The Companies Act, 2013 (the Act), while
clubbing the different formats prescribed under the
earlier Act into one format, also made different formats
for the annual return, certification by a practising
company secretary (PCS) and extract of annual return,
and thus made the filling and filing of annual return
more cumbersome. Several additional information are
forming part of the format of annual return, certain changes made as
compared to old format thus the format runs into several pages. The
responsibility of the key managerial personnel is increased not only for the
compilation of data for filling the format of annual return but also requires
to compile one other format as extract of annual return to be attached with
the directors‟ report. The responsibility of a PCS while certifying the annual
return is also added to specifically check and certify eighteen important
compliances by a company.
Clubbing of formats
The earlier Act had two separate formats, one for companies having share
capital, and the other for companies not having share capital. The Act has
not clubbed both the formats into one. Companies not having share capital
have to tick the sub category of company not having share capital and
companies registered under section 8 of the Act have to tick the appropriate
sub category, whereas, the entire format is applicable for all the companies.
Change in the effective date of annual return
The annual return is to be filed by every company within a period of sixty
days from the date of annual general meeting held or the last date on which
the annual general meeting was to be held. The particulars on such annual
return are to be provided as on the date of annual general meeting.
The new format requires the particulars to be provided as on the date of
financial year ended as against the earlier requirement of as on the date of
annual general meeting. Besides, a company is also required to prepare an
extract of annual return as on the date of financial year ended and to place

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at the board meeting at the time of approval of directors‟ report and to
attach the same along with the directors‟ report.
Additional information to be provided
The new format requires certain additional information to be provided in
addition to information to be provided under the earlier Act. The following
are some of the important additional information to be provided in the new
format:
1. Principal business activities of the company;
2. Particulars of holding, subsidiary and associate companies;
3. Details of other securities issued in addition to share capital and
debentures;
4. Turnover and net worth of the company;
5. Names of the promoters, key managerial personnel and changes made
therein since the last annual return;
6. Dates of meetings of members, directors and various committees of
directors along with attendance details;
7. Remuneration of directors and key managerial personnel;
8. Penalties and punishment imposed on the company, its directors and
key managerial personnel;
9. Particulars of compounding of offences, appeals made against any
penalty or prosecution;
10. Details of certification of compliances and disclosures;
11. Disclosures further go in providing particulars of declaration of
dividend, inter corporate loans and investments and related party
transactions etc.
12. Details of shares held by or on behalf of foreign institutional investors
with full particulars of such institutions;
13. Separate disclosure on corporate social responsibility;
14. Disclosure of directors;
15. Confirmation about appointment of auditors.
The providing of above mentioned information such as turnover, net worth,
and remuneration to directors and key managerial personnel, loans and

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investments, related party transactions needs the support of Chief Financial
Officer (CFO) and his team. Interestingly, the annual return has to be
signed by a director and company secretary or where there is no
company secretary by a PCS. It is the need of the hour that the
responsibility be passed on to the CFO and to the whole time director
or managing director, if there is one.
Modifications in the format of annual return
The format of annual return has not only clubbed two formats and added
various additional information to be provided therein; it has also undergone
some modifications from the earlier format of annual return.
1. The effective date of annual return as explained above is the date of
closure of financial year instead of date of annual general meeting.
2. When providing information such as Yes or No, for whether shares listed
on recognised stock exchanges, now add the particulars of names of
stock exchanges at which share are listed with its code.
3. Besides providing the date of annual general meeting, if there is any
extension granted by the Registrar of Companies, particulars of such
extension are also to be provided in the annual return.
4. Shareholding pattern underwent a major modification thereby providing
particulars of promoters with their names and holding, changes in
promoters‟ holding and so on.
5. Signing of annual return by one director instead of two directors.
6. Severe increase in penal provisions.
Modification in certification of annual return
The annual return under the earlier Act was to be certified by a PCS only for
listed companies. The Act now has extended such certification to all other
unlisted companies both public and private companies having:
a) Paid up share capital of ten crore rupees or more; OR
b) Turnover of fifty crore rupees or more.
The inclusion of unlisted companies for certification by a PCS is to some
extent in view of secretarial compliance report as provided in the earlier Act.
In addition, if a company other than One Person Company and Small
Company does not have a company secretary in employment, the annual
return is to be signed by a director and a PCS.

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Different formats
The single format of annual return is now divided into three formats. They
are:
1. Form MGT – 7 – Annual Return;
2. Form MGT – 8 – Certificate by a PCS;
3. Form MGT – 9 – Extract of Annual Return.
Every company shall prepare its annual return in Form MGT – 7.
The annual return, filed by a listed company or company having paid up
share capital of ten crore rupees or more or turnover of fifty crore rupees or
more shall be certified by a PCS and the certificate shall be in Form MGT –
8.
The extract of annual return to be attached with the Board‟s Report shall be
in Form MGT – 9.
Conclusion
The format as prescribed in the Act contains several information
requirements, more particularly to achieve the twin objectives of (a)
compliances and (b) disclosures. The inclusion of certain financial
information such as remuneration of directors and key managerial
personnel, loans and investments, related party transactions further
strengthens disclosure not only to the information of shareholders and
public at large but also to the regulators for proper compliance in those
areas. The certification by a PCS highlighting several specific compliances
further gives comfort level to the independent directors and all other
stakeholders.
(To be continued)
(Dr S. Chandrasekaran is Senior Partner, Chandrasekaran Associates, Delhi)
The format as prescribed in the Act contains several
information requirements, more particularly to achieve the
twin objectives of (a) compliances and (b) disclosures.