This guidance note assists small companies in navigating their annual filing obligations under the Companies Act, 2013. It includes critical timelines, forms, mandatory attachments, and detailed requirements to help avoid defaults and ensure compliance.
1. Definition of Small Company
According to Section 2(85) of the Companies Act, 2013, a small company is defined as:
- Paid-up Capital: Not exceeding ₹4 crore.
- Turnover: Not exceeding ₹40 crore in the preceding financial year.
2. Annual Filing Checklist for Small Companies
A. Form MGT-7A (For One Person Company and Small Company)
| Form | Purpose | Time Limit | Mandatory Attachments | Conditions and Exemptions |
|---|---|---|---|---|
| MGT-7A | Simplified Annual Return | Within 60 days from AGM | - List of shareholders. - Directors' report (simplified format with fewer disclosures). | Applicable only to One Person Companies and small companies as per criteria in Section 2(85). |
B. Form MGT-7 (For Other Companies)
| Form | Purpose | Time Limit | Mandatory Attachments | Conditions and Exemptions |
|---|---|---|---|---|
| MGT-7 | Annual Return for Other Companies | Within 60 days from AGM | - List of shareholders. - Directors' report. - Additional disclosures as per Rule 11. | Not applicable for small companies and One Person Companies. |
3. Key Differences Between MGT-7 and MGT-7A
| Criteria | MGT-7 | MGT-7A |
|---|---|---|
| Applicable Companies | Other Companies | Only for One Person Companies and Small Companies |
| Disclosure Requirements | Detailed disclosures required | Simplified disclosures |
| Attachments | Requires more documentation | Fewer attachments required |
4. Annual Filing Checklist for Other Forms
| Form | Purpose | Time Limit | Mandatory Attachments | Exemptions for Small Companies |
|---|---|---|---|---|
| AOC-4 | Filing of Financial Statements | Within 30 days from AGM | - Financial statements. - Auditor’s report. | Financial statements must comply with accounting standards. |
| ADT-1 | Auditor Appointment | Within 15 days from AGM | - Board resolution for auditor appointment. - Consent letter from the auditor. | Not applicable; small companies must appoint an auditor. |
| DIR-8 | Director’s Disclosure of Disqualifications | Before reappointment at AGM | - Declaration by the director regarding disqualifications. | No exemptions. |
| DIR-3 KYC | Director KYC Compliance | By 30th September annually | - Self-attested identity proof. - Address proof. | No exemptions. |
| DPT-3 | Return of Deposits | By 30th June | - Details of deposits accepted and repaid. - Compliance certificate. | No exemptions. |
| MSME-1 | Delayed Payments to MSMEs | Half-yearly (April-September, October-March) | - Details of outstanding dues to MSMEs. | No exemptions. |
| MBP-1 | Disclosure of Interest by Directors | During the first board meeting of FY | - List of companies in which the director is interested. | No exemptions. |
| AOC-4 (XBRL) | Financial Statements in XBRL | Within 30 days of AGM | - XBRL-compatible financial statements. | Not applicable to small companies unless specified. |
5. Important Components of Directors’ Report
The Directors' Report must be detailed and cover the following key aspects:
- Financial Performance: A summary of financial results, comparing current and previous years.
- Dividend Recommendation: Information regarding declared dividends and reasons for any changes.
- Board Meetings: Number and dates of board meetings held during the financial year.
- Directors’ Responsibility Statement: A declaration that:
- The financial statements comply with accounting standards.
- Adequate internal controls are maintained.
- The directors have assessed the effectiveness of these controls.
- Related Party Transactions: Disclosure of all transactions with related parties as per Section 188.
- Risk Management: Overview of the company’s risk management processes.
- CSR Activities: If applicable, details of Corporate Social Responsibility initiatives.
- Secretarial Audit: If applicable, a summary of the secretarial audit findings.
- Material Changes: Any significant events or changes affecting the company’s financial position.
- Website Link for Annual Return: Disclose where the annual return can be accessed online.
6. Common Compliance Pitfalls
To avoid non-compliance and associated penalties, small companies should:
- Set Up a Compliance Calendar: Track filing deadlines to prevent missing important dates.
- Ensure Accuracy: Double-check all forms for errors before submission to avoid rejections.
- Maintain Documentation: Keep accurate records of board meetings and resolutions to ensure compliance.
- Regularly Update Statutory Registers: Ensure that all necessary registers (e.g., register of members, directors) are maintained accurately.
- Appoint Auditors Promptly: Ensure the appointment of auditors well before the filing deadlines.
7. Penalties for Non-Compliance
Failure to comply with filing requirements can lead to severe penalties under the Companies Act, including:
- Delayed Filing: A penalty of ₹100 per day for forms like AOC-4 and MGT-7.
- Non-filing of AGM: A fine of ₹1 lakh and ₹5,000 for each day of default.
- Failure to Appoint an Auditor: Penalties as specified under Section 147.
8. Best Practices for Compliance
- Training and Awareness: Conduct regular training sessions on compliance for board members and compliance officers.
- Engage Professionals: Consult with company secretaries and legal advisors for guidance on regulatory updates.
- Periodic Internal Audits: Regularly review compliance processes to identify any areas needing improvement.
9. Final Considerations
A well-organized approach to compliance with annual filing requirements and the preparation of the directors’ report is crucial for small companies. By following this comprehensive guidance note, companies can minimize the risk of defaults and foster a culture of transparency and accountability, ultimately enhancing stakeholder trust.
This detailed guidance note provides small companies with a clear understanding of their annual filing requirements, necessary forms, mandatory attachments, and potential pitfalls. By following these guidelines, companies can maintain compliance and support their growth and sustainability
