Requirement of Filing Form MGT-9 as per Companies Act, 2013

At the end of every financial year, companies in India have to file an annual return. There are numerous amendments related to the filing of annual returns. There has also been a lot of uncertainty regarding the requirement of Form MGT-9. The MCA has made attempts to reduce the lengthy documentation and resolve these uncertainties. Here in this article, you will find the format of MGT-9, the recent legal development, and the requirement of Form MGT-9 in India.

What is Form MGT-9?

An annual return is a comprehensive document of the company having a detailed overview of the company’s financial and non-financial disclosures. It has to be submitted to the Registrar within 60 days from the annual general meeting. Companies have to submit the annual return to ensure transparency in business operations.

As per section 92(3) and section 134 of the Companies Act, 2013, companies are required to attach a copy of the annual return extract in Form No. MGT-9. It is prepared when the director’s report is approved in the board meeting.

Format of Form MGT-9

• While filing Form MGT-9, a company has to submit registration and other details like CIN, registration date, the name of the company along with the category, registered office address, and details of the registrar and transfer agent.
• Furthermore, they have to mention the principal business activities of the company. There is a separate column for mentioning particulars of holding, subsidiary, and associate companies and the shareholding pattern. The company also has to fill in the details about the indebtedness of the company including their outstanding or accrued interest but not due for payment.
• Additionally, they have to give the details about the remuneration of directors and other key managerial personnel. Lastly, they have to fill in details if they have incurred any penalties or punishment.

Recent Legal Developments

• As per the Companies Act, 2013, section 134, the companies were required to submit MGT-9 along with the extract of the annual return and director’s report. Section 134 states that the statement in the general meeting along with a report of the board of directors shall be included in the extract of the annual return as given under section 92(3). According to section 92(3), the extract of the annual return shall form part of the report.
• But this provision was amended in 2018 by the MCA and a new provision was added which stated that if a company has a website, they have to publish the annual return in Form MGT-7 on the company’s website and MGT-9 is not required to be published on the website. So, after the 2018 amendment, there was no requirement of Form MGT-9.
• However, section 92(3) was not amended by the government, and the law under section 92(3) stated that the extract of annual return still formed the part of the board’s report in Form MGT-9. Hence, every company had to still prepare the form and annex it with the directors’ report.
• Therefore, now the company has to comply with both the legal requirement. This anomaly led to the publication of annual returns on the websites as well as in Form MGT-9.
• The Companies (Management and Administration) Rules, 2014 under Rule 12 mentioned that the annual return extract has to be attached with the board’s report in MGT-9. If the company has already disclosed the annual return in the board’s report according to section 92(3) of the Companies Act, then they are not required to attach the annual return extract in Form MGT-9.
• Later, section 23(ii) and section 36 of the Companies (Amendment) Act, 2017 notified on August 28th, 2020 aimed at amending section 92(3) and section 134 of the Companies Act respectively to settle the dispute between all the rules. After the amendment, every company had to place a copy of the annual return on the company’s website and the web link of the annual return has to be disclosed with the board’s report. The MCA has given the companies which are unable to place a copy on the website right to annex the annual return extract with the board’s report.
• In 2020, the Companies (Management and Administration) Amendment Rules, 2020 was introduced. After the 2020 amendment, rule 12(1) was substituted and now the company was not required to attach annual return extract with the board’s report in MGT-9 if the web link of the annual return has been disclosed in the board’s report.
• But now with the recent legal development in 2021 the requirement of Form No. MGT-9 is completely changed. Under Companies (Management and Administration) Amendment Rules, 2021 every company except an OPC and small company has to file the annual return in Form No. MGT-7. The OPCs and small companies have to file the annual report in Form No. MGT-7A. This Form MGT-7A has been introduced by MCA as an abridged form for filing the annual returns by every OPCs and small company.
• Companies (Management and Administration) Amendment Rules, 2021 have omitted the requirement of attaching annual return extract along with the board’s report under Rule 12 of the said rules. After 5th March 2021 Rule, 12 is substituted and now companies are not required to annex the annual return extract along with board’s report.

Is there a Requirement for Form MGT-9?

Earlier, preparing the annual return extract was removed from section 134(3)(a) and section 92(3). But the same was sustained in the Companies (Management and Administration) Rules, 2014. Later a proviso was added in rule 12 stating that if a web link of the annual return is disclosed in the board’s report then there is no requirement for attaching MGT-9.

But now the law is clear after the recent introduction of Companies (Management and Administration) Amendment Rules, 2021. Now, there is no requirement for Form MGT-9 under any provision of any Act or Rules.

Conclusion

With the latest development regarding the requirement of Form MGT-9, it can be concluded that from the financial year 2020-2021, there is no requirement of Form MGT-9 irrespective of the fact whether the company has a website or not. The present amendment brings clarity regarding MGT-9.  Lastly, under section 92(3) and section 134(3)(a) of the Companies Act, if the company has a website, then it is mandatory for the company to provide a web link of the annual return extract in the board’s report. The removal of Form MGT-9 and the introduction of MGT-7A for small companies and OPCs is also a good move by the government, as it helps the new start-ups in doing business in India.