MCA Imposes ₹40 Lakh Penalty for Non-Filing MGT-7 AND AOC-4

Ensure compliance with regulatory filings is paramount for companies operating in India to maintain transparency and avoid penalties. Submitting AOC-4 and MGT-7 forms to the Ministry of Corporate Affairs (MCA) holds particular significance among these filings. Failure to file these forms on time can result in hefty fines and legal consequences. A recent case in Chennai, where the MCA levied a fine of ₹40 lakhs for non-filing MGT-7 and AOC-4, underscores the seriousness of these Filings. However, avoiding these fines is relatively straightforward if you follow a few simple steps. In this guide, we'll share some easy-to-follow tips to help you avoid AOC-4/MGT-7 Filing Penalties. If your company hasn’t filed its MGT-7/AOC-4 yet, contact IndiaFiling’s experts to ensure compliance and avoid fines. [shortcode_33]

Annual Return in MGT-7

Form MGT-7 is a key compliance document that companies must submit as part of their annual ROC filing obligations. According to Section 92(4) of the Companies Act, 2013, every company must file its annual return using Form MGT-7 and the required fees to the Registrar of Companies within 60 days of conducting its Annual General Meeting.

Failing to submit Form MGT-7 within the 60-day deadline incurs an initial penalty of Rs. 100 for each day of delay. The company and its directors are also liable for not completing the ROC filing on time.
The company and responsible officers face a fixed penalty of Rs. 50,000 for non-compliance.
If the delay persists, an additional daily fine of Rs. 100 is imposed, up to a maximum penalty limit of Rs. 5,00,000.

Financial Statements via AOC-4

As per Section 137 of the Companies Act 2013, every company must file a copy of its financial statements using Form AOC-4 with the Registrar of Companies within thirty days following the commencement of the Annual General Meeting, along with nominal fees. Additionally, all necessary documents and, if applicable, consolidated financial statements must be attached to the financial statement form.

Failure to submit it within thirty days of the Annual General Meeting (AGM) exposes the company, its members, and directors to penalties.
A daily fine of Rs. 1,000 is levied, capped at a maximum of Rs. 10,00,000. Additionally, the company's Chief Financial Officer, Managing Director (if applicable), or any other director delegated by the Board to oversee compliance with Form AOC-4-related provisions are subject to a penalty of Rs. 1,00,000.
If the non-compliance persists, a further penalty of Rs. 1,000 per day, up to a maximum of Rs. 5,00,000, is imposed.

Note: The Ministry of Corporate Affairs (MCA) recently fined the Company Secretary (CS) Rs. 2,00,000 for certifying MGT-7/AOC-4 without disclosing the Board Meeting Date. Accordingly, a penalty of Rs.40 Lakhs was imposed under Sub-section 5 of section 92 of the Companies Act, 2013. Also read, MCA Imposes ₹3.50 Lakh Penalty for AOC-4 Non-Compliance

Why is Timely Filing Important?

As mentioned above, timely filing of MGT-7 and AOC-04 is a legal requirement and a practice that helps maintain your company's credibility with stakeholders. Failure to file these documents can result in penalties, additional fees, or even more severe legal repercussions.

Click here to learn more Consequences of Not Filing ROC

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Simple Steps to Avoid MGT-7 and AOC-4 Penalties

Here are simple steps to avoid penalties related to MGT-7 and AOC-4 filings:

Understand Filing Deadlines: Know the deadlines for filing MGT-7 and AOC-4 forms per the Companies Act 2013. MGT-7 should be filed within 60 days from the date of the Annual General Meeting (AGM), while AOC-4 should be filed within 30 days from the date of the AGM.
Understand AOC-4 and MGT-7 Filing Requirement
- AOC-4: This form encompasses financial statements, including the Balance Sheet, Profit and Loss Account, Cash Flow Statement, Directors' Report, and Auditor's Report.
- MGT-7: It includes crucial information about the company's share capital, indebtedness, and details of shareholders, directors, and meetings.
Create a Filing Schedule: Develop a comprehensive filing calendar that includes all compliance deadlines, ensuring ample time for preparation and review.
Early Preparation is Key: Gather necessary documents well before the filing deadlines. This includes financial statements, audit reports, director's reports, and meeting minutes.
Accuracy is Paramount: Thoroughly review all information to ensure accuracy and compliance with regulatory requirements. Any discrepancies, especially regarding board meeting dates, must be rectified promptly to avoid penalties.
Utilize IndiaFilings LEDGERS Software: Leverage IndiaFilings' accounting software to streamline data collection, record-keeping, and filing processes and ensure adherence to regulations.
Seek Expert Guidance: Engage qualified professionals such as Company Secretaries, Chartered Accountants, or legal advisors associated with IndiaFilings. Our experts possess expertise in compliance matters and can assist with accurate filing preparation and review.
Stay Informed through IndiaFilings: Regularly monitor updates from IndiaFilings and the MCA to stay abreast of any changes in filing requirements, deadlines, or regulatory frameworks.
Conduct Regular Compliance Audits: Periodically conduct internal audits to ensure ongoing compliance with all regulatory requirements. This proactive approach helps identify and rectify potential issues before they escalate into penalties.
Review and Reconcile: Before submission, review all the documents and information thoroughly to ensure they align with the requirements of MGT-7 and AOC-4. Reconcile financial statements with supporting documents for accuracy.
Submit on Time: You must submit the completed MGT-7 and AOC-4 forms within the stipulated deadlines. Late filings can attract penalties, so adhering to the timelines is crucial.
Keep Records: Maintain copies of all filed documents and records of the filing process for future reference. This helps in case of any audits or inquiries regarding compliance.

By following these simple steps, you can minimize the risk of penalties associated with non-compliance or late filing of MGT-7 and AOC-4 forms, ensuring smooth operations and regulatory adherence for your company.

Conclusion

In India, companies must file MGT-7 and AOC-4 forms on time to avoid penalties. These forms contain important information about a company's operations and finances and must be submitted to the Registrar of Companies within specific deadlines. By following simple steps, companies can prevent penalties and ensure smooth operations. If your company hasn't filed the AOC-4/MGT-7 form yet, taking action now is essential to prevent penalties. Our experts are ready to assist you through filing and ensure compliance with MCA regulations. Don't risk fines or legal trouble – contact our experts and get your AOC-4/MGT-7 filed today! [shortcode_33]

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