Form MGT-8: Applicability, Compliance aspects & penalties

Introduction to Form MGT-8

Form MGT-8 is a certificate for the fulfillment of the annual return certified by a Company Secretary are as follows:

• having paid-up share capital of ten crore rupees
• or more or turnover of fifty crore rupees
• or more by a listed company, by the practicing company secretary.

According to Rule 11(2), Companies Act 2013, under Section 92(2), the company secretary carefully examines the papers of a company, registers, record, books to provide assurance to the company that now there is no risk of fraudulent activities and any misrepresentations. Through the company secretary annual income tax return filed by a company having prescribed turnover and paid-up capital should be certified in a prescribed form under Section 92(2). Annual return disclosing the facts have to be correct while fulfilling all the provision of the act.

Compliance Aspects For Form MGT-8

Form MGT-8 requires a certificate of assurance that this aspect of the company has complied with provisions of the Act & Rules. The responsibility of the company secretary is limited only to listed regulation only. Some of the following aspects of compliance that Form MGT-8 deals with are:

1. The status of the company under the Act,
2. Maintaining the record, books, and making the entries within the given times,
3. Records and filing of forms according to the annual return with the Central Government, the Tribunal, Court, Registrar of the Companies, Regional Director and other authorities within/beyond the prescribed time
4. Calling/ convening/ holding Board meetings with the Board of Directors or its committees, if any. And the meetings of the members of the company within the prescribed time. According to the annual return in respect of which meetings, proper notices were given and the proceedings including the circular resolutions and resolutions passed by postal ballot.
5. The closure of Security holders/Register of Members,
6.  Advances/loans to its directors and/or firms or companies or person stated in section 185 of the Act;
7. Arrangements/ Contracts with related parties as referred in section 188 of the Act;
8. Buyback of securities or shares /redemption of preference shares or debentures/alteration of share capital/ or reduction of share capital/ conversion of shares/securities and issue of share certificates in all instances; /Issue, allotment, transfer, the transmission of shares.
9. Keeping in the state of dormancy the right to share rights, dividend and bonus share pending registration of transfer of shares in compliance with the provisions of the Act.
10. The signing of an audited financial statement according to the provisions of section 134 of the Act. And the report of directors is as per subsections (3), (4) and (5).
11. Declaration/ payment of dividend, transfer of unpaid/ unclaimed dividend/other amounts as applicable to the Investor Education and Protection Fund in accordance with section 125 of the Act;
12. Constitution/ re-appointment/ appointments of director/ retirement/ filling up casual vacancies/retirement/ disclosures of the Directors, Key Managerial Personnel and the remuneration paid to them.
13. Appointment/ reappointment/ filling up casual vacant auditors according to the provisions of section 139 of the Act;
14. Taking approval through to the Central Government, Tribunal, Regional Director, Registrar, Court or from the other authorities as per the various provisions of the Act are required to be considered.
15. Acceptance/ renewal/ repayment of deposits.
16. Borrowings from its directors, members, public financial institutions, banks, and others and creation of charges/ modification of charges/ satisfaction of charges in that respect, wherever applicable.
17. Adaptation of the provisions of the Memorandum and Articles of Association of the company.

Must Read: Compliances of a Private Limited Company

Form MGT-8: Penalties for Non-Compliance

If the company secretary provides a false certificate in Form MGT-8 which doesn't fulfill all the provisions mentioned in the laws of Section 92 then the penalty has to be borne by the company secretary. The fine which the company secretary will bear will be not less than Rs 50,000 and might extend to Rs. 5 Lakh. A company secretary will be also liable for disciplinary actions by the Disciplinary Committee of the ICSI as per the provision of the Company Secretaries Act, 1980. If any return, report, certificate, financial statement, or any other document makes a false statement or omits any material or incorrect facts then the Section 448 of Companies Act, 2013 also imposes a penalty on the company secretary. A serious punishment of imprisonment is imposed if someone is found guilty or fraud. The imprisonment will be for a minimum of 6 months and can extend to 10 years. Moreover, a fine will be imposed which will equal to the amount involved in the fraud or may be extended to three times of fraud amount involved in the fraud. If the case becomes more serious and the general public is affected due to this then the imprisonment of a minimum for 3 years will be given. At LegalRaasta, a team of expert professionals is looking forward to assisting you in a wide range of company compliances, to Convert Proprietorship to PVT, Company Annual Filing, ITR Filing, and Trademark Registration. Call us at +91 8750008585 or send your query on [email protected] You can also download our LegalRaasta APP, for easy access.

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