Table of Contents
Introduction
The annual filing process for a company is a crucial compliance requirement under the Companies Act, 2013. Proper and timely filing not only ensures adherence to legal obligations but also maintains the company’s credibility and avoids penalties. As we step into F.Y. 2023-24, here are some important points to consider while doing the annual filing for your company.
Important Points To Consider For Company Annual Filing
1. Annual General Meeting (AGM)
i. For Companies holding their first Annual General Meeting (AGM), please note that the same can be held within 9 months from the end of the Financial Year i.e., on or before 31/12/2024.
ii. For all the other companies, conduct the Annual General Meeting (AGM) within six months from the end of the financial year, i.e., on or before September 30, 2024.
iii. Approve the audited financial statements, Board’s Report and other relevant documents in the Annual General Meeting (AGM).
2. Directors’ Report
i. Prepare a comprehensive Directors’ Report, ensuring it covers all mandatory disclosures as per Section 134 of the Companies Act, 2013.
ii. Include details about the state of the company’s affairs, dividend recommendations, changes in directors and key managerial personnel, and particulars of loans, guarantees, and investments.
iii. Ensure the report is signed by the chairperson or any two directors authorized by the Board.
iv. To simplify the format of the Board Report, the Ministry of Corporate Affairs (MCA) made amendments to Rule 12 through the Companies (Management and Administration) Amendment Rules, 2021, dated March 05, 2021. As per this amendment, companies are no longer required to attach the extract of the annual return in Form No. MGT 9 to the Board’s Report, even if they do not have a website. Now, only companies with a website need to prepare the annual return in e-Form No. MGT 7 or e-Form No. MGT 7A (as applicable), place it on their website, and include the weblink of the annual return in the Board’s Report.
3. Auditor’s Appointment
i. Ensure the appointment or reappointment of auditors is compliant with Section 139 of the Companies Act, 2013.
ii. File E-Form ADT-1 within 15 days of the appointment or reappointment of statutory auditors. For Example, if the statutory auditor is appointed in the AGM held on 30th September 2024, then the E-Form ADT-1 must be filed by 14th October 2024.
iii. The auditor’s report, including the statutory auditor’s qualifications, if any, should be annexed to the financial statements.
4. Filing of Financial Statements and Annual Return
i. File the financial statements along with the consolidated financial statements, if applicable, in e-Form AOC-4 within 30 days from the date of the AGM.
ii. Ensure that the financial statements are duly signed by the directors, the authorized signatory and the statutory auditor of the company.
iii. File the Annual Return in e-Form MGT-7/ MGT-7A within 60 days from the date of the AGM. MGT-7A is required to be filed by a Small Company.
As per new definition, “small company” means a company, other than a public company whose:
- paid-up share capital does not exceed Rs. 4 Crores or such higher amount as may be prescribed under the law which shall not be more than Rs. 10 Crores; and
- turnover for the immediately preceding financial year does not exceed Rs. 40 Crores or such higher amount as may be prescribed under the law which shall not be more than Rs. 100 Crores:
Provided that nothing mentioned above shall apply to:
- a holding company or a subsidiary company
- a company registered under section 8
- a company or body corporate which is governed by any special Act.
5. Filing of Cost Audit Report
i. If applicable, file the cost audit report in e-Form CRA-4 within 30 days of receipt of the report from the cost auditor.
ii. Cost audit is applicable to every company, including foreign companies, involved in the production of goods or provision of services listed under Table A or Table B of the Companies (Cost Records and Audit) Rules, 2014.
- Table A includes companies in regulated sectors, such as electricity, petroleum, drugs, fertilizers, sugar, etc.
- Table B includes companies in non-regulated sectors, such as automobiles, cement, steel, paper, textiles, etc.
The applicability of cost audit is determined by the following criteria:
- For companies in regulated sectors, the overall annual turnover from all products and services in the preceding financial year must be ₹50 crore or more. For companies in non-regulated sectors, this threshold is ₹100 crore or more.
- Additionally, the aggregate turnover of the specific product(s) or service(s) for which cost records are required should be ₹25 crore or more for regulated sectors, and ₹35 crore or more for non-regulated sectors.
If both criteria are met, the company must have its cost records audited by a cost auditor. If either criterion is not met, the company is not required to have its cost records audited. However, the company is still obligated to maintain cost records as per the rules.
6. Compliance with XBRL Filing
i. If applicable, ensure that the financial statements are filed in XBRL format as mandated by the MCA for certain classes of companies.
ii. Under the Companies Act, 2013, along with the Companies (Filing of Documents and Forms in XBRL) Rules, 2015, certain classes of companies are required to file their balance sheet, profit and loss account, and E-form AOC-4 XBRL using XBRL taxonomy with the Registrar of Companies (ROC). These include:
- Every public company listed on the Indian stock exchange and their Indian subsidiaries.
- Every company with a turnover of ₹100 crore or more.
- Every company with a paid-up capital of ₹5 crore or more.
- Every company required to prepare financial statements under the Companies (Indian Accounting Standards) Rules, 2015.
However, the following companies are exempt from filing financial statements in XBRL taxonomy:
- Non-banking financial companies (NBFCs)
- Housing finance companies
- Companies involved in insurance and banking sectors
Once a company has filed its financial statements in XBRL format with the ROC under Section 137 of the Act, it must continue to file subsequent financial statements, AOC-4, and other documents in XBRL format, even if it no longer falls under the specified classes of companies.
7. Applicability of CARO
i. Certain companies are mandated to include a statement in accordance with the Companies (Auditor’s Report) Order, 2020 (CARO 2020) as an annexure to their audit report.
ii. CARO 2020 applies to all companies, including foreign companies, but excludes the following:
- One person companies (OPCs)
- Small companies (companies with paid-up capital of ₹4 crore or less and a turnover of ₹40 crore or less)
- Banking companies
- Companies registered for charitable purposes
- Insurance companies
Additionally, the following private companies are exempt from the requirements of CARO 2020:
- Those with gross receipts or revenue (including revenue from discontinued operations) of ₹10 crore or less in the financial year
- Those with paid-up share capital plus reserves of ₹1 crore or less as of the balance sheet date (typically the end of the financial year)
- Companies that are neither a holding nor a subsidiary of a public company
- Those with borrowings of ₹1 crore or less throughout the financial year.
Conclusion
Timely and accurate annual filing not only keeps a company in good standing with regulatory authorities but also enhances the trust of stakeholders. By adhering to these points, you can ensure a smooth and compliant annual filing process for F.Y. 2023-24.
