WHAT IS FORM MGT-8 AND ITS APPLICABILITY
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Form MGT-8 is a certification that must be provided by a practicing company secretary along with certain companies' annual returns. It is required for listed companies, companies with paid-up capital over Rs. 10 crore, or companies with turnover over Rs. 50 crore. The secretary certifies that the annual return discloses correct and adequate facts and that the company has complied with the Companies Act. The secretary must examine registers, records, meetings, related party transactions, and other corporate filings and activities. Non-compliance can result in fines up to Rs. 5 lakh for the secretary, disciplinary action, and imprisonment of up to 10 years for the company if fraud is involved.
WHAT IS FORM MGT-8 AND ITS APPLICABILITY
- 1. WHAT IS FORM MGT-8 AND ITS APPLICABILITY Form MGT-8 is a certification given on a company’s annual return by a practising company secretary, as per the Companies Act 2013, under Section 92(2). Provisions Under Companies Act 2013: According to Section 92(2) of the Companies Act, 2013 read with rule 11(2) of Companies (Management and Administration) Rules 2014, the annual return of: A listed company or A company having paid-up share capital of Rs 10 crore or more or Turnover of Rs 50 crore or above will be certified by the company secretary in practice, and the certificate shall be in Form No MGT 8. This is a kind of Mini secretarial audit report which is submitted as an attachment to annual return in Form MGT-7. The Company Secretary shall certify that the annual return discloses the facts correctly and adequately and the firm has complied with all the provisions of the Act. Objective of this certification: In this certificate, the company secretary at first certifies that the company secretary has examined the registers, records, and books and papers of the company. This self-certificate of examination is important because at any stage company may not deny this fact and admissible under any proceeding related to fraud and misrepresentation as well as class action suits. Certification of annual return is subject to opinion and information of the company secretary and examination carried out by the company secretary, its officer, and agents. The information shallalways beobtained through some source of information and may have some background documentation. Aspects which need to be examined: Status of the company under the act Maintenance of registers/records Filing of forms and returns Calling/convening/holding Board Meeting or its committee meeting, if any, and meeting of members on due dates as stated in the annual return Closure of register of members/security holders Advances to directors or persons mentioned insection 185 of the Companies Act, 2013.
- 2. Contracts or arrangements with persons specified in Section 188 of the Companies Act, 2013 as related parties. Details of changes in share capital by way of issue, transfer, transmission, redemption, buyback or conversion of securities. Right of dividend/bonus shares/right shares being kept in abeyance till the registration of transfer is completed. Amount to be moved to the Investor Education and Protection Fund as per Section 125 of the Companies Act, 2013. The signing of audited FS as per section 134 and Boards report is as per sub- section (3), (4) and (5) of section 134 Appointment/reappointment/remuneration pertaining to directors and key managerial personnel and the remuneration paid to them Appointment/re-appointment/filling up casual vacancies of auditors as per section 139 Approvals required to be taken from the CG, NCLT, RD, Registrar of Companies, Court or such other authorities under the provisions of the Act. Acceptance, renewal and repayment of deposits. Borrowings from the directors, members, public financialinstitutions, banks, and others Loans and investments or guarantee given or providing of securities to other bodies (corporate or persons falling under the provisions of section 186 of the Act). Alteration of the articles of association/memorandum of association. Penalty in case on non-compliance: Pecuniary Penalty: If the Company Secretary certifies the annual return which is not in conformity with the section/rules and doesn’t fulfilthe requirements mentioned in section 92, then he/she shall be punishable with fine which shall be a minimum of Rs 50,000 and a maximum of Rs 5 lakh. Under the Institute of Company secretaries of India (ICSI): A practising company secretary will be liable for disciplinary actions by the Disciplinary Committee of the ICSI under the provisions of Company Secretaries Act, 1980. Under Companies Act 2013: Section 448 of Companies Act, 2013 also imposes a penalty if any return, report, certificate, financial statement, prospectus, statement or any other document makes a false statement or omits any material fact.
- 3. Under Section 447 of the Companies Act 2013, if someone is found guilty of fraud, then a serious punishment of imprisonment could be imposed. There is imprisonment of a minimum of 6 months to 10 years for this case. In addition to this, a fine could be imposed that will be equal to the amount involved in the fraud or may be extended up to 3 times the fraud amount involved in the fraud. If the case is more serious, involving public interest, the imprisonment would be for a minimum of three years.