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

In accordance with the general practices, every company is required to prepare the extract of the annual return in Form MGT-9 and that too before the preparation of actual Annual Return in E-form MGT-7 which is submitted to ROC within 60 days of AGM. The Form MGT-9 is an extract of the annual return which contains the following details of the Company for one Financial Year and it is annexed to the Board’s Report of the Company: Basic details of Company (CIN, address, principal business activity); Principal Business Activities of the Company; Details of Holding, Subsidiary and Associate Company; Share Holding Pattern;

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.

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

Who needs to fill out MGT-9?

As per the Companies Act 2013, all companies that have issued equity shares or have convertible securities on their balance sheet are required to prepare and file Form MGT-9 with the Registrar of Companies (RoC) every year. This includes both listed and unlisted companies.

Form MGT-9 requires companies to provide information about the remuneration paid to directors, key managerial personnel (KMP), and other employees of the company. 

Therefore, companies with directors, KMPs, or employees who receive remuneration during the financial year must fill out Form MGT-9.

The form contains the following information

  • Name of the company: The name of the company is entered at the top of the form.
  • CIN: The company’s corporate identification number (CIN) is entered on the form.
  • Financial year: The financial year for which the form is being filed is mentioned in the form.
  • Remuneration paid to directors: The form requires companies to disclose the remuneration paid to directors during the financial year. This includes the salary, bonus, and other benefits received by the directors.
  • Remuneration paid to KMP: The form also requires companies to disclose the remuneration paid to key managerial personnel (KMP).. This includes the salary, bonus, and other benefits received by the KMPs.
  • Remuneration paid to other employees: The form also requires companies to disclose the remuneration paid to other employees of the company.
  • Reasons for variations in remuneration: The form requires companies to provide reasons for any variations in the remuneration paid to directors, KMPs, and other employees.
  • Average percentage increase in salaries: The form requires companies to provide details of the average percentage increase in salaries of employees during the financial year.
  • Comparison of remuneration with industry peers: The form also requires companies to compare their remuneration practices with those of their industry peers.
  • Signature of the director/secretary: The form must be signed by the company’s director or secretary in digital format using a digital signature certificate (DSC).

Form MGT-9 is a document that provides information about the remuneration paid to directors, KMPs, and other employees of the company. 

It promotes transparency in the remuneration practices of companies and ensures that stakeholders are aware of the compensation paid to key individuals within the organization. 

Companies must file Form MGT-9 within 60 days (about 2 months) of the annual general meeting (AGM) to avoid any penalties or legal repercussions.

Details Required in Form MGT-9

The Companies Act of 2013 requires companies to disclose the following details in Form MGT-9:

  • The name of the director, KMP, or employee.
  • The designation of the director, KMP, or employee.
  • The remuneration is paid to the director, KMP, or employee during the financial year.
  • The nature of the remuneration includes salary, allowances, bonuses, stock options, and other benefits.
  • The amount of contribution to the provident fund and pension fund.
  • The details of perquisites and other allowances.
  • The amount of any commission paid to directors.
  • The details of any stock options granted to directors, KMP, or employees.
  • The details of other benefits include profit-sharing, bonuses, or deferred benefits.

Companies must provide this information for each director, KMP, and employee who receives remuneration during the financial year.

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.

What problems may Companies face while filing this form

  • Incorrect or incomplete information: One of the most common problems is inaccurate or incomplete information. Companies must ensure that the information provided in the form is correct and complete. Any discrepancies or errors could lead to penalties or legal repercussions.
  • Technical glitches: Another problem that companies may face while filing Form MGT-9 is technical glitches. This could be due to issues with the MCA portal or other technical issues. It is advisable for companies to file the form well in advance of the due date to avoid any last-minute technical issues.
  • Digital signature issues: Companies must ensure that the digital signature used to sign the form is valid and up to date. Any issues with the digital signature could lead to the rejection of the form
  • Late filing: Failing to file Form MGT-9 within the due date can result in penalties and legal consequences. It is, therefore, important for companies to ensure that the form is filed within the stipulated time frame.
  • Lack of knowledge: Companies may also face problems while filing Form MGT-9 if they are unfamiliar with the process or the requirements. Companies need to have a clear understanding of the requirements and seek professional advice. Especia employs professionals that are knowledgeable and experienced. Especia would make sure to give customers a hassle-free experience, allowing them to focus on other aspects of their business.

FAQs

Is it mandatory to file Form MGT-9 even if the company has not paid any remuneration?

Yes, it is mandatory for all companies to file Form MGT-9, even if they have not paid any remuneration to directors, KMPs, or other employees.

What are the consequences of not filing out Form MGT-9?

Failing to file Form MGT-9 within the due date can result in penalties and legal consequences. The company and its officers may be liable to pay fines and face legal action.

Can Form MGT-9 be filed after the due date?

Yes, Form MGT-9 can be filed after the due date, but it will be considered a belated filing and may attract penalties and legal consequences.

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