- Compliance Aspects of MGT-8
- A penalty for Non-Compliance of MGT-8
- Monetary punishment
- Action by ICSI
- Penal provisions
- Imprisonment provisions
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MGT-8 form is to certify the annual returns filed. In this form, the secretary confirms that the facts provided by the annual returns disclose correct information. According to section 92(2), the Companies Act 2013 and rule 11(2) of Companies (Management and Administration) Rules, 2014, a practicing company secretary provides certification on the company’s annual return in the form MGT-8. He/she also verifies that it complies with the relevant provisions of the Company’s Act 2013.
It should state that the Annual Return disclosing the facts are correct and adequate, complying with all the provisions of the act. The company secretary certifies the following types of companies:
- If it is a listed company
- In case a company has a paid-up share capital of Rs.10 crore or more
- Or if a company has a turnover of Rs.50 crore or more
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 the opinion and information of the company secretary and examination carried out by the company secretary, its officer, and agents. The information shall always be obtained through some source of information and may have some background documentation. A prudent person shall present a reasonable opinion. The officers and agents of the company secretary may carry out the examination.
Compliance Aspects of MGT-8
The certificate issued by the secretary ensures that the company has complied with the provision of the Act and Rules under some aspects of compliance. The listed items below present you with some aspects of compliance under the form MGT-8:
- Status of the company
- 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/loans to its directors and/or persons or firms or companies referred to in section 185
- Contracts/arrangements with related parties as specified in section 188
- Issue/allotment/transfer/transmission/buyback of securities/redemption of preference shares or debentures/alteration or reduction of share capital/conversion of shares/securities and issue of security certificates.
- Keeping in abeyance the rights to dividend, rights shares, and bonus shares pending registration of transfer of shares.
- Declaration/payment of a dividend; transfer of unpaid/unclaimed dividend/other amounts to the IEPF as per the section 125
- The signing of audited FS as per section 134 and Boards report is as per sub-section (3), (4) and (5) of section 134
- Constitution/appointment/re-appointments/retirement/filling up casual vacancies/disclosure of Directors, 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/repayment of deposits.
- Borrowings from the directors, members, public financial institutions, banks, and others
- Loans and investments or guarantees given or providing of securities to other bodies (corporate or persons falling under the provisions of section 186 of the Act)
- Alteration of AOA and/or MOA of the company
A penalty for Non-Compliance of MGT-8
Non-compliance is when the company secretary provides a false certificate in form MGT-8, which doesn’t fulfill all the requirements mentioned in section 92. In this case, the company secretary has to bear the penalty for the same. The fine can’t be less than Rs.50,000 and can extend up to Rs.5 lakhs.
Action by ICSI
As per the provisions of the Company Secretaries Act, 1980, a company secretary will also be liable for disciplinary actions by the Disciplinary Committee of the ICSI.
In case there are any false statements or omits or incorrect facts in the report, return, certificate, financial statement, or any other documents, then there could be other penalties imposed by Section 447 of the Companies Act, 2013.
But 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 fraudulent practice affects the general public, the minimum imprisonment is of 3 years.
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