Consequences of Not Filing ROC
Consequences of Not Filing ROC
ROC returns are financial statements, and annual returns of a company must be filed on time to the registrar of companies with the MCA each year. As per Companies Act, 2013, non-filing of ROC is an offence. Hence, it is indispensable for a company to file the annual return with the MCA within 60 days of the Annual General Meeting and within 30 days for a Financial Statement. In this article, we look at the various consequences and the penalties for not filing ROC.
Consequences of Default – For Company
The following are some of the penal consequences for a company that has not filed its annual return:
Penalty
Normally, the Government fee for filing or registering any document under the Companies Act required or authorized to be filed with the Registrar is Rs.200. A private limited company would be required to file form MGT-7 and form AOC-4 each year. The government fee applicable if filed on time would be Rs.400. In case of delay in filing of annual return/balance sheets/financial statements, the penalty as mentioned would be applicable:
| Period of Delay | Penalty Charge |
| Upto 15 days (sections 93,139 and 157) | 1X of the normal fee |
| More than 15 days and up to 30 days (Sections 93, 139 and 157) and up to 30 days in remaining forms. | 2X of normal fee |
| More than 30 days and up to 60 days | 4X of normal fee |
| More than 60 days and up to 90 days | 6X of the normal fee |
| More than 90 days and up to 180 days | 10X of the normal fee |
| More than 180 days and up to 270 days | 12X of the normal fee |
| Delay beyond 270 days | The second proviso to sub-section (1) of section 403 of the Act may be referred. (Rs.100 per day penalty after 270 days) |
The penalty for not filing a company’s annual return (Form MGT-7 and Form AOC-4) is set to be increased to Rs.200 per day. Thus, for a company that files its annual return 9 months after its due date, the penalty would be Rs.54,000 compared to a penalty of Rs.4800 applicable now.
Know more about 2018 penalty for not filing company annual or IT return.
Consequences for Default – For Directors
The Directors of a company are responsible for ensuring that the company complies with all applicable rules and regulations. When a company defaults on compliance or dues payable, the Directors are held responsible for the default. The following are penal consequences for a Director of a company that has not filed its annual return.
Director Disqualification
In case a company has not filed its Annual Return for three continuous financial years, then every person who has been a director or is currently the director of the specific company could be disqualified under the Companies Act, 2013 (Know more about Director Disqualification). If a Director is disqualified, his/her DIN will become inactive, and the person will not be eligible to be appointed as a Director of any company for a period of five years from the date of disqualification. Further, disqualified Directors would also not be allowed to incorporate another company for a period of five years.
Fine & Imprisonment
A director of the company can be punished if the company has not been filed even after 270 days from the date when the company should have originally filed with an additional penalty. Any Director who has defaulted in the filing of the annual return of a company can also be penalized with imprisonment of a term extended up to six months or with a fine of an amount not lesser than fifty thousand rupees, and it might extend up to five lakh rupees, or with both imprisonment and fine. However, these provisions provided under the Companies Act 2013 are rarely used.
In addition, if any information filed by a Director or any other person in the annual return is false by any nature or if he/she fails to mention any fact or material that is true can be punished with imprisonment for a term which is not lesser than six months and which could extend up to 10 years. Further, he/she can also be liable for payment of a fine which is not lesser than the amount subject to the fraud involved, and it may extend to an amount three times the sum concerned with the fraud.
Strike-Off
In case the Company has not filed its Annual Return for the last two financial years continuously, then such a company would be termed as an “inactive company”. On such a classification, the bank account of the company could be frozen. Further, the Registrar could also issue a notice to the Company and initiate a strike-off of the company from the MCA records.
Consequences of Not Filing Forms Under ROC
Form MGT-7
When filing an Annual ROC, companies must file Form MG-T. As clearly stated in Section 92(4) of the Companies Act 2013, companies are required to file a copy of Annual returns through Form MGT-7 and pay the nominal fees to the Registrar of Companies within 60 days from the date of the Annual General Meeting. If the companies fail to file the form, they can still file after 60 days, but with an additional fee of Rs.100 per day.
In case of non-filing the form, both the company and all the directors are liable to penalty. The penalty will be the company, and all the directors are liable to pay Rs. 50,000. If there is a continuing failure, the further penalty will be Rs.100 each day as such failure continues, goes to the maximum of Rs. 5,00,000.
Form AOC-4
As the Act instructs, every company must file a copy of financial statements, including the consolidated financial statements, with an attachment of necessary documents and pay fees within 30 days of the Annual General Meeting.
In case of failing to file, a company and the directors are subjected to a penalty of Rs.1000 per day to the maximum of Rs. 10,00,000. The CEO of the company managing director or the director who is responsible, in the absence of them, or in case there is no director as such, all directors need to pay a charge of Rs. 1,00,000.
