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Penalty for Late Filing of Annual Return of Company

Late Filing of Company Annual Return

Penalty for Late Filing of Annual Return of Company

The Companies (Management and Administration) Rules, 2014 requires all companies to prepare and file an annual return containing information pertaining to the company as it was on the close of the financial year. All companies are required to file the annual return within 60 days of holding annual general meeting or within 60 days from the last date on or before which an annual general meeting must have been held by the Company. In this article, we look at the penalty for late filing of annual return of a company.

Applicability of Annual Return Filing

All Companies incorporated in India (Private Limited Company, One Person Company, Limited Company, Section 8 Company, Producer Company and Nidhi Company) are required to file annual return at the end of each financial year.

Even a defunct company must file annual return till the name of the company is struck off from the Register of Companies by the Registrar. Also, non functioning companies or companies with no activity are also required to file annual return at the end of each financial year. The fact that a company has not been functioning does not exempt the company from its requirement for filing of annual return.

Penalty for Failure to File Annual Return

The consequences for not filing annual return are very serious. If a company fails to file its annual return, it is punishable with a fine which shall not be less than Rs.50000 but which may extend to Rs.5 lakhs. Also, every Officer (Director) of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than Rs.50,000 but which may extend to Rs.5 lakhs, or both.

Disqualification of Director

If the annual return of a company is not filed continuously for three financial years, then any Director of such company would be disqualified and would not be eligible for appointment as a Director of any other company for a period of five years from the date on which the defaulting company failed to file annual returns. (Know more about Director Disqualification)

In addition to the above, to ensure proper Corporate Governance and Proper Compliance of provisions of Companies Act, the following action would be implemented:

  • No other efiling of the company would be accepted by the ROC from Directors of defaulting companies for any other company also.
  • Company Secretaries and Auditors of defaulting companies would not be allowed to sign and certify the filing with MCA-21 system, till the defect is rectified.
  • Members of ICAI, ICSI and ICWAI must not issue any certificates to such defaulting companies.
  • Action will be taken against defaulting companies and their Director in default in coordination with RBI and SEBI.

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