Penalties and Prosecution for Non Filling of Financials with ROC

You may lend in pool of harassment and penalty if the Annual Return and financials statements are not filed on time? As per Companies Act,  this is a criminal offence for which directors and the secretary may be prosecuted with penalties. As per Companies Act, 2013 every Company have to file Annual return within 60 and Financial statement within 30 from the date of AGM to the ROC.

So you need to get pretty serious before Registrar of companies will bother taking you to court.

In this Article, we are going to discuss the probable consequences of non-filling or delay in filing of Annual Return and  Financial statement.

A) Companies act 2013 provision read as under-

As per Section 92 Every company shall file with the Registrar a copy of the annual return (MGT-7), within 60 days from the date on which the annual general meeting is held.

As per Section 137 A copy of the financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed (AOC-4) with the Registrar within 30 days of the date of annual general meeting

B) What will happen if not complied?

If a Company does not comply with the above provision for filling of above-mentioned forms within prescribed time-limit. In such situation, penalty or prosecution under section 92(5) and 137 (3) shall be initiated.

C) Consequences of delay/non- filing For Company

i) For delay/non-Filling of Annual return 

Delay period Penalty
Up to 330 days of AGM Maximum up to 12 times of normal fees
More than 330 days of AGM 12 times of normal fees plus Fine not be less than Rs. 50,000/- but which may extend to Rs.5,00,000/


ii) 
For delay/non-Filling of Financial Statements –

Delay period Penalty
Up to 300 days of AGM Maxmium up to 12 times of normal fees
More than 300 days of AGM 12 times of normal fees plus Fine of Rs 1000/- every day during which failure continues but maximum fine may be Rs 10,00,000/-


For Directors –

 i) For delay/non- Filling of Annual Return

Delay period Penalty and prosecution
Up to 330 days of AGM No penalty
More than 330 days of AGM

a) Imprisonment up to extend to 6 months or

b) Fine which shall not be less than Rs 50,000  but which may extend to Rs 5 lakh or

c) Both with imprisonment and fine.


ii)  
For delay/ non – Filling of  Financial Statements

  Delay period Penalty and prosecution
Up to 300 days of AGM No penalty
More than 300 days of AGM

a) Imprisonment of term which may extend to 6 months or

b) Fine which shall not be less than Rs 1 lakh but which may extend to Rs 5 lakh or

c) Both with imprisonment and fine.

D) How it can be Compounded (section 441)

Many peoples have raised the question as to what are the consequences if Company fails to file an annual return or financial statement within 300 or 330 days from the date of AGM.

 In this case, the company would be liable for the penalty or punishment provided under this Act but it can save itself from the prosecution by compounding the offence.

Compounding is essentially a compromise or arrangement between the administrator of the enactment and person committing an offence. Compounding crime consists of receipt of some consideration (termed as compounding fees) in return for an agreement not to prosecute one who has committed an offence.

A Company can apply for the compounding of offence only after rectifying the default.

E) Crux

It would be highly advisable to the promoters and directors to comply with the timelines for the filing of the financial statement and annual returns failure of them attract multiple penalties.

Comment

  1. very good sir. what are the steps to be taken to lender in this case to save his money and precautions to be taken to renew the limit or enhancement of the limit without filing of financial returns or conducting AGM.

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