Introduction
The Registrar of Companies (ROC) is a statutory body established under the Companies Act, 2013 (“Act”), responsible for overseeing the registration and regulation of companies and limited liability partnerships within the jurisdiction of India. The ROC serves as a custodian of critical information about businesses, ensuring their compliance with statutory regulations specified under the Act and its associated rules. By maintaining a public database of registered companies, it safeguards the interests of various stakeholders, including investors, creditors and the public at large. Through its functions, it significantly contributes to fostering a fair, accountable, and credible business environment.
This article explores the importance of compliance with the ROC (“ROC filing”), detailing the essential forms that need to be filed, the consequences of non-compliance and effective strategies to mitigate associated risks. Understanding and adhering to these requirements provides mutual benefits for businesses and the society by protecting businesses from legal and financial penalties, while also fostering good corporate governance.
Importance of ROC filing
ROC filing holds significant implications for various stakeholders, particularly companies and investors.
For companies, ROC filing ensures legal adherence, transparency, and accountability in business operations. It enables companies to maintain their legal standing, promote corporate governance, and facilitate better financial management. Additionally, financial institutions and investors often request a company’s financial statements and compliance records before lending or investing. Thus, ROC filing enables businesses to obtain loans and investments by demonstrating their financial soundness and creditworthiness. Regular submission of financial statements to the ROC showcases a company’s legitimacy, attracts clients, consumers, and partners, thereby stimulating business growth and expansion.
On the other hand, for investors, since ROC filing includes vital financial statements such as balance sheets, profit and loss statements and cash flow statements, it provides critical information enabling informed decision-making. Investors rely on these filings to assess a company’s financial health, governance practices, and potential risks, which ultimately influence their investment decisions. Moreover, ROC compliance instils trust and confidence among investors, signalling a company’s commitment to transparency and ethical conduct.
List of some key forms required to be filed by a company:
As noted in the previous section, ROC filing is crucial to maintain legal standing, transparency, and regulatory adherence. Failure to file necessary documents within the prescribed timelines can result in penalties, prosecution, and other legal consequences.
Following is a list of certain important forms that need to be filed with the ROC, along with their descriptions, corresponding rules/sections, timelines, and consequences of late/non-filing:
| S. No | Form | Description | Section/ Rule | Timeline | Consequences of Late/ Non-filing |
| 1. | Form MGT-14 | Copy of resolution or any agreement required to be filed | Section 117 (1) of the Act and Rule 24 of Companies (Management and Administration) Rules, 2014. | Within 30 (Thirty) days of the passing of the resolution | If a company fails to file the resolution before the expiry of the period mentioned in Section 117(1) of the Act, the company shall be liable to a penalty of INR 10,000/- (Indian Rupees Ten Thousand) and in case of continuing failure, with a further penalty of INR 100/- (Indian Rupees One Hundred) for each day after the first during which such failure continues, subject to a maximum of INR 2,00,000/- (Indian Rupees Two Lakhs) and every officer of the company who is in default including liquidator of the company, if any, shall be liable to a penalty of INR 10,000/- (Indian Rupees Ten Thousand) and in case of continuing failure, with a further penalty of INR 100/- (Indian Rupees One hundred) for each day after the first during which such failure continues, subject to a maximum of INR 50,000/- (Indian Rupees Fifty Thousand). |
| 2. | Form PAS-3 | Return of Allotment | Section 39 (4) and 42 (9) of the Act and Rule 12 and 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014 | Within 30 (Thirty) days of making the allotment. | In case of default, the company and its officers in default shall be liable for a fine of INR 1000/- (Indian Rupees One Thousand) for each day the default continues or INR 1,00,000/- (Indian Rupees One Lakh), whichever is lesser. |
| 3. | Form MGT-7 | Annual Return | Section 92 (1) and Section 92(4) of the Act and Rule 11 (1) of the Companies (Management and Administration) Rules 2014. | Within 60 (Sixty) days of the Annual General Meeting, or where no Annual General meeting is held, within 60 (Sixty) days of the date on which it should have been held. | If any company fails to file its annual return under section 92(4) of the Act before the expiry of the period specified therein, such company and its every officer who is in default shall be liable to a penalty of INR 10,000/- (Indian Rupees Ten Thousand) and in case of continuing failure, with a further penalty of INR 100/-(Indian Rupees One Hundred) for each day after the first during which such failure continues, subject to a maximum of INR 2,00,000/- (Indian Rupees Two Lakhs) in case of a company and INR 50,000/- (Indian Rupees Fifty Thousand) in case of an officer who is an default. |
| 4. | Form AOC-4 | Financial Statements | Section 137 of the Act and Rule 12 (1) of the Companies (Accounts) Rules | Within 30 (Thirty) days of the Annual General Meeting with such fees as may be prescribed under Section 403. | If a company fails to file the copy of the financial statements under sub-section (1) or sub-section (2), as the case may be, before the expiry of the period specified therein the company shall be liable to a penalty of INR 10,000/- (Indian Rupees Ten Thousand) and in case of continuing failure, with a further penalty of INR 100/- (Indian Rupees One Hundred) for each day during which such failure continues, subject to a maximum INR 2,00,000/- (Indian Rupees Two Lakhs) and the managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the directors of the company, shall be shall be liable to a penalty of INR 10,000/- (Indian Rupees Ten Thousand) and in case of continuing failure, with a further penalty of INR 100/- (Indian Rupees One Hundred) for each day after the first during which such failure continues, subject to a maximum of INR 50,000/- (Indian Rupees Fifty Thousand). |
| 5. | Form SH 7 | Increase in Authorized Share Capital of the Company | Section 64 (1) of the Act and Rule 15 of the Companies (Share Capital and Debentures) Rules 2014. | Within 30 (Thirty) days of such alteration or increase in redemption | The company and any officer in default of these provisions shall be punishable with a fine which may extend to INR 1000/- (Indian Rupees One Thousand) for each day the default continues or INR 5,00,000/- (Indian Rupees Five Lakhs), whichever is lesser. |
Once the filing of the requisite forms is done, a copy of the challan/receipt can be generated by using the MCA portal. This receipt is used as proof of completion of the filing process.
It should be noted that the requirements for ROC filing vary depending on the type of company. Therefore, understanding and fulfilling the unique requirements based on the company’s classification is essential for maintaining compliance with ROC regulations.
Effect on Company and its directors for non-filing of statements/annual returns:
The failure to file documents with the ROC can have significant consequences for both the company and its directors.
For instance, for a company, neglecting to file its Annual Returns for a continuous period of two years or more, carries the risks of the company being classified as inactive under Section 455 of the Act. This classification implies that the company’s operations may have ceased due to the prolonged non-filing of returns like AOC-4 and MGT-7. As a result, the company’s bank account could be frozen, and the Registrar may take steps to strike off the company from its records after providing a reasonable opportunity for the company to present its case.
Similarly, for directors, the repercussions of non-filing are severe. According to Section 164(2) of the Act, directors who fail to submit both Form MGT-7 and AOC-4 for three consecutive years face disqualification. This disqualification prevents them from being re-appointed in the same company or appointed as directors in any other company for the next five years. Additionally, Section 167 of the Act mandates that incurring disqualification under Section 164 results in the automatic vacation of the office of the director. This not only hampers the future prospects of the directors but also leads to the loss of their current position within the company.
Ways to mitigate the risk:
Mitigating the risks associated with non-filing of documents with the ROC, as outlined in the previous sections, require proactive measures and diligent adherence to compliance procedures. Here are a few tips that can be effective in mitigating these risks:
- Maintain a Compliance Calendar: Develop a comprehensive compliance calendar that includes all ROC filing deadlines for various documents such as Annual Returns, Financial Statements, and Director-related forms. Regularly update and review this calendar to ensure timely submission of required documents.
- Maintain Document Records: Maintain organized and up-to-date records of all ROC filings, correspondence with regulatory authorities, and related documents. This documentation will serve as evidence of compliance in case of any inquiries or audits.
- Stay Informed: Keep abreast of changes in regulatory requirements, filing procedures, and deadlines issued by the ROC or relevant authorities. Stay informed by regularly monitoring communications from the ROC, subscribing to newsletters, and engaging with legal or compliance experts. Additionally, promptly respond to any communications received from regulatory authorities to mitigate the risk of penalties or adverse actions.
- Seek Professional Assistance: Companies should regularly contact their appointed company’s legal and secretary people to ensure that all necessary forms have been submitted and the company is legally compliant.
Author: Abhisshek Singlla,
Co-Author: Prajjwal Sharma
