What is Form MGT-8 under the Companies Act, 2013?
It is a Certificate issued by a practising company secretary in a specified format as prescribed under the Companies Act, 2013. Form MGT-8 can be considered as a mini secretarial audit.
Under Which Section Form MGT-8 is issued?
It is issued under Section 92 (2) of the Companies Act, 2013 read with Rule 11(2) of the Companies (Management and Administration) Rules, 2014.
What are the criteria for the applicability of Form MGT-8?
Form MGT-8 is applicable to
- All Listed Companies
- Companies having paid-up share capital Rs. 10 crores or more or Turnover Rs. 50 crore or more
What is the purpose of Form MGT-8?
Basically, Form MGT-8 is certification to Form MGT-7, therefore it is issued to certify whether a company has complied with the provisions of the Companies Act, rules and regulations during the financial year and annual return of the company states the facts correctly and accurately.
When MGT-8 is issued and what should be the date of signing?
Form MGT-8 is a certification of details filled in Form MGT-7 (Annual Return) and certification can take place only after the Annual Accounts are finalised and adopted by the shareholders at the Annual General Meeting.
Therefore, one can interpret that the date of signing Form MGT-8 can be
- Date after preparation of Form MGT-7, OR
- The date on which Form MGT-7 is certified, OR
- The date of Form MGT-7 itself.
The companies to whom MGT-8 is applicable should obtain the same before filing Form MGT-7 with Registrar of Companies, as it is a mandatory attachment to the form for such companies.
Also, as per the provisions of Section 92 of the Companies Act, 2013, the Annual Return in Form MGT-7 must be filed within 60 days from the date of the Annual General Meeting.
Is MGT-8 applicable to private limited companies?
Certification in Form MGT-8 is mandatory for “the companies with paid-up share capital Rs. 10 crores of more OR Turnover Rs. 50 crore or more”. Therefore irrespective whether a company is a public company or a private company if they fulfil any one of the criteria i.e. paid-up capital or turnover for a particular financial year, then certification in Form MGT-8 will be applicable for that financial year.
Is MGT-8 applicable to Nidhi companies?
As stated above, if any company, fulfils the criteria i.e. paid-up capital or turnover for a particular financial year, then Form MGT-8 will be applicable. Therefore, it applies to Nidhi Companies as well.
Rule 11(2) of Companies (Management and Administration) Rules, 2014, does not provide any special exemptions apart from paid-up capital and turnover threshold.
Is the generation of UDIN mandatory for Form MGT-8?
With effect from October 01, 2019, for documents/certificates signed by Practising company secretary, UDIN (Unique Document Identification Number) must be generated either on the date of signing or 7 days before the date of signing of such document/certificate. A detailed list of documents for which UDIN generation is mandatory is provided under the guidelines issued by ICSI.
Therefore, for MGT-8, the practising company secretary must generate UDIN from UDIN portal of ICSI.
How to file Form MGT-8?
Form MGT-8 is not an e-form and is not be filed separately unlike other e-forms. It is a physical form which must be typed, printed, physically signed and scanned. The signed scan copy of the form is attached to Form MGT-7 as an attachment, and further Form MGT-7 will be filed with ROC.
What are the penalties for wrong reporting of information in Form MGT-8 or non-compliance?
As per Section 92(5) of the Companies Act, 2013, if a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, he shall be punishable with fine which shall not be less than Rs. 50,000 (fifty thousand rupees) but which may extend to Rs. 5 Lacs (five lakh rupees).
Further, Section 448 of the Companies Act, 2013 provides that if in any return, report, certificate, financial statement, prospectus, statement or other document required by, or for, the purposes of any of the provisions of this Act or the rules made thereunder, any person makes a statement,—
(a) which is false in any material particulars, knowing it to be false; or
(b) which omits any material fact, knowing it to be material,
He shall be liable for punishment under Section 447.
Section 447 of the Act, imposes a severe punishment, i.e. imprisonment for a term which shall not be less than 6 months but may extend to 10 years and fine which shall not be less than the amount involved in fraud but which may extend to 3 times of the amount involved in the fraud.
PCS shall also be liable for various actions initiated by the Disciplinary Committee of ICSI for guilty of professional or other misconducts.
What is the Format of Form MGT-8?
The format of Form MGT-8 is provided under Section 92(2) read with Rule 11(2) of the Companies (Management and Administration) Rules, 2014. Click here to view the format provided under the Act.
What does of Form MGT-8 include?
It provides certification on below points:
That the Annual Return states the facts as at the close of the aforesaid financial year correctly and adequately.
During the financial year under report, the company has complied with of the Act & Rules made thereunder in respect of:
- Status of the company under the Act - Status means whether the company is listed, public limited or private limited company.
- Whether the registers and records are maintained and entries in such registers are being timely made.
- Whether the company has filed various return, forms etc which were required to be filed with various authorities within the prescribed time.
- Whether the company has complied with the provisions of Calling/ holding/convening of Board Meetings, committee meetings and general meetings, and maintenance of records of the same
- Closure of the register of members
- Compliances related to Section 185 of the Act - Loans and advances
- Compliances under Section 188 of the Act - related party transactions
- Compliances related to Issue, allotment, transfer, transmission, buyback of shares, the redemption of preference shares, issue and redemption of debentures
- Right of dividend/bonus shares/right shares being kept in abeyance till the registration of transfer is completed
- Declaration and payment dividend as per Section 125 of the Act.
- The signing of audited financial statements and Boards’ Report
- constitution/ appointment/ re-appointments/ retirement/ filling up casual vacancies/ disclosures of the Directors, Key Managerial Personnel and the remuneration paid to them;
- appointment/reappointment or filling up the casual vacancy of statutory auditors
- approvals required to be taken from the from various authorities under the various provisions of the Act
- acceptance/ renewal/ repayment of deposits
- Borrowings from director/members/other institutions and matters pertaining to charge.
- 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 Memorandum or Articles of Association
Whether Practising Company Secretary (PCS) is required to sign the Annual Return?
Under section 92(1) of the Act, the Annual Return is required to be signed both by a director and the Company Secretary, or where there is no Company Secretary, by a PCS.
Important points which a practising company secretary must take into consideration while signing Form MGT-8:
- Form MGT-8 is a certification to Form MGT-7, therefore one must not overlook the details mentioned in the Form MGT-7.
- Prepare a detailed checklist for Form MGT-8.
- To obtain the requisite information, invest a good amount of time in the audit of documents available with the company and on the public domain.
- Take the search on MCA - View public documents
- Make a detailed list of compliances applicable to the company, along with their due dates and verify whether the same is done within the prescribed time.
- If there are any qualifications/remarks related to any point in Form MGT-8, then specify such remarks below that point itself. Do not mention the same in any separate annexure.
- Check the provisions of applicable sections, secretarial standards.
- Check whether the forms and returns filed by the company are within due dates and whether any forms were filed late or missed to file.
- Original and updated copies of Memorandum and Articles of Association, Minutes of meetings, Registers and Records, Last audited financial statements, copies returns and forms filed with Registrar along with receipts, List of promoters, pending litigations and orders passed by various authorities and courts, documents related to charge filing and indebtedness of the company etc. should be checked.
The professionals may also get a declaration from the management via Management Representation Letter, in respect of the following matters:
- indebtedness of the company,
- Shareholders and shareholding pattern of the company
- Transfer and transmission of shares
- Details of penalty/punishment on the company, director and officer.
- Details of compounding of offence in respect of Company, Director and Officer.
- Maintenance of registers, records, minutes by the company
- That no material event is suppressed from the PCS
- Any other matter as may be required.
While certifying the details as mentioned above one should always be careful. The data provided by the management and available in the public domain should be verified thoroughly. As penalties and punishments involved for false information or for intentional hiding of material facts are huge. Therefore due care and investment of the proper amount of time to verify the original documents is a must. It is the duty and responsibility of the professional to disclose true and correct information. They are also bound to inform the management regarding non-compliances happened if any and remedies to resolve the same so that the management can be well aware to avoid such non-compliances in future. One must understand the Companies Act, 2013 casts immense responsibility on the company, their management and professionals.
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