MGT 8 form – Compliance Assurance through it

Form MGT 8 is a certificate issued on the annual return of a company by a practicing company secretary, as provided for under Section 92(2) of the Companies Act 2013. With a view to providing this assurance, the company secretary must closely review the company’s registers, records, books, and documents in order to ensure that they are free from any irregularities and fraudulent activities.

In this blog, let’s find out what this form is, its applicability, and its contents.

What is Form MGT 8 and its applicability?

It is well known that every company registered in India, whether public or private, is required to prepare its annual return in Form No. MGT 7. MGT-7 is an electronic form issued by the Ministry of Corporate Affairs (MCA) to all companies for the purpose of submitting their annual return information.

Certification of this annual return is needed by a Company Secretary in practice where the company is a listed company or falls under a certain specified threshold limit. Such certificate shall be in Form No. MGT 8.

According to sub-rule (2) of rule 11 of the Companies (Management and Administration) Rules, 2014, the annual return, filed by a listed company or a company having paid-up share capital of Rs. 10 crores or more or turnover of Rs. 50 crore or more, is to be certified by a Company Secretary in practice.

Thus, MGT 8 is a certification needed to authenticate the details contained in MGT 7 in case of:

  • Listed companies, and
  • Companies having paid-up share capital of Rs. 10 crores or more or turnover of Rs. 50 crores or more

It is a sort of mini secretarial audit report submitted as an attachment to the annual return in Form MGT-7.

Format

Form MGT 8 can be downloaded from the link here.

Certification

For the relevant financial year for which MGT 7 (annual return) is filed by a company, a Company Secretary in full-time practice needs to certify the following via MGT 8:

  • The annual return accurately and properly sets out the facts as at the end of the relevant financial year.
  • The company has complied with provisions of the Act & Rules made thereunder with regard to its status under the Act and has maintained books/records & made the entries therein within the time prescribed therefor.
  • The company has filed all the requisite forms and returns with the Registrar of Companies (ROC), Regional Director, the Central Government, the Tribunal, Court, or other appropriate authorities within/beyond the prescribed time.
  • The company has held meetings of the Board, committee meetings, and meetings of its members on due dates as stated in the annual return. For such meetings, proper notices were sent and the proceedings comprising circular resolutions and resolutions passed by postal ballot, have been properly recorded in the Minute Book and the same has been signed.
  • Closure of Register of Members or security holders.
  • Loans and advances to the company’s directors and/or persons or firms or companies specified under Section 185 of the Act.
  • Related party contracts referred to in Section 188 of the Act.
  • Issuance, allotment, transfer, or buyback of shares/ redemption of preference shares or debentures/ any alteration in share capital/ conversion of shares and issuance of security certificates in all instances.
  • The rights to dividend/bonus shares/right shares are being kept in abeyance till the registration of transfer of shares is completed.
  • Declaration and payment of dividends by the company.
  • The company’s financial statements have been duly authenticated by the Board of Directors as per Section 134 (including the board’s report, auditors’ report, and other documents).
  • Constitution, appointment, re-appointment, retirement, filling up of casual vacancies, and disclosures of the Directors, KMP, and the remuneration paid to them.
  • Constitution, appointment, re-appointment, and filling up of casual vacancies of auditors.
  • Any approvals required to be taken from the appropriate authorities as per company law provisions
  • Acceptance and repayment of deposits.
  • Company’s borrowings from its directors, members, PFIs, and banks including the creation or modification of charges in respect thereof.
  • Loans, investments, and guarantees given by the company under Section 186 of the Act.
  • Alteration in MOA or AOA of the company.

Penalty for non-compliance

1. If a practicing company secretary is found to certify an annual return otherwise than in conformity with the aforesaid requirements of company law, he shall be penalized with Rs. 2 lakhs. {Section 92(6)}

2. In case of default, the Disciplinary Committee of the ICSI, pursuant to the provisions of the Company Secretaries Act 1980, may take disciplinary actions against such practicing company secretary.

3. A penalty under Section 448 can also be imposed if it is found that any return, report, certificate, prospectus, or any other document of the company gives a false statement or omits any material fact.

4. Lastly, it may also attract a severe punishment of imprisonment for 6 months-10 years under Section 447, if any person is found to be guilty of fraud. This shall be in addition to a fine equivalent to the amount involved in fraud (extendable to 3 times of fraud amount).

Key takeaways
MGT 8

Hope the information provided in this article proves helpful to you!


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Ruchi Gandhi

The author enjoys to write informational content in the domain of company law and allied laws. She takes interest in doing thorough and analytical research on legal topics. She is a CA along with MBA (Fin) and M. Com.

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