Introduction:
Maintaining track of legal obligations is absolutely essential in the field of business and corporate compliance. One such crucial document is Form MGT-8. If you manage a company, particularly a listed or large public company, understanding Form MGT-8 and its significance is crucial. The correctness and openness of an annual return from a corporation depend much on this certification.
This blog will explain Form MGT-8, who needs it, why it's necessary, and how it differs from MGT-7. We will also look at due dates, MGT-8 applicability, and other portions of corporate law, including Section 92. You will know in the end exactly how to remain compliant with Form MGT-8 criteria.
What is Form MGT-8 for?
A competent company secretary issues the MGT-8 form as a certification. It confirms that a Company, usually reporting through Form MGT-7 for its annual return, complies with the provisions of Companies Act 2013. It is important for transparency and accountability that this certification exists.
When corporations submit their annual reports, they furnish information regarding:
- The company's registered office
- Shareholding structure
- Directors and key managerial personnel
- Changes in directorship and shareholding
Certain companies require independent verification of these details through Form MGT-8. This helps ensure that the information provided is accurate and compliant with the law.
MGT-8 Applicability
According to the Companies Act, 2013, some types of businesses must use Form MGT-8. MGT-8 is only applicable to the following types of businesses:
- If a company wants to list its shares on any recognized stock market in India, it needs to obtain a certification on Form MGT-8. This guarantees accuracy and conformity of the yearly return of listed corporations, hence improving investor trust and regulatory openness.
- Public corporations must meet either of the following standards:
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Paid-up: Share capital of ₹10 crore or more: Form MGT-8 becomes required should the paid-up share capital of the firm surpass this mark.
- Turnover of at least ₹50 crore or more: Companies with yearly sales of at least ₹50 crore have to have their annual return verified using Form MGT-8.
-
Paid-up: Share capital of ₹10 crore or more: Form MGT-8 becomes required should the paid-up share capital of the firm surpass this mark.
This criteria ensures a higher level of responsibility for larger and listed businesses. While smaller private businesses are exempt from Form MGT-8, acquiring this certification is legally required for listed and larger public corporations.
The contents of the report
The Form MGT-8 report comprehensively verifies the following elements of the company's yearly return:
- Verify the registered office address, corporate identification number (CIN), and other fundamental information about the firm.
- Examining the specifics of the ownership pattern—including the amount of issued shares, variations in shareholding, and the situation of the shareholders.
- Examining the list of directors, important managerial staff, and any changes in directorship during the financial year.
- Ensuring compliance with the clauses of the Companies Act, 2013, and relevant regulations.
- Cross-checking the financial data and confirming its conformity with the yearly return.
- Verification of the records of meetings held—including general meetings, board meetings, and resolutions passed.
- Examining loan, borrowing, and any charge-generated corporate assets data.
- Making sure no unreported fines or defaults exist.
- Scrutinizing the disclosures concerning transactions with linked parties, transfers of shares, and alterations in the firm's structure.
What are MGT-7 and MGT-8?
Compliance depends on knowing how Form MGT-7 and Form MGT-8 vary. A simple summary:
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Form MGT-7: Businesses must file their yearly returns with the Ministry of Corporate Affairs (MCA). It contains detailed information about the company's registered office, shareholding patterns, directors, and key managerial personnel.
- Form MGT-8: A working company secretary certifies that the data entered in Form MGT-7 is accurate and compliant with the Companies Act.
Difference Between MGT-7 and MGT-8
| Aspect | Form MGT-7 | Form MGT-8 |
|---|---|---|
| Purpose | Filing the company’s annual return | Certifying the accuracy and compliance of the annual return |
| Filed By | Company (through its authorized personnel) | Practicing Company Secretary |
| Content | Details about the company’s registered office, directors, shareholding, and changes during the year | Verification and certification of the details submitted in MGT-7 |
| Applicability | Mandatory for all companies | Mandatory for listed companies and public companies with paid-up capital ₹10 crore or more or turnover ₹50 crore or more |
| Regulatory Requirement | Section 92 of the Companies Act, 2013 | Section 92(2) of the Companies Act, 2013 |
| Frequency | Annually | Annually |
FAQs
1. What is Form MGT-8 for?
A practicing company secretary uses Form MGT-8 to confirm that the annual return (MGT-7) satisfies the requirements of the Businesses Act, 2013.
2. What is the difference between MGT-7 and MGT-8?
A company secretary certifies MGT-8 as correct and compliant following MGT-7, its yearly return.
3. What are MGT-7 and MGT-8?
A company secretary certifies annual returns on MGT-8 after filing them on MGT-7.
What is Rule 8 of MCA?
Annual return is stipulated by the Companies (Management and Administration) Rules, Rule 8 of Section 92 of the Companies Act, 2013. This regulation describes the contents and timeframes for turning in Form MGT-7, therefore clarifying the need for Form MGT-7 certification for particular companies.
Rule 8 essentially requires listed and big public companies to verify this data using Form MGT-8; it also assures that companies disclose complete and accurate information in their yearly filings.
Why is MGT-8 Required?
Form MGT-8 is necessary for numerous critical reasons:
- Ensures Precision: It verifies that the data in the yearly return is accurate.
- Compliance: This helps businesses follow the 2013 Companies Act.
- Builds Trust: Investors, stakeholders, and regulators may all rely on the validated information.
- Legal Obligation: The MGT-8 certification is mandatory for listed and significant public companies due to its applicability.
The law guarantees that companies remain transparent and accountable by mandating the completion of Form MGT-8.
The Due Date for MGT-8
The due date for Form MGT-8 matches the yearly return filing on Form MGT-7. Companies must submit their annual returns sixty days following the Annual General Meeting (AGM). You so have to also file Form MGT-8 throughout this period.
For example, if a firm has its AGM on September 30, it has to file the annual return in Form MGT-7 and certification in Form MGT-8 by November 29.
Late submission is quite crucial as failure to do so may result in penalties and non-compliance issues.
How to File Form MGT-8
Filing Form MGT-8 involves the following steps:
- Prepare the Annual Return in Form MGT-7.
- Engage a practicing company secretary to review the annual return.
- The company secretary verifies the details and issues Form MGT-8.
- Submit Form MGT-8 along with Form MGT-7 on the MCA portal.
This process guarantees that a professional has checked and verified all information.
Penalty for Non-Compliance
If the company makes a mistake, it could face severe penalties. Section 92(5) of the Companies Act 2013 prescribes corporate sanctions and sanctions on defaulting officers if the company fails to file its annual return or obtains the required certification in Form MGT-8.
- Company Penalty: The firm penalty amount lies between ₹50 thousand and ₹500 thousand.
- Officer in Default: Directors and key executive personnel may face fines of up to ₹50,000 or ₹500,000, imprisonment for up to six months, or both.
Early filing and the Form MGT-8 certification is required in order to avoid these severe fines. Financial fines undermine the company's reputation and investor trust and cause non-compliance. Organisational transparency, accountability, and effective governance need compliance.
FAQs
1. What is the MGT-8 form name?
The official name is Form MGT-8—Certification of Annual Return.
2. How can I file Form 8 in MCA?
On the MCA site, select Form 8 under LLP filings, complete it, attach any necessary documents, and then submit it.
3. What is the MGT-9 form?
MGT-9 is a summary of yearly return under Section 92 of the Companies Act (2013).
