[Opinion] Practicing Company Secretary Penalized by ROC for Incorrect Annual Return Certification
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- Last Updated on 24 September, 2024
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Prof R Balakrishnan – [2024] 166 taxmann.com 502 (Article)
1. A brief about this case
This is a case in which the Registrar of Companies, Chennai of Tamil Nadu, Andaman & Nicobar Islands, passed an order on 15th June 2023 against the practicing company secretary who certified the annual return of M/s. M/s Meenakshi India Limited for the wrong certification of the annual return filed by the company for the financial year 2016-17. The certification was done by the practising company secretary (in form MGT-8, which forms part of an attachment to the annual return in MGT-7- the annual return) was not in conformity with the requirements of the Companies Act 2013 as mandated by section 92(6) of the Companies Act 2013 and the section 92(6) spells out that if a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made there under, he shall be liable to a penalty of two lakhs. Though the company prepared the annual return, it left out the details of one of the board meetings. The same was certified as correct by the practising company secretary without proper verification, which led to the penal action. The company had earlier compounded the offence committed by them, and consequently, the Registrar of Companies initiated proceedings against the practicing company secretary and penalized him to the tune of Rs. 2 lakh. Let us go through the case and understand the rationale behind imposing the penalty by the Registrar of Companies of Chennai.
2. Provisions relating to this case under the Companies Act 2013
The relevant provisions pertaining to this case is that of section 92 of the Companies Act 2013, read with relevant rules framed there under and the extracts of the relevant provisions are as given below.
| Companies Act 2013 Chapter VII – Management and Administration Section 92 – Annual Return |
|
| Section | Provision |
| 92 (1) | Every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood on the close of the financial year regarding— |
| 92 (1) (f) | meetings of members or a class thereof, Board and its various committees along with attendance details. |
| 92 (2) | The annual return, filed by a listed company or, by a company having such paid-up capital and turnover as may be prescribed, shall be certified by a company secretary in practice in the prescribed form, stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of this Act. |
| Companies (Management and Administration) Rules 2014 Rule 11 – Annual Return |
|
| Rule | Provision |
| Every company shall file its annual return in Form No. MGT-7 except One Person Company (OPC) and Small Company. One Person Company and Small Company shall file annual return from the financial year 2020-21 onwards in Form No. MGT-7A | |
| 11 (2) | The annual return, filed by a listed company or a company having paid-up share capital of ten crore rupees or more or turnover of fifty crores or more, shall be certified by a Company Secretary in practice, and the certificate shall be in Form No. MGT-8 |
| Companies Act 2013 Chapter VII – Management and Administration Section 92 – Annual Return |
|
| Penal section for non-compliance/default if any | |
| Section | Provision |
| 92(6) | 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 liable to a penalty of two lakhs. |
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