IMPORTANT ANNUAL FILINGS: DOING BUSINESS IN INDIA

December 3, 2024 > India >

Ahlawat & Associates | View firm profile

Introduction

India, with its dynamic and diverse economy, has become one of the most attractive destinations for business expansion and investment. Whether you are setting up a new business or managing an existing enterprise, complying with regulatory and legal requirements is crucial. Among these obligations, annual filings are significant for businesses operating in India. These filings ensure compliance with Indian corporate laws, tax regulations, and financial reporting standards, contributing to transparency and accountability.

Here’s a detailed overview of the essential annual filings businesses need to make while operating in India. We have categorised the filings based on the applicability of the following enactments:

A. Companies Act, 2013

  1. Annual Return Filing with the Ministry of Corporate Affairs (MCA)

Every company in India is required to complete the annual filing with the concerned Registrar of Companies (ROC), MCA, upon conclusion of the Annual General Meeting (“AGM”) every year. These filings are:

      1. Form AOC-4: This form is required to be filed to submit the financial statements, including the balance sheet, profit and loss account, and directors’ report of a company. This form needs to be filed within thirty days from the date of the AGM. In case of delay in filing the return, there is per-day penalty applicable to it. In case financial statements are not adopted in AGM, then un-adopted financial statements need to be filed within thirty days of the date of AGM (due date of AGM if AGM not held or extended due date, if any). Once financial statements are adopted, the company shall file the adopted financial statements within thirty days of the AGM (actual or adjourned, whichever is applicable).
      2. Form AOC-4 CFS:Every company having one or more subsidiaries is required to prepare the consolidated financial statements of the company and of all the subsidiaries. Such financial statements, duly adopted in the AGM of the company, shall be filed with the ROC within thirty days of the date of AGM.
      3. Form AOC-4 XBRL: Certain classes of companies as notified under Companies (Filing of documents and forms in Extensible Business Reporting Language) Rules, 2015 by the Central Government are required to mandatorily file their financial statement in Extensible Business Reporting Language (XBRL) format. It shall be filed with the ROC within thirty days of the date of the AGM.
      4. Form MGT-7/MGT-7A: This is the Annual Return, which contains information about the company, including its directors, shareholders, and corporate governance practices. It must be filed by every company within sixty days from the date of the AGM. In case of delay in filing the return, there is a per day penalty applicable to it.
      5. MGT-14: In the case of any resolution passed as a special resolution in the AGM or if the AGM is being conducted through video conferencing or other video audio mode, in such a case, Form MGT-14 is required to be filed within thirty days from the date of the AGM.
      1. Director’s Report and Financial Statements

The companies must prepare and approve the director’s report and financial statements before the due date of the AGM. These documents must be signed by the directors of the company and are required to be adopted at the AGM. The director’s report provides an overview of the company’s financial health, corporate governance practices, and future business outlook.

The financial statements—comprising the balance sheet, profit & loss account, and cash flow statement—reflect the financial performance of the company for the preceding financial year.

      1. Compliances under the Companies Act, 2013

The other event-based annual compliances required to be undertaken by the companies are as follows, including but not limited to:

        1. Form MSME Return: All companies who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed forty five days from the date of acceptance or the date of deemed acceptance of the goods or services as per the provisions of Section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006), shall submit a half-yearly return to the MCA. Hence, the due dates for the MSME, if applicable, are April 30 and October 30, every financial year.
        2. Form DPT-3: Pursuant to the provisions of Rule 16 of the Companies (Acceptance of Deposits) Rules, 2014, every company shall, on or before the 30th day of June of every year, file with the ROC, a return in e-Form DPT-3 for deposits and/or particulars of transactions not considered as deposits as on March 31, of that year.
        3. Form PAS-6: Pursuant to Rule 9A and 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014, every unlisted public company and private company, other than a small company, is required to submit Form PAS-6 to the concerned ROC within sixty days from the conclusion of each half year duly certified by a company secretary in practice or chartered accountant in practice.

B. Foreign Exchange Management Act, 1999

      1. Foreign Liabilities and Assets Return (“FLA”): A company that has received foreign direct investment directly or indirectly in the previous year(s), including the current year, shall submit form FLA to the Reserve Bank of India on or before the 15th day of July of each year (Year for this purpose shall be reckoned as April to March).
      1. ECB 2 Return: A company that has raised External Commercial Borrowings (“ECB”) from outside India is required to report actual ECB transactions through Form ECB 2 Return through the AD Category I bank on a monthly basis so as to reach the Department of Statistics and Information Management (“DSIM”) within seven working days from the close of the month to which it relates.
      1. Annual Performance Report (“APR”): An Indian company acquiring equity capital in a foreign entity, which is reckoned as Overseas Direct Investment (ODI), shall submit an APR with respect to each foreign entity every year till the company is invested in such foreign entity, by December 31st, and where the accounting year of the foreign entity ends on December 31st, the APR shall be submitted by December 31st of the next year.

Conclusion

In conclusion, businesses operating in India must navigate a complex regulatory environment that includes a variety of annual filings to maintain compliance with corporate, tax, and foreign exchange laws. The filings under the Companies Act, 2013, such as the submission of financial statements, annual returns, and other event-based compliance forms, are essential to ensure transparency and accountability in business operations. Furthermore, businesses engaged in foreign direct investment (FDI) or external commercial borrowings (ECB) must comply with reporting obligations under the Foreign Exchange Management Act (FEMA), including FLA returns and APR submissions.

Staying updated on these annual filing requirements is crucial for businesses to avoid penalties and legal issues. The diverse range of filings also highlights the importance of maintaining accurate and timely records, which not only ensures regulatory compliance but also enhances the company’s credibility in the market. Businesses must prioritize these filings as part of their overall governance strategy to foster sustainable growth and avoid potential legal complications.

Author Details:

Ms. Shweta Singh (Senior Associate) of Ahlawat & Associates

 

 

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