Challenges Faced By CS in Annual Return Filing

It is a well-known fact that ‘annual filing fever’ grips all CS (Company Secretary) offices during October & November after corporates hold their AGMs and due dates are triggered for filing of audited financial statements and annual return. However this year, filing has reached a ‘feverish’ pace and pitch thanks to the late release of e-forms under the new Companies Act, 2013 and also repeated revisions of the same. This has thrown several challenges at CS offices as well as corporates struggling to understand and fill the information correctly. Let’s look at some of the challenges related to preparation and e-filing of Annual Return (AR) of an unlisted Company for the FY14-15:

1. There is extract of AR in MGT9 which is made part of the Turkey WhatsApp Number List Board’s Report (new requirement under the Companies Act, 2013) and then there is MGT7 which is the full-length AR in e-version. MGT7 was released only in end September, 2015 and kept evolving like the ‘amoeba’ till it reached its current ‘avatar’ on 17th Nov, 2015. Needless to say the information CSs gathered for MGT9 earlier is not exactly the same as in MGT7. Wonder how MGT9 qualifies as an ‘extract of AR in MGT7’? Surely, there was enough time since 2014 to align the two and save the corporates and professionals from interpretation and information-gathering about the same subject multiple times and from multiple perspectives! Hoping this is ironed out for the FY15-16 annual filing.

2. Corporates are irked that CSs are going back time and again asking them to classify their business activity %-wise under 2 different codes – NIC2008 for Annual Return (both MGT7 and MGT9) and NCPS (National Classification of Products & Services) or ITC-HS (Indian Trade Classification – Harmonized System) for classification in AOC4 (filing of audited financial statements). This information is not available in the audited financials and its schedules. Most of the companies are unable to find the correct classification and hence it is only the ‘almost there’ or ‘nearest’ code. Once the broad level classification is filled in MGT7, the auto-fill description popping up reflects an unrelated activity sending the CSs into a tizzy resulting in a gtalk/WhatsApp/phone ‘ask around’ activity. Lack of clarity is the biggest hurdle resulting in different interpretations. We cannot risk being wrong given that CSs are either signing the form or certifying as in the case of MGT8 (for certain category of companies).

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