Penalty for Late Filing of Annual Return of Company

Companies can attract penalties if they fail to file their annual returns at the end of the financial year. Therefore, companies must file their annual returns each year without fail. This article explains the scope of penalty a company can face should they fail to file their annual returns and its applicability.

The old Companies Rules 2014 wanted all the companies to prepare and file an annual return which contains information that pertains to the company at the end of every financial year.

All the companies are expected to file the annual return within 60 days of the holding of the annual general meeting or before the annual general meeting.

Here is a brief on the penalty charges for late filing of annual return of the company.  

The Annual Return Filing and its applicability

All of the private, one person and Limited Companies are required to file an annual return with the name of the company at the end of each financial year.

Even a company which is dysfunctional should file return till the name of the company is not struck off from the Registrar of Companies by the Registrar.

Also, the nonfunctioning companies are required to submit the annual return at the end of every financial year. The fact that the firm is non-functioning does not relieve the company from filing the annual return.

Related: Annual Return Filing of a Company

Penalty in case of failing to file Annual Return

There are several consequences for not filing the annual return, and this is considered to be severe.

If any particular registered company fails to file its annual return can be charged a penalty of INR 50,000 which may range up to INR 5 lakhs.

Also, each and every officer or Director of the company who is a defaulter can be imprisoned for a term that may extend up to six months or pay a fine of INR 50,000 and that may extend up to INR 5 lakhs or even both.

Also Read: When a Company is Accorded Defaulter Status

A Director can be disqualified

 If the annual return is not filed by a particular company for three consecutive financial years; then any of the Director of such a company can be disqualified and also there is a penalty that the particular individual is not eligible to be appointed as a Director of any other company for a period of five years.

Along with the above, it is to be ensured that there is proper Corporate Governance and Proper Compliance of various provisions of Companies Act, the following can be implemented in case these are not followed:

  • There would be non-acceptance of e-filing by the ROC from the directors of the defaulting companies for any other company
  • The auditors and the company secretaries of the defaulting companies are disallowed to certify or sign the filing with MCA-21 system, till the defect is solved by following the proper norms.
  • Members of the apex bodies like ICWAI, ICSI and ICAI will no more be allowed to issue certificates to such defaulting companies.
  • There will be strict actions taken against the defaulting companies and their directors by SEBI and RBI.

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