Policy

Companies told to place copy of annual return on website, share link with board report

KR Srivats New Delhi | Updated on September 02, 2020

Move seen to ease burden and cost of multiple compliance

Companies have to now place a copy of their annual return (Form MGT-7) filed with the Ministry of Corporate Affairs (MCA) on their website, if any.

Last Friday, the MCA operationalised a provision in the Companies (Amendment) Act, 2017 that also required companies to disclose the web link of such annual return in the board’s report.

The MCA has now also ruled that companies need not attach an extract of the annual return as part of their board report in Form MGT-9, sources said.

Corporate law experts pointed out that several companies are already putting an extract of the annual return on their websites. An extract is also being attached to the board report without creating additional value to stakeholders, they said.

Now, with the latest MCA move, it has become law that extracts of annual return need not be attached with the board report, sources said.

Reduced burden

G Ramaswamy, former President of the CA Institute, told BusinessLine that this will enable investors and other stakeholders to read the financial statements in a fair manner. “It will reduce the burden of the companies from multiple compliance for same information by using the technology advantage,” he said.

Aditya Nayar, Partner, Ortis Law Offices, said: “Earlier, in practice, companies used to finalise the annual returns after the date of the annual general meeting. However, due to this mandatory requirement, companies will now be bound to finalise the annual returns on the date of approval of the board’s report itself. This certainly will bring more transparency to the entire process.”

Also, the annual returns will be easily accessible to the general public who are interested in investing/dealing with the company, he said.

Harish Kumar, Partner, L&L Partners, said the MCA relief would surely reduce the compliance burden and cost thereof, which is otherwise attributed on account of numerous disclosures in the board report including duplication of information being reported to the shareholders.

Elaborating on the MCA move, a corporate executive said that all along companies have been attaching Form MGT-9 with the director’s report. From now on, this is not required — if a company has a website, all that has to be done is just upload Form MGT-7 and give its link in the director’s report. If there is no website for the company, Form MGT-9 is required to be attached.

Published on September 02, 2020

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