Legal Consequences Of Not Filing Annual Return

An Annual Return is the most important document that is to be filed by every company with the Registrar of companies as this one document reflects the company performance on the close of the financial year. Annual return has to be filed with the RoC within 60 days from the date of Annual General Meeting (AGM). If the AGM is not held in any year, the return has to be filed within 60 days from the date on which AGM should have been held together with the statement specifying the reasons for not holding the AGM, on payment of such fee or additional fee as prescribed (Rule 12 of the Companies (Registration Offices and Fees) Rules, 2014. Similarly, the responsibility cannot be abandoned even if the company is inoperative except for the case where the company has been wound-up or its name struck-off from the Register maintained by the Registrar of Companies, and then the business need not file its annual returns.


Penalty for Failure to File Annual Return

The consequences for not filing annual return are very serious. If a company fails to file its annual return, it is punishable with a fine which shall not be less than Rs.50000 but which may extend to Rs.5 lakhs. Also, every Officer (Director) of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than Rs.50,000 but which may extend to Rs.5 lacs, or both.


Disqualification of Director

If the annual return of a company is not filed continuously for three financial years, then any Director of such company would be disqualified and would not be eligible for appointment as a Director of any other company for a period of five years from the date on which the defaulting company failed to file annual returns.

In addition to the above, to ensure proper Corporate Governance and Proper Compliance of provisions of Companies Act, the following action would be implemented:

  • No other e-filing of the company would be accepted by the ROC from Directors of defaulting companies for any other company also.
  • Company Secretaries and Auditors of defaulting companies would not be allowed to sign and certify the filing with MCA-21 system, till the defect is rectified.
  • Members of ICAI, ICSI and ICWAI must not issue any certificates to such defaulting companies.
  • Action will be taken against defaulting companies and their Director in default in coordination with RBI and SEBI.

In the end.. Given the seriousness of the RoC filing, business owners should consider filing their Annual Returns. If you have questions about the information presented here or if you would like to receive personalized advice, contact BDS Legal Services and get a free consultation. We are a one-stop platform to ask, answer, discuss legal questions, and from time to time. BDS Legal Services representative will get in touch with you, understand your need and will identify your legal needs and will assist you accordingly.

Get in touch for free consultation on or call 022 50677213 / 022 50677219 / 022 50677212.

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