Whether MGT-9 required to attach with Directors Report? Series 495

SHORT NOTE:

Whether MGT-9 required to attach with Directors Report?

This Editorial is updated till 29^th August, 2019.

In this editorial auditor shall discuss the few questions in relating to Directors Report:

                 I.            Whether Companies need to attach MGT-9 with Directors Report for F.Y.          ending 31.03.2019?

              II.            Whether Companies are required to publish Annual Return on its Website?

              III.     Practically annual Return prepare after AGM and Directors’ Report prepare       before AGM. Therefore, How to publish give link of publication of MGT-7         in Directors Report?

       IV.    Whether Companies are required to prepare both MGT-9 and need to                  publish MGT-7 on its website.

A.    Whether Companies need to attach MGT-9 with Directors Report for F.Y. ending 31.03.2019?

As per CA, 2013 section 134, Companies are required to prepare MGT-9 extract of Annual Return and such MGT-9 was required to file with Directors Report.

As per Section 134, extract of Law:-

There shall be attached to statements laid before a company in general meeting, a report by its Board of Directors, which shall include— “the extract of the annual return as provided under sub-section (3) of section 92. Section 92(3) an extract of the annual return in MGT-9 shall form part of the Board's report”

Note:- The provision of Section 134(3) has been amended by CAA, 2017 w.e.f. 31.7.2018 i.e. as per notification dated 31st July, 2017 provision in relation to MGT-9 has been removed from Section 134 and a new provision I added i.e. “the web address, if any, where annual return referred to in sub-section (3) of section 92 has been placed.

However, same has not been amended in Section 92(3) i.e. an extract of the annual return in MGT-9 shall form part of the Board's report.

One can clearly opine that as provision of MGT-9 is still forming part of Section 92(3). Therefore, it is mandatory to prepare MGT-9 and annex same with Directors’ Report as annexure for f.y. ended 31.03.2019.

B.     Whether Companies are required to publish Annual Return on its Website?

As per CA, 2013 section 134, Companies are required to give in directors report the web address, if any, where annual return referred to in sub-section (3) of section 92 has been placed.

As per Section 134, extract of Law:-

There shall be attached to statements laid before a company in general meeting, a report by its Board of Directors, which shall include— “the web address, if any, where annual return referred to in sub-section (3) of section 92 has been placed”.

Note:- The provision of Section 134(3) has been amended by CAA, 2017 w.e.f. 31.7.2018 i.e. as per notification dated 31st July, 2017 i.e. “the web address, if any, where annual return referred to in sub-section (3) of section 92 has been placed.

One can opine that, as per Section 134(3) specifically mentioned that if a Company having website then such Company mandatorily required to publish its Annual Return i.e. MGT-7 on website of the Company.

We have to be very clear that, on website of Company it is required to publish Annual return i.e. MGT-7.

MGT-9 is not required to publish on the website of the Company.

 C.     Practically annual Return prepare after AGM and Directors’ Report prepare before AGM. Therefore, How to give link of publication of MGT-7 in Directors Report?

As per CA, 2013 section 134, Companies are required to give in directors report the web address, if any, where annual return referred to in sub-section (3) of section 92 has been placed.

Note:-

·        Directors report prepare in Board Meeting held before AGM.

·        Director’s report circulated to Members of Company along with notice of AGM.

·        Annual return prepared after holding of AGM. Because company have to show presence of directors in AGM or not.

One school of thought: In such Case Company will give a link in its Directors Report where MGT-7 Annual return of Company shall be published after AGM.

Therefore, one can opine that company will give blank link in Directors Report while mentioning that once company shall be finalized Annual Return, such shall be available on this link.

D.    Whether Companies are required to prepare both MGT-9 and need to publish MGT-7 on its website.

This is confusion in corporate and professionals that whether company have to comply with both i.e. publication of Annual Return i.e. MGT-7 on website and annex MGT-9 in Directors Report.

As per Section 134, extract of Law:-

There shall be attached to statements laid before a company in general meeting, a report by its Board of Directors, which shall include— “the web address, if any, where annual return referred to in sub-section (3) of section 92 has been placed”.

As per Section 92, extract of Law:-

An extract of the annual return in MGT-9 shall form part of the Board's report

Note: - Company has to comply with both the Section i.e. Section 134 and Section 92.

One can opine that, to compliance both the Sections i.e. 134 & 92

                   i.            Every Company shall prepare MGT-9 and annex same with Directors Report.

               ii.            If Company having website, its need to publish Annual Return i.e. MGT-7 on its         website and need to give link of the same in its Directors Report.

Therefore, Company has to comply with both the requirements.

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)

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