Whether MGT-9 required to attach with Directors Report?

Summary:

Many professionals have asked one question i.e. “Whether MGT-9 is required to be preparing for F.Y. 2019-20 or not”.

Old Provisions:

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

This provision 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”.

Section 92(3)

‘An extract of the annual return in such form as may be prescribed shall form part of the Board’s report’

Amended Section 92(3)

‘Every company shall place a copy of the annual return on the website of the company if any, and the web-link of such annual return shall be disclosed in the Board’s report’ [YET TO BE NOTIFIED]

Recent Amendment:

As per amendment dated August 28, 2020 after Sub rule (1) of Rule 12 o Companies (Management and Administration) Amendment Rules, 2020 the following proviso shall be added:

“Provided that a Company shall not be required to attach extract of the annual return with the  Board’s Report in Form MGT-9, in case the web link of such annual return has been disclosed in the Board’s Report in accordance with sub-section (3) of Section 92 of the Companies Act, 2013.”

Point of Discussion:

1. Which Companies need to attach MGT-9 with Directors Report for F.Y. ending 31.03.2020?
2. Whether Companies are required to publish Annual Returns on their Website?
3. Practically annual Return prepare after AGM and Directors’ Report prepare before AGM. Therefore, how to publish give the link of publication of MGT-7 in Directors Report?

Question- I: Which Companies need to attach MGT-9 with Directors Report for F.Y. ending 31.03.2020?

As per Notification dated 28.08.2020, “All the Companies not having Website” are required to attach MGT-9 with Directors Report for F.Y. ended 31.03.2020 and onwards.

Question – II: Whether Companies are required to publish Annual Return or MGT-9 on its Website?

As per the combined reading of Section 134 (3) read with amended Section 92(3) read with the notification dated 28.08.2020, it is mentioned that copy of the annual return shall be published on the website of the Company.

As per rule 11, ‘Every company shall prepare its annual return in Form No. MGT-7’.

After combined reading above mentioned provisions one can opine that, if a Company having a website, such a Company has published its Annual return i.e. MGT-7 on the website of Company.

MGT-9 is an extract of Annual return and nowhere in section 92 or 134 mentioned the publication of MGT-9. Therefore, one can opine that Companies are not required to publish MGT-9 on their website.

Question – III: Practically annual Return prepare after AGM and Directors’ Report prepare before AGM. Therefore, how to publish and give a 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: –

• Director’s report prepares in the Board Meeting held before AGM.
• Director’s report circulated to Members of the Company along with notice of AGM.
• Annual return prepared after holding of AGM. Because the company must show the presence of directors/ shareholders in AGM.

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.

Conclusion:

After reading the provision of Companies Act, 2013 along with all amendments, it can be opined that MGT-9 applicable to all companies except companies that have published their annual return (MGT-7) on their website and given link of same in Directors Report.

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