What is form MGT-7 and why is it important for companies?

1. Mandatory Requirement
   Every company registered under the Companies Act, 2013, must file its annual return each financial year using Form MGT-7 or MGT-7A. This return must be submitted to the Registrar of Companies (ROC) within 60 days after the Annual General Meeting (AGM).
   
   
2. Penalty for Late Filing
   If a company fails to file the form on time, it will attract a penalty of ₹100 for each day of delay, with no maximum limit.
   
   
3. Risk of Strike Off
   If a company skips filing annual returns for two consecutive financial years, it risks being marked as an “inactive company” by the authorities.
   
   
4. Disqualification of Directors
   Not filing annual returns for three straight years can disqualify the company’s directors. Once disqualified, they cannot be appointed as directors in any company for the next five years. Their Director Identification Number (DIN) will also be deactivated.
   
   
5. Heavy Fines and Imprisonment
   If the delay exceeds 270 days from the due date, directors may face a fine starting from ₹50,000 and going up to ₹5 lakh. In serious cases, imprisonment for up to six months can also be imposed, and sometimes both a fine and imprisonment are applied together.

As per Section 2(85) of the Companies Act, 2013, a Small Company is a private company that meets the following conditions:

• Paid-up share capital does not exceed ₹2 crore (this limit can be increased up to ₹10 crore).
• Annual turnover does not exceed ₹20 crore (this limit can be increased up to ₹100 crore).

  Note:
  The following are not considered Small Companies:

• A holding company or a subsidiary company.
• A company registered under Section 8 (non-profit organizations).
• Any company governed by a special Act.