Consequences of Non-Filing of Annual Return and Financial Statements

The consequences of Non-Filing of Annual Return and Financial Statements are severe and one must be aware as well as cautious in this regard. Companies Act 2013 require every Company to file its Annual Return and Financial Statements with the Registrar of Companies, containing information as prescribed in this regard, within 60 days from the date of holding the Annual General Meeting.

Annual return and Financial Statements is mandatory to be filed by all companies, whether it has commenced its business or not, or even if it is a defunct or non-functioning company. In case the Annual Return and Financial Statements are not filed within the specified time period, the same can filed thereafter on payment of requisite late fees. The late fee is of a substantial amount depending upon the period of delay and it should be better avoided.

However, when the Annual Filings are not completed within a period of 270 Days from the date on which it should be have been actually submitted, then the Company and its Officers are imposed with severe consequences.

Private Limited Company Registration  - Ventureasy.com
Non-Filing of Annual Return

CONSEQUENCES

1. Imposition of Penalty: The company shall be punishable with fine which shall not be less than 50,000 but which may extend to 5,00,000.

2. Penalty imposed on directors/officers: Every officer or Director of the company who is in default shall be punishable with imprisonment for a term which may extend to 6 months or with fine which shall not be less than 50,000 but which may extend to 5, 00,000, or with both.

3. Inactive Company: If the Company has not filed its Annual Return for last two financial years consecutively, it will be termed as “Inactive Company”. Thereafter, the Registrar shall issue a notice to the Company and enter its name in the Register of Dormant Companies.

4. Disqualification of Directors: If a company has not filed its Annual Return for continuous period of three financial years then;

  • Every person who is or has been a director of that company shall not be eligible for reappointment as a Director of that company or any other Company for a period of 5 years (5 years from the date on which the company becomes defaulting)
  • The director of a defaulting company would not be eligible to sign e-forms for any other company, until the default of the defaulting company is made good.

In view of the above, it is highly recommended for every Company to file its Annual Return and Financial Statements without any delay.

Nikita Bhatia is the co-founder of VenturEasy, an online platform for Company registration, book-keeping, accounting, tax consultancy and legal compliances in India. A Chartered Accountant and company secretary by profession, she has wide experience in the fields of audit, accountancy, taxation and corporate governance.