CS Executive · Company Law and Practice

Annual Report - Concepts: formula sheet

Full chapter guide

Key formulas

Duty under Section 461: Central Government → causes a general annual report on the working and administration of the Act to be prepared and laid before each House of Parliament; The duty is mandatory ("shall") and rests on the Central Government.
Time limit: Laying before Parliament: within 1 year of the close of the year to which the report relates; Counted from the close of the reporting year.
Where it is laid: Each House of Parliament = Lok Sabha and Rajya Sabha; Both Houses, not only one.
Contrast with Section 394: Section 461: report on the Act | Section 394: report on a Government company; Section 394 report is prepared within three months of the AGM where CAG comments and audit report are placed.
Who must prepare the report: Every listed public company, for each AGM; Section 121(1). Not applicable to private or unlisted public companies.
Content of the report: Report in the prescribed manner + confirmation that the AGM was convened, held and conducted as per the Act and rules; Section 121(1).
Filing deadline: Within 30 days of the conclusion of the AGM, with the Registrar, with prescribed fees or additional fees; Section 121(2).
Penalty on the company: ₹1,00,000 + ₹500 per day after the first day of continuing failure, maximum ₹5,00,000; Section 121(3).
Penalty on every officer in default: Not less than ₹25,000 + ₹500 per day after the first day of continuing failure, maximum ₹1,00,000; Section 121(3).
Who prepares (Section 394(1)): Central Government is a member → Central Government causes annual report on working and affairs; Applies to a Government company where the Central Government is a member.
Time limit for preparation: Within 3 months of the AGM at which CAG comments and audit report are placed (proviso to Section 143(6)); The three months run from the AGM, not from the financial year end.
Laying before Parliament: As soon as may be after preparation → both Houses of Parliament, with audit report and CAG comments/supplement; No fixed number of days is given for laying.
State Government also a member (Section 394(2)): State Government lays a copy of the sub-section (1) report before the State Legislature (House or both Houses) with audit report and CAG comments; Applies in addition to the Central Government being a member.
Government company in liquidation: Sections 394 and 395 apply, so far as may be, as to any other Government company (Section 395(2)); Liquidation does not remove the reporting duty.
When Section 395 applies: Central Government is NOT a member + one or more State Governments are members of a Government company; If the Central Government is a member, Section 394 applies instead.
Who acts: Every State Government that is a member (or the only State Government member) causes the report to be prepared and laid; The duty is on the State Government, not on the company's Board.
Time to prepare: Within three months of the AGM before which CAG comments and the audit report are placed (Section 394(1)(a), applied by Section 395(1)(a)); Section 395 borrows the time limit from Section 394(1).
Laying: As soon as may be after preparation, before the House or both Houses of the State Legislature, with the audit report and comments upon or supplement to it; Parliament is for Section 394; the State Legislature is for Section 395.
Liquidation: Sections 394 and 395 apply, so far as may be, to a Government company in liquidation (Section 395(2)); Applies like any other Government company.

Quick revision

Section 461: the Central Government prepares a general annual report on the working and administration of the Act.
Section 461 report is laid before each House of Parliament within one year of the close of the year to which it relates.
Section 121 applies to every listed public company, not to unlisted companies.
The Section 121 report is on each AGM and confirms the meeting was convened, held and conducted as per the Act and rules.
The Section 121 report is filed with the Registrar within thirty days of the conclusion of the AGM.
Section 121(3) company penalty: ₹1,00,000, plus ₹500 per day after the first, maximum ₹5,00,000.
Section 121(3) officer in default: not less than ₹25,000, plus ₹500 per day after the first, maximum ₹1,00,000.
Section 394: where the Central Government is a member of a Government company, it prepares an annual report within three months of the AGM at which the CAG comments and audit report are placed.
Section 394 report is laid before both Houses of Parliament with the audit report and CAG comments.
Section 394(2): a State Government that is also a member must lay a copy before its State Legislature.
Section 395: where the Central Government is not a member, the State Government prepares the report within the Section 394(1) time and lays it before the State Legislature.
Sections 394 and 395 also apply, so far as may be, to a Government company in liquidation.

Common mistakes

Saying the report is laid within one year of the date it is prepared. Fix: Write that the one year runs from the close of the year to which the report relates.
Saying the report is laid only before the Lok Sabha. Fix: The section says each House of Parliament, so both Houses.
Applying Section 121 to every company. Fix: Remember the words 'listed public company'. Private and unlisted public companies are outside this section.
Confusing the 30-day AGM report with the 60-day annual return. Fix: Section 121: report on AGM, listed public companies, 30 days. Section 92: annual return, every company, 60 days.
Counting the three months from the end of the financial year. Fix: Count from the AGM before which the CAG comments and audit report are placed.
Saying the report is laid before Parliament within three months. Fix: Three months is for preparation. Laying is 'as soon as may be' after preparation.
Applying Section 395 when the Central Government is also a member. Fix: Section 395 applies only where the Central Government is not a member. If the Central Government is a member, use Section 394. Section 394(2) then requires any State Government member to lay a copy of the Central report before its Legislature.
Saying the company's Board prepares and lays the report. Fix: The State Government causes the report to be prepared and laid. It is a Government report to the legislature.

Exam tips

Quote the key words: general annual report, working and administration of this Act, each House of Parliament, within one year of the close of the year.
In date problems, always start from the close of the reporting year, not the date of preparation.
Write one line distinguishing Section 461 from Section 394 to show you know the difference.
Keep the answer short. The section has a single rule, so extra detail can introduce errors.
End with a conclusion that cites Section 461.
Open your answer with the words 'listed public company'. The examiner looks for this condition first.
Write the thirty-day period and the starting point, 'conclusion of the AGM', in the same sentence.
In penalty questions, show the arithmetic: base amount, days after the first, daily rate, then check the cap.