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CS Professional · Compliance Management, Audit and Due Diligence

Signing and Certification of the Annual Return: Chapter Guide

This chapter covers the annual return under Section 92 of the Companies Act, 2013: what it contains, who signs it, who certifies it, when it is filed, and what penalty follows a default. You solve questions by stating the provision, applying it to the facts, and concluding.

What this chapter covers

This chapter is about one core compliance document, the annual return under Section 92. You study what the return must contain, who must sign it, which companies need a certificate from a company secretary in practice, and what happens if the company, its officers or the certifying professional get it wrong.

The chapter has four linked parts. First comes the content and filing of the return. Then comes signing, where the rule changes for a One Person Company and a small company. Then comes certification by a company secretary in practice, which applies to listed companies and to companies with prescribed paid-up capital or turnover. Last come penalties, including the lesser penalty rule for certain companies and the adjudication process.

It connects to the rest of the paper in a direct way. Compliance management asks you to ensure that filings are correct and on time. Audit and due diligence ask you to test whether they were. Sections 204 and 205, on secretarial audit and the functions of the company secretary, sit next to this chapter. So you can expect a case that mixes the annual return with the secretary's duties or with a secretarial audit.

Questions in this paper are written and case-based, and this chapter suits that format well. A case can give you a company type, a date of AGM and a default, and ask who signs, whether certification is needed and what penalty applies. The rules are short and precise, so you can score full marks if you state them exactly. Candidates lose marks by mixing up the signing rule for small companies, by misquoting penalty amounts, or by skipping the conclusion.

Signing and Certification: topics in the order to study them

  1. 1Annual Return under Section 92Start here, because the contents, the extract in the Board's report and the 60-day filing rule in Section 92 are the base for the other three topics.
  2. 2Signing of the Annual ReturnNext, learn the general rule (a director and the company secretary, or a company secretary in practice if there is no company secretary) and the exception for a One Person Company and a small company.
  3. 3Certification by Company Secretary in PracticeCertification is a separate step from signing, and it is easier to follow once you know who signs and what the return contains.
  4. 4Penalties and Consequences of Non-ComplianceStudy this last, because the penalties for late filing, for wrong certification, and the reduced penalty and adjudication rules all refer back to the earlier topics.

How to prepare Signing and Certification

Treat this chapter as a set of exact rules with conditions. Prepare it so you can reproduce each rule precisely and apply it to a fact pattern.

  1. Read Section 92 once in full and list its sub-sections in your own words: contents, signing, certification, extract in Board's report, filing, penalty, and penalty for the certifying professional.
  2. Build a two-column table on paper for signing: general company versus One Person Company and small company. Practise writing it from memory.
  3. Write down who needs certification: a listed company, or a company with prescribed paid-up capital or turnover. Note that the certificate states that the return discloses the facts correctly and adequately and that the Act has been complied with.
  4. Learn the filing deadline: within sixty days from the date of the AGM, or from the date the AGM should have been held, with a statement of reasons if no AGM was held.
  5. Learn the penalty figures together with their conditions: the daily additional amount, the maximum for a company and for an officer, the lesser penalty under Section 446B, and the adjudication proviso under Section 454.
  6. Solve three or four case-style questions. For each, write the provision, the analysis of the facts, and a one-line conclusion.
  7. Link the chapter to Sections 204 and 205 by writing two lines on how secretarial audit and the secretary's reporting duty relate to the annual return.

Common mistakes in Signing and Certification

  • Treating signing and certification as the same thing.

    Fix: Keep two separate lines in your notes. Signing is by the director and company secretary. Certification is by a company secretary in practice, and only for the companies covered by the rule.

  • Applying the general signing rule to a One Person Company or a small company.

    Fix: Check the company type first in every case. If it is a One Person Company or small company, the company secretary signs, or the director if there is no company secretary.

  • Quoting penalty amounts without the daily rate and the caps.

    Fix: Learn the penalty as three parts: the base amount, the daily addition after the first day, and the separate maximum for a company and for an officer in default.

  • Forgetting the lesser penalty and the no-penalty proviso in the conclusion.

    Fix: After computing the penalty, ask two questions: is it a company covered by Section 446B, and was the default rectified in time under the Section 454 proviso?

  • Miscounting the sixty-day filing period.

    Fix: Count from the date of the AGM, or the date it should have been held if no AGM took place. Mention the statement of reasons in that case.

  • Writing a theory answer with no conclusion on a case-based question.

    Fix: Use three labelled steps in every answer: provision, application to the facts, and a clear conclusion that names the company, the person and the amount.

Last-day revision: Signing and Certification

  • The annual return is prepared in the prescribed form with particulars as on the close of the financial year.
  • It covers the registered office, business activities, holding, subsidiary and associate companies, shares, debentures, shareholding pattern, members, directors, KMP, meetings, remuneration and penalties.
  • General signing rule: a director and the company secretary, or a company secretary in practice if there is no company secretary.
  • For a One Person Company and a small company: signed by the company secretary, or by the director if there is no company secretary.
  • The Central Government may prescribe an abridged form for One Person Companies, small companies and other classes.
  • A listed company, or a company with prescribed paid-up capital or turnover, must have the return certified by a company secretary in practice.
  • An extract of the annual return forms part of the Board's report.
  • Filing with the Registrar is due within sixty days from the AGM date, or the date the AGM should have been held.
  • Late filing: penalty of ₹10,000 on the company and each officer in default, plus ₹100 per day after the first, capped at ₹2,00,000 for a company and ₹50,000 for an officer.
  • Wrong certification by a company secretary in practice attracts a penalty of ₹2,00,000.
  • Under Section 446B, a One Person Company, small company, start-up company or Producer Company pays at most half the stated penalty, subject to ₹2,00,000 for a company and ₹1,00,000 for an officer.
  • Under Section 454, no penalty is imposed for a Section 92(4) default if it is rectified before, or within thirty days of, the adjudicating officer's notice.

Signing and Certification practice questions

Signing and Certification in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Signing and Certification: frequently asked questions

Who signs the annual return under Section 92?

As a general rule, a director and the company secretary sign it. If there is no company secretary, a company secretary in practice signs in place of the company secretary. For a One Person Company and a small company, the company secretary signs, or the director if there is no company secretary.

Which companies need a company secretary in practice to certify the annual return?

A listed company, and a company with such paid-up capital or turnover as may be prescribed. The certificate states that the return discloses the facts correctly and adequately and that the company has complied with all the provisions of the Act. Check the prescribed thresholds in the rules and the study material.

What is the penalty for not filing the annual return on time?

The company and every officer in default are liable to a penalty of ₹10,000, plus ₹100 for each day after the first during which the failure continues. The total is capped at ₹2,00,000 for a company and ₹50,000 for an officer in default. Section 446B may halve these for certain small entities.

Can a default in filing the annual return escape penalty?

Yes, in one situation. Under the proviso to Section 454(3), if the default under Section 92(4) is rectified before, or within thirty days of, the notice from the adjudicating officer, no penalty is imposed and the proceedings are treated as concluded.

What happens if a company secretary in practice certifies the return wrongly?

If the certification is not in line with Section 92 or the rules made under it, the company secretary in practice is liable to a penalty of ₹2,00,000.