In this article, we take a look at the newly introduced regulation regarding resolutions and its relevant form, MGT-14.
As a company grows, it needs to make changes. The changes may be minor and inconsequential or big and dynamically effective. The ministry of Corporate Affairs is the regulatory body for companies and LLPs. They are not only charged with implementing the corporate policy of the government but also keeping an eye on the activities of the business to ensure that the management of the company is working in its best interests. And so, any major changes that a company decides to undertake has to be first reviewed and approved by the ministry of corporate affairs. It is in the same spirit that the Ministry of corporate affairs has introduced MGT-14. Let us understand with some clarity what exactly is this form MGT-14.
What Is Form MGT-14?
Under the Companies Act 2013, form MGT-14 was introduced and brought into action, under which certain specific resolutions had to be mandatorily registered with the Registrar of Companies (ROC).
As soon as the specified resolutions are presented in front of the board of directors and approved, they have to be notified with the Registrar of Companies under whom the company was registered. But what are these specific resolutions? Let’s take a look.
Types Of Resolutions
There are 3 types of resolutions that are required to be notified with the Registrar along with form MGT-14
Ordinary resolution: Under this, the approval must be given by at least 50% of the board members and a majority of the shareholders pass this type of resolution.
Special resolutions: Under this, approval must be given by at least 75% of the board members and are used for special purposes and extraordinary decisions that cannot be taken otherwise.
Written resolutions: Under this, approval has to be given by at least 75% of the board members and is signed by all the members/shareholders.
Additionally there is an annexure called Annexure A that has to be filed irrespective of the type of resolution. If form MGT-14 is being filed for special resolutions, then Annexure B also has to be filled along with Annexure A. And for ordinary resolutions, Annexure C has to be filed along with Annexure A.
When Should You File Form MGT-14
Once a resolution has been approved and decided by the board members, the resolution has to be mandatorily filed with the RoC within 30 days of the decision.
Documents To Be Submitted With MGT-14
While filling the form, the list of documents that have to be submitted along with it includes the following:
- A copy of the agreement/resolution so passed regarding which the form is being filed.
- The explanatory statement, basically a statement containing all the details of the resolution.
- In case, any article is altered alters or changed in the articles of association by the resolution, then, a copy of the article must also be attached with the agreement or the resolution.
Details required for Form MGT-14
The content that is included in the form MGT-14 include the following:
- CIN (Corporate Identification Number)
- Details of the company including the name, address of the office and email id, and other contact details if required.
- The details of the document to be registered, that is, the resolution Agreement.
- Dispatch date of the resolution.
- Passing date of the resolution.
- The number of resolutions.
- Additionally, the details regarding the resolution also have to be provided, which include the purpose, subject matter and the authority under which the resolution is being passed.
- In case, the company has to be winded up, the details regarding the same must be provided in a detailed manner.
- Fees for filing the form MGT-14
Depending on the share capital that the company holds, the fee structure varies accordingly. The fee structure is as follows:
- Rs.200/document for the share capital less than Rs.1,00,000.
- Rs.300/document for the share capital between Rs.1,00,000 – 4,99,999.
- Rs.400/document for the share capital between Rs.4,99,999 – 25,99,999.
- Rs.500/document for the share capital between Rs.25,00,000 – 99,99,999.
- Rs.600/document for the share capital Rs.1,00,00,000 and above.
- Depending on the number of days by which the registration is delayed, the penalty has to be paid accordingly. If the delay is for up to 30 days, the fees doubles, and similarly more the delay, greater is the penalty that is charged.
Penalty Charges For Delay
Penalty charges for the company: In case, the company is unable to file the document (resolution) within 30 days after it has been passed, they are liable to pay a fine of Rs.1,00,000 and Rs.500 for every subsequent day.
Penalty charges for the officer: The officers who are a part of the default, have to pay Rs.50,000 and Rs.500 for every subsequent day.
Conclusion
Regulatory procedures and formalities may seem like a sunken cost in terms of time and money as it doesn’t add any direct value to the company. But when you look at it from the perspective of a framework, these regulations and provisions provide for a strong system of corporate governance which emanates trust in the market and economy in general. This can lead to more people starting their own businesses or even help in attracting foreign investments. So following these regulations is something that must be diligent no matter how mundane. So it is advisable for all companies to engage with a corporate compliance expert like a Company Secretary who can take care of all the regulations on a timely and accurate basis. If you have any further queries with regards to corporate compliances or are looking for some to assist you with your corporate compliances, then get in touch with us so that our team of corporate law experts can understand your requirements in detail and help you with your needs.
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