The MGT-8 form is required to certify the annual Compliance filed. In this form, the Secretary confirms that the facts given by the Annual Compliance disclose the correct information. As per Section 92 (2), Companies Act 2013, and Rule 11 (2) of the Companies (Management and Administration) Rules, 2014, a practicing company secretary provides certification on the annual return of a company in Form MGT-8. She also confirms that it complies with the relevant provisions of the Companies Act 2013.
It should be stated that in compliance with all the provisions of the Act, the Annual Compliance disclosing the facts are correct and sufficient.
The Company Secretary certifies the following types of companies:
- If it is a listed company
- If the company has a paid-up share capital of 10 crores or more
- Or if a company has a turnover of 50 crores or more
In this certificate, the company secretary first certifies that the company secretary has checked the company’s registers, records, and books and papers. This self-certificate of examination is important because at any stage the company cannot deny the fact and is admissible under any proceedings related to fraud and misrepresentation as well as class action suits.
The certification of the Annual Compliance is subject to the opinion and information of the company secretary and examination conducted by the company secretary and his secretary and his officers. The information will always be obtained through some source and may contain some background documents. The prudent person will present a reasonable opinion. Officers and agents of the company secretary can take the exam.
Compliance Aspects of MGT-8
The certificate issued by the Secretary ensures that the company has complied with the provisions of the Act and Rules under certain aspects of compliance.
The items listed below present you with some aspects of compliance under Form MGT-8:
- Company position.
- Maintenance of register/record.
- Form and return filing.
- Calling/calling a board meeting or its committee meeting.
- Closing the register of members/security holders.
- Advances/loans referred to in section 185 to their directors and/or individuals or firms or companies.
- Contract/arrangement with the parties concerned, as specified in section 188.
- Issuance/allocation/transfer/transmission/repurchase of securities/repurchase of preference shares or change/deduction of debenture/share capital or conversion of securities/securities and issue of security certificate.
- Pursue registration rights pending transfer of dividends, rights shares, and bonus shares.
- Declaration/payment of dividend; Transfer of unpaid/unclaimed dividend/other amounts to IEPF as per Section 125.
- The signature and board report on FS audited as per section 134 is as per sub-section (3), (4), and (134) of section 134.
- Constitution/appointment/reappointments/retirement/filling of casual vacancies/disclosure of directors, chief managerial personnel and remuneration given to them.
- Appointment/reappointment of auditors/filling of casual vacancies as per section 139.
- Under the provisions of the Act, approval from CG, NCLT, RD, Registrar of Companies, Courts, or other such authorities is required.
- Acceptance/renewal/repayment of deposits.
- Borrowing from directors, members, public financial institutions, banks, and others.
- Loans or investments or guarantees granted or provided for securities to other bodies (corporate or individuals falling under the provisions of section 186 of the Act).
- Change of AOA and/or MOA of the company.
A Penalty for Non-compliance of MGT-8
Noncompliance occurs when the company secretary grants an incorrect certificate in the form of MGT-8, which does not meet all the requirements outlined in section 92. In this case, the company secretary has to bear the fine for this. The fine cannot be less than Rs 50,000 and it May increase to Rupees 5 lakhs.
Action by ICSI
As per the provisions of the Company Secretaries Act, 1980, a Company Secretary will also be responsible for disciplinary action by the disciplinary committee of ICSI.
If the report, return, certificate, financial statement, or any other document contains any false statement or incorrect or incorrect facts, there may be other penalties imposed by section 447 of the Companies Act, 2013.
Provision of Imprisonment Ranging
But if someone is found guilty of fraud, there can be a severe sentence of imprisonment. In this case, there is minimum imprisonment ranging from 6 months to 10 years. Additionally, fines can be imposed which will be equal to the amount involved in the fraud or the fraud amount involved in the fraud can be increased up to 3 times.
If fraudulent behavior affects the general public, the minimum imprisonment is 3 years.