It is a well-recognized simple fact that ‘annual filing fever’ grips all CS (Company Secretary) offices during October And Nov after corporates keep their AGMs and due dates are brought on for filing of audited financial claims and annual come back. Nevertheless this year, filing has reached a ‘feverish’ pace and pitch thanks to the delayed discharge of e-types under the new Companies Act, 2013 and also repetitive revisions of the same. It has thrown a number of challenges at CS offices in addition to corporates struggling to know and fill up the details properly. Let’s examine a few of the challenges linked to planning and e-filing of Hong Kong Company Annual Return of an unlisted Business for the FY14-15:
1. There is extract of AR in MGT9 that is created part of the Board’s Report (new requirement beneath the Businesses Take action, 2013) and then there is MGT7 which is the full-length AR in e-version. MGT7 was released only in end September, 2015 and kept developing just like the ‘amoeba’ until it achieved its current ‘avatar’ on 17th Nov, 2015. Naturally the details CSs gathered for MGT9 earlier will not be identical to in MGT7. Question how MGT9 qualifies as being an ‘extract of AR in MGT7’? Certainly, there was plenty of time since 2014 to align both and conserve the corporates and professionals from interpretation and data-gathering about the same subject many times and from several viewpoints! Wishing this is ironed out for the FY15-16 yearly submitting.
2. Corporates are irked that CSs will be going back time and again requesting these to categorize their company activity %-wise below 2 various codes – NIC2008 for Yearly Return (each MGT7 and MGT9) and NCPS (National Category of items & Solutions) or ITC-HS (Indian native Trade Category – Harmonized System) for classification in AOC4 (submitting of audited financial statements). This information will not be available in the audited financial records and its agendas. Most of the companies are unable to get the proper classification and hence it is just the ‘almost there’ or ‘nearest’ code. When the broad level classification is filled in MGT7, the car-fill up explanation showing up mirrors an unrelated activity sending the CSs into a tizzy causing a gtalk/WhatsApp/phone ‘ask around’ exercise. Insufficient clearness will be the biggest challenge leading to various interpretations. We are not able to danger becoming incorrect considering the fact that CSs are generally signing the shape or certifying as in the case of MGT8 (for certain group of companies).
3. Within the preliminary version of MGT7, specifics of share capital crack-up was below Promoter and Public group. Since general public holding is usually relevant for public restricted businesses, many professionals missed satisfying in share funds belonging to nonpromoters with regards to unlisted personal limited businesses. There was misunderstandings whether or not this was correct for them to fill it below ‘public’ category or otherwise not. After umpteen representations, queries, online seminars, FAQs etc., this has been clarified by amending the form to see as ‘Break up of share funds – Promoter and Non-promoter holding’.
4. Likewise Loan in MGT9 clearly meant ‘including interest accrued however, not due’, while in MGT7 initial edition, it simply read Loan. It has now been broadened to see as ‘Loan such as interest accrued although not due’ which aligns the forms. As it is, details for this level – of interest accrued, accrued although not expected etc. will not be available to CSs from the monetary statements so we need to return to the customer to inquire about the same, postponing the complete procedure. Simply put, unless the CS is fully prepared with a thorough checklist it is unachievable to prepare the AR. Tragedy will there be was little time for us to come up with a check list that could stand because the e-form itself continues to be developing. Numerous a occasions a form filled up nowadays would be no good for tomorrow for the reason that there was a revision. A colossal waste of time and energy in redoing it.
5. Another area is shareholding within the initially version was classified as Indian native and International. Any doubt arose whether it consists of Preference share capital. It is now changed to Equity and Choice but there is no location to display the crack-up of Indian and foreign shareholding by body business. Fixing one anomaly has led to another phoning for one more revision in MGT7!
6. What exactly is the concept of quantity of meetings a director is entitled to go to? Does it consist of alternate company directors also? Exactly what are the meetings these are entitled to go to? Seemingly easy details but can be construed in a number of ways.
7. Disclosure of remuneration of Directors And KMP – different remain used by various professionals. While some say this will not need to be revealed for unlisted companies, some are of the view that whether listed or unlisted, in case a company has MD/WTD/Manager and so on., whether employed as Director / KMP you/s 203 of the Take action or otherwise not remuneration specifics should be disclosed. Numerous corporates are sensitive about disclosing specifics of managerial remuneration nevertheless they forget to recognize that these details is in any case obtainable in the Routine to audited Equilibrium Sheet, even though to your lesser level of disclosure.
8. Compliance and punishments under other Acts – how are we to know this? Hard to determine because generally, range of labor of any Computers (Practicing Company Secretary) fails to extend to many other enactments and this can be a new necessity. There is absolutely no disclosure about such non-conformity and penalties in the financial claims also. How are we to indication that the information is proper unless we verify? These are generally but a couple of grey areas and challenges encountered by way of a CS in the Annual Return filing this season. The jrjkyf on CSs are substantial for wrong details filled in. Therefore it could assist to take the following actions:
– Research the e-form completely and create a check list of knowledge needed and initiate only if complete data is accessible. A minimum of for the following season’s filing much better clearness may be readily available.
– Do send out the filled form to customer for his or her verification.
– Wherever required, demand a Administration Representation letter. Presently a number of disclosures are susceptible to interpretations and corporates usually are not revealing specific information according to guidance obtained off their professionals or internal choices.
– Check all original documents before signing the shape, given that as CS one is declaring to that effect as well as to correctness and completeness. For accreditation in MGT8, in any case a mini-review has to conduct.