Introduction:
All the companies in India are governed by the Ministry of Corporate Affairs and all the steps of incorporation, to the Registrar of Companies. These institutions assist in smooth working and regulations of the Companies. It is to be made sure that all the companies are working fairly and the members are provided with correct information. In pursuit of this objective, the companies have to fie the resolutions and agreements passed in the meeting of the Board of Directors.
The Form MGT-14 is an e-form used by the companies to file all the resolutions. It is passed by the Board of Directors as well the company’s members at the board meetings and is submitted to the registrar of the Companies.
The form was introduced under the Indian Companies Act,2013 to provide the directors with a proper format and basis to file the resolutions passed at the meetings. The documents that a company can file with MGT-14 are:
- Resolutions
- Proposed Resolutions under section 94(1)
- Agreements
- Postal Ballet Resolutions under section 110
Incidents for Filling the Form
MGT-14 can be filled by the companies incorporated under the Indian Companies Act, 2013 for the following events:
- Alteration of the Memorandum of Association
- Alteration of the Articles of Association
- Alteration of objects clause of the company
- Any private Placement in the Company
- Conversion of a Private limited company to a Public Limited Company and vice versa.
- In case the company has an unutilized share capital.
- Issuance of equity shares to the general public.
- Issuance of SWEAT equity shares
- Issuance of Global Depository Receipts
- Issuance of more equity shares to the employees under the Employees Stock Option Scheme.
- Reclassification of shares of the Company
- Voluntary winding up of the Company under section 304
- To apply for winding up in a court of law.
Types of Resolutions
There are 3 types of resolutions in which the form MGT-14 is filed with the registrar of Companies. These 3 resolutions are:
Board Resolutions
Approval must be given by at least 75% of the board members and the majority of the members must give their assent to this type of resolution to get it passed.
All the ordinary resolutions are filed under Annexure A of the form.
It is to be noted that the Private Companies are exempted from filing the resolutions mentioned in Section 179(3) and Rule 8 of Chapter XII of the Indian Companies Act,2013. Thus, the private companies are exempted from filing the MGT-14 form for the matters discussed in their Board Meetings.
| S.no. | Resolutions |
| a. | Issue of securities, debt, whether inside or outside India |
| b. | Taking Loans from any source |
| c. | Investing the Funds of the company( according to provisions to section 186) |
| d. | Granting loans, giving guarantee or providing securities against the loans( according to provisions to section 186) |
| e. | Approval of financial statements and Board’s report. |
| f. | To appoint Internal Auditors |
| g. | To Appoint Secretarial Auditor |
| h. | To appoint or remove any person from a key Managerial Position |
| i. | Making any political Contributions |
| j. | Deciding the fate of shareholders who have not paid their entire allotment money. |
| k. | |
| l. | Expanding the company’s business or operations to other those that were mentioned during the registration. |
| m. | |
| n. | Acquiring a company, acquiring a major share in some other company. |
Special Resolutions
This type of resolution is used for some specific purposes and the decisions are not possible to be taken in the normal course of action. To pass any special resolution, Annexure B is to be filed. Under this type of resolution. Approval must be given by at least 75% of the board members.
| S.no. | Section | Matters Included |
| a. | 3 | Converting a Private Limited Company to a One Person Company(OPC). |
| b. | 5 | Any amendment in the specific clauses of the Articles of Association of a public Company |
| c. | 8 | A section 8 Company willing to convert itself into another kind of a company or any alteration in its AOA or MoA. |
| d. | 12 | Shifting the registered office in the same state but outside the local limits of the city, town, or village where it is situated. |
| e. | 13 | Shifting the registered office within the same state but from one registrar’s jurisdiction to another. |
| f. | 13 | Changing the company’s name after the completion of the registration process. |
| g. | 13(8) | If the Company wants to utilize the funds raised for one purpose to another. |
| h. | 14 | Any amendment in the AoA of a private Company. |
| i. | 27(1) | A company must not vary the terms of the contract at any time, mentioned in the prospectus or objects for which it was issued through the approval given by the Company in the AGM. |
| j. | 27(1) (a) | A company can issue depository receipts in any foreign country. |
| k. | 48(1) | Where the Company’s Share Capital is divided into different classes of shares, the rights of any class of shareholders may be modified with the shareholder’s consent. |
| l. | 54 | Issue of SWEAT equity shares |
| m. | 55 | Issue of Preference Shares |
| n. | 62(1) | Private offer of securities |
| o. | 66(1) | Reduction in Authorized Capital |
| p. | 67(3)(b) | Purchase of fully paid-up equity shares for employee’s welfare. ( Not applicable to Pvt. Ltd. Company) |
| q. | 68(2)(b) | Buyback of equity shares |
| r. | 71(1) | Issue of fully or partially convertible debentures at the time of redemption. |
| s. | 94 | Keep registers abroad. |
| t. | 140 | Removing an Auditor |
| u. | 149(10) | Re-appointment of an Independent Director |
| v. | 165(2)(1) | Reduce the no. of companies in which its directors can act as directors. |
| w. | 180(a) | To sell, lease or Dispose of the entire or a major stake of the company’s undertaking |
| x. | 180(b) | To invest the amount received by a merger or amalgamation, in any trust securities |
| y. | 180(c) | To borrow money, where the money to be borrowed, along with the already borrowed money exceeds the average of its paid-up share capital and free reserves apart from the temporary loans taken by the Company’s bankers. |
| z. | 180(d) | To remit or give more time to a director to repay his debt towards the company. |
| A. | 185 | Granting a loan to MD or WTD. |
| B. | 186 | Investment or Loan above 60% of the paid-up capital or 100% of the free reserves. |
| C. | 196 | Appointing a person above 70 years at a Managerial Position |
| D. | Schedule V | Remuneration of Managerial Personnel when Company’s funds are not sufficient. |
| E. | 271(1)(b) | Winding up the company by NCLT. |
| F. | 271(1)(b) | Winding up the company |
| G. | 455 | To obtain a Dormant Company’s status |
Ordinary Resolutions
To pass a written resolution, at least 50% of the board members have to approve of it and signed by a majority of the members. Annexure C is required to be filled for all ordinary resolutions passed.
| S.no. | Section | Matters Included |
| a. | 4 | When the company has to change its name after receiving an order from the RoC. This happens when the Company had provided the wrong information when applying for the name. |
| b. | 16 | When a company is asked to change its name on the order of the central Government, in case there is a copyright or trademark infringement issue with its name. |
| c. | 43 | Issuance of equity shares with differential rights. |
| d. | 61A | Increase or consolidate its share capital or sub-divide or cancel the not taken up Shares. ( Only if authorized by its AoA) |
| e. | 62 | A private company cannot offer its shares to its employees without the shareholder’s consent. |
| f. | Rule 12(6) | General Meeting approval for issue of Bonus shares. |
| g. | 63 | Capitalization of profits and reserves to issue fully paid-up bonus shares. |
| h. | 73(2) | General meeting approval for inviting deposits from members. |
| i. | 102 | To transact various businesses at the Annual General Meeting |
| j. | 139 | To appoint Auditor |
| k. | 142 | To appoint Branch Auditor |
| l. | 148(3) | Remuneration of cost Auditor |
| m. | 149 | To appoint an Independent Director |
| n. | 151 | To appoint small shareholders Director |
| o. | 152 | To appoint a director. |
| p. | 188 | For entering into contracts with a related party(RP) |
| q. | 192 | Permission to enter into non-cash transactions involving the directors, holding or associate companies or a subsidiary Company. |
Attachments to be Made with Form MGT-14
The following documents are required to be submitted with the form:
- A copy of the agreements signed and resolutions passed relating to which the form is filed along with the explanatory statement[1] (a statement carrying all the information about the resolutions being passed).
- The altered Memorandum of Association, if any alteration has taken place.
- The altered Articles of Association, if any alteration has taken place.
Information to be Furnished in the Form
Following information has to be also provided to the RoC in the form:
- Corporate Identification Number(CIN)
- Details about the company such as the Company’s name, its email id, office address, and other particulars, if required.
- Details about the documents needed to be registered ( Resolution Agreement).
- The date on which the resolution was dispatched.
- The date on which the resolution was passed.
- The number of resolutions passed.
- All the material information about the resolution passed and the authority which passed it.
- In case of winding up, all the necessary information has to be also provided.
Process of Filing the Form
Step1
- Visiting the official website of the Ministry of Corporate Affairs(MCA) www.mca.gov.in.
- Login to your account with MCA using the details provided by the ministry.
Step2
Select the option which says “ Upload E- forms”.
Step 3
- After selecting that option, the applicant is now required to select the “ Normal Forms” option.
- To upload the form saved, click on the ” Browse” option.
Step 4
After successful submission of the form, the applicant will automatically receive the SRN (Service Request Number). This number will be required while making the payment for the form’s fees.
Step 5( Final Step)
Once the form is submitted and fees paid, the form will reach the ministry for processing.
Fees Structure
Based on the amount of Share Capital of the company, the fee structure is also different for the companies. The fees to be paid by each category of the company is mentioned below:
| S.NO. | Amount of Share Capital | Fees to be Paid |
| 1. | Less than Rs. 1,00,000 | Rs. 200 per document |
| 2. | Between Rs. 1,00,000 to Rs. 4,99,999 | Rs.300 per document |
| 3. | Between Rs. 4,99,999 to Rs. 25,99,999 | Rs. 400 per document |
| 4. | Between Rs. 25,99,999 to Rs. 99,99,999 | Rs. 500 per document |
| 5. | Equal to or greater than Rs. 1,00,00,000 | Rs. 600 per document |
Moreover, a delay in the registration process also invites a penalty. The penalty is dependent upon the number of days by which the delay is caused and paid accordingly.
Consequences of Not Filling and Penalty Charged
In case, any company fails to fill the form within the prescribed time limit, it will have to face the following consequences and pay the penalty charged on it.
- The company will have to file another form CG 1 with the ministry.
- The defaulting company will have to pay the penalty.
Any delay in the registration process can occur at any time and can be caused by either the company or by the officer in charge. In both cases, a penalty is levied. The penalty charged in both situations is stated below:
- If the company is not able to file the resolution within a time frame of 30 days of its passing[2], the company will have to pay a fine of Rs. 1,00,000 and an additional Rs. 500 for every following day. A maximum penalty of Rs. 25 Lakhs can be charged from the Company.
- If the delay is caused by the officer in charge, for the first time, the penalty will be Rs. 50,000. If the delay continues even after the first time, then Rs. 500 will be charged for every passing day. A maximum penalty of Rs. 5Lakhs can be charged from the officer.3.
3. After payment of the penalty and receiving the order, the company will have to file a copy of the order and the receipt of penalty in the Form INC 28 and then submit it to the RoC.
Conclusion
The form MGT-14 assists in filling the resolutions and agreements that have taken place in the board meetings of the Company are submitted to the Registrar of Companies. The form was introduced only to provide a basis for the directors to fill the resolutions accurately.
The form is governed by sections 94(1) and 117 of the Indian Companies Act, 2013. All the 3 types of resolutions( Ordinary, Special, and Board Resolutions) are to be filed within 30 days of passing of the resolutions. The fees for filing the form depend upon the Capital of the Company.
If there is not a timely submission of the form i.e., within 30 days of passing of resolution or signing of the agreement, the concerned company attracts a penalty depending upon its Capital Structure and has to face the consequences. Thus, it is important to submit the form on time and provide all the information to the RoC.
If the directors fill the form accurately, it also helps to build a sense of trust between the owners and members of the company as it brings a certain kind of transparency in the working of the organization. The members build a sense of trust in the organization when they think that their company is not hiding anything from them.
References:
[1]The Indian Companies Act,2013 Section 102
[2] The Indian Companies Act,2013 Section 117
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