Company Law

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How to Change Main Object Clause Of MOA of Private Limited Company (7 Steps)

Posted on by Fastlegal Team
object clause

If a Private Limited company wish to undertake any object (New Business Activity) which is not mentioned in its MOA, and the company wants to start up a new business which is not as per it’s MOA then, it should make a change in its main object by Following the procedure mentioned below

object clause

Step by Step Procedure for Change in Object Clause of MOA of Company

Time Requierd 25 days

Hold Board Meeting and send Notice for Extra Ordinary General Meeting for change in Object Clause

Object Change

The first step for change in object clause of the MOA of the company is to hold Board meeting of the Company, in the board meeting main agenda should be to hold an Extra-Ordinary General Meeting of the Company.

Hold Extra-Ordinary General Meeting on the specified date for the change in Object Clause

object clasue

Now hold the extra Ordinary general meeting of the Company, in this regard do necessary legal and procedural requirement at venue of general meeting

 
Pass Resolution by taking approval of Shareholders for change in Object Clause

How to Change Main Object Clause Of MOA of Private Limited Company (7 Steps) 1

Now start the proceedings of general meeting and pass required resolution for change in main object of the company, resolution is required to be passed by requisite approval of shareholders of company

Get true certified copies of all the documents and resolutions in respect to change in Object Clause

object change

Once all the approval of shareholders are received , any director of company or authorized person will prepare necessary documents , like certified copies of all the documents and resolution , Following documents certified copies is mandatory required to be arranged :
1. Altered MOA of the Company
2. Resolution passed at EGM of the Company

File MGT-14 with all the Resolutions and Altered MOA

How to Change Main Object Clause Of MOA of Private Limited Company (7 Steps) 2

Once the above requirements are complete in all respect, Company is required to file E Form MGT-14 to Registrar of Companies with payment of fee.

Approval of E form MGT-14 for Change in Object of the Company

approval of MGT-14

Once e Form MGT-14 is filed with ROC , the ROC will check and verify the correctness of the Form and will if deems fit approve or send back the e form

Certificate of Registration for Change in Object Clause of the Company

Certificate for Object Change

Once the E form MGT-14 is approved by ROC , the Company will receive the email in this regard along with Certificate.

Once all the above is completed, complete all the required certificate and altered MOA in single set as new set of MOA of the Company.

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Convertible Notes: A Deep Dive into a Popular Startup Funding Instrument

Posted on by Fastlegal Team

Convertible notes are a form of short-term debt that converts into equity, typically associated with the financing of early-stage startups. In this deep dive, we will explore the nuances of this popular funding instrument, guiding you through its benefits, risks, and overall mechanics.

Understanding Convertible Notes

What Are Convertible Notes?

A convertible note is a type of financing instrument that startups often use in their seed rounds. It starts as a loan and then converts into shares of preferred stock during a future financing round, usually at a discount.

Why Use Convertible Notes?

Convertible notes are quick and easier to structure than equity rounds. They defer the valuation negotiation until a later stage when the company has grown and valuation is clearer.

How Do Convertible Notes Work?

Step 1: Issuance

The startup issues a convertible note to an investor in exchange for capital. The note outlines the terms of the agreement, including interest rate, maturity date, discount rate, and valuation cap.

Step 2: Accruing Interest

Unlike traditional loans, the interest on a convertible note typically doesn’t get paid out in cash. Instead, it accrues and converts into equity along with the principal amount at the next funding round.

Step 3: Conversion Triggers

Conversion triggers are predefined events that prompt the conversion of debt to equity. The most common trigger is a subsequent equity financing round.

Step 4: Conversion Mechanics

Upon a trigger event, the note will convert into equity. The discount rate applies to give the note holders a lower price per share than new investors.

Step 5: Conversion at Maturity

If the note reaches maturity without a conversion event, startups might repay the debt, renegotiate the note, or convert the debt into equity at a predefined ratio.

Key Terms of Convertible Notes

  • Valuation Cap: A maximum valuation at which the note can convert into equity to protect investors from dilution.
  • Discount Rate: A percentage reduction from the per-share price of the next investment round.
  • Interest Rate: The rate at which the loan accrues interest until conversion.
  • Maturity Date: The due date for the loan to be repaid or converted if no equity financing has occurred.
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Advantages and Disadvantages

Advantages

  • Provides flexibility for the startup.
  • Simplifies the fundraising process.
  • Incentivizes early investors with a lower price.

Disadvantages

  • Can be costly for founders in the case of high valuation caps.
  • Could lead to ownership and control dilution.
  • Complexities and legal risks if not structured properly.

Best Practices for Startups

  • Establish favorable terms to both parties.
  • Set a reasonable valuation cap and interest rate.
  • Prepare for different scenarios at the maturity date.
  • Engage with knowledgeable legal advisors.

Conclusion

Convertible notes offer a vital lifeline for startups looking to finance their growth without immediate valuation. By understanding how convertible notes work and their associated terms and conditions, founders and investors can facilitate a smoother and more efficient investment process.

Remember, the key to navigating convertible notes is a clear understanding of the instrument, sound legal advice, and well-negotiated terms that are fair to all parties involved.

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How to Change Name of Private Limited Company

Posted on by Fastlegal Team

In this article we will discuss about procedure for Change in Name of Private Limited Company , A Private Limited company can change its Name with the Approval of Shareholders via Special Resolution and Central Government , for Change in Name of Company Following procedure is required to be followed :

Procedure for Change in Name of Private Limited Company :

  1. Hold Board Meeting and Pass Resolution for Application to ROC for approval of new Name, Please note that resolution should clearly mention the New Name
  2. Apply New Name in RUN form along with Resolution of Board for new Name , Certified True copy of Resolution should be attached. Get name Approval from CRC.
  3. Hold Board Meeting and Send Notice for Holding Extra Ordinary General Meeting
  4. Hold Extra Ordinary General Meeting of Members of the Company
  5. Pass Special Resolution
  6. Get the Certified true Copies of Resolution passed at Extra Ordinary General Meeting  of all the documents signed along with Copy of Altered MOA and AOA of the company
  7. File form MGT-14 with ROC
  8. Once form MGT-14 is approved , File Form INC-24 for Change in the Name of the Company
  9. Once INC-24 is approved , you will receive , new certificate after change in the name of Company
  10. Apply for Changes in PAN Card of the Company
  11. Apply for Change in GST Registration and any Other statutory Registrations

NOTE: The old name should be written along with the new name in all the documents of the company for two years.                   ( FORMERLY KNOWN AS ———-)

Do you need any help for Change in Name of your Company , Please email us at mail@fastlegal.in

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Guide to Depreciation on Fixed Assets and Deferred Tax Calculation

Posted on by Fastlegal Team

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life. In this tutorial, we’ll explore how to calculate depreciation under the Companies Act and the Income Tax Act. We’ll also discuss the procedure for calculating deferred tax related to fixed assets.

Depreciation Under Companies Act

The depreciation under the Companies Act is calculated based on the useful life of the assets, as stated in Schedule II of the Companies Act, 2013.

Here’s a simplified step-by-step process:

  1. Identify the Asset: Determine the fixed asset that you will depreciate.
  2. Determine the Cost: Ascertain the historical cost of the asset, including purchase price, import duties, transportation, and installation.
  3. Assess the Useful Life: Refer to Schedule II for the prescribed useful life of the asset class.
  4. Select the Method: Choose a depreciation method (Straight line method or Written down value method) as per your company policy.
  5. Calculate Depreciation: Apply the method to the cost of the asset over its useful life.

Example Table of Rates and Useful Life as per Companies Act:

Asset TypeUseful Life (Years)Depreciation Rate (SLM)Depreciation Rate (WDV)
Buildings303.34%5.28%
Furniture109.50%18.10%
Machinery156.33%13.91%
Computers331.67%63.16%

Note: SLM stands for Straight Line Method, and WDV stands for Written Down Value Method.

Depreciation Under Income Tax Act

The Income Tax Act allows businesses to claim depreciation on their assets to reduce their taxable income using the Written Down Value (WDV) method.

Steps for calculation under Income Tax Act:

  1. Categorize the Asset: Identify the block of asset as per Income Tax rules.
  2. Determine the WDV: Find out the Written Down Value at the beginning of the year.
  3. Apply the Rates: Use the rates provided by the Income Tax Act for different asset types.
  4. Compute Depreciation: Calculate the depreciation for the year based on the applicable rate.

Example Table of Rates as per Income Tax Act:

Asset BlockDepreciation Rate
Building10%
Furniture and Fittings10%
Machinery and Plant (General)15%
Computers and Software40%

Calculating Deferred Tax

Deferred tax is calculated on temporary differences between the book value of assets as per accounting records and their value for tax purposes.

Here’s how to calculate deferred tax:

  1. Identify Temporary Differences: Determine the temporary differences that arise due to differences in depreciation methods or rates as per accounting standards and tax laws.
  2. Calculate Timing Differences: Assess the timing difference for the period by subtracting the tax base of the asset from its carrying amount.
  3. Apply the Tax Rate: Apply the current tax rate to the timing difference to find the deferred tax.
  4. Deferred Tax Asset or Liability: If the carrying amount is greater than the tax base, it results in a deferred tax asset. Conversely, if the tax base is greater, it leads to a deferred tax liability.

Example Calculation:

ParticularsCarrying AmountTax BaseTemporary DifferenceTax RateDeferred Tax
Machinery (as per books)100,00080,00020,00030%6,000

In this example, a deferred tax liability of Rs. 6,000 will be recognized on the balance sheet because the carrying amount is more than the tax base.

Remember that rules and rates are subject to change, and different types of assets may have specific requirements. It’s important to refer to the latest schedules and rates provided under the Companies Act and Income Tax Act respectively, and to consult with a tax professional for accurate depreciation and deferred tax calculations.

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Appointment of Resident Director in India

Posted on by Fastlegal Team

Section 149 (3) of the Companies Act, 2013 has provided for the residence of a director in India (Resident Director in India) as a compulsory i.e. every company shall have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year.

So if you are Incorporating a new company that has all the Directors who is not Indian Residents, you need to hire one Indian Resident Director.

Resident Director in India

Duties and Responsibilities of Resident Director in India

  • Resident Director will be fully responsible as Normal Director of the Company,
  • Resident Director will not be involved in operational control of the company.
  • Resident Director will be appointment to fulfill the statutory requirements.
  • Directorship will be covered under the officers and liability insurance.
  • Resident Director will participate in Board Meetings of the Company, wherever required
  • Circular or other Resolutions will be approved or disapproved as par Individual Understanding.
  • Resident Director will be from our team only.

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Items not considered as deposits, in terms of Rule 2(1)(c) of Companies (Acceptance of Deposits) Rules, 2014 read with Section 73 of the Companies Act, 2013 by CS Arun Jain

Posted on by CS Arun Jain

Items not considered as deposits, in terms of Rule 2(1)(c) of Companies (Acceptance of Deposits) Rules, 2014 read with Section 73 of the Companies Act, 2013.

Sl.

No.

 Particulars Amount
a. Amount received from –  
  (i) the Central Government; or  
  (ii) a State Government; or amount received from any other source whose repayment is guaranteed by the Central Government or State Government; or  
  (iii) amount received from a local authority; or  
  (iv) amount received from statutory authority constituted under an Act of Parliament or a State Legislature.  
b. Amount received from –  
  (i) Foreign Governments; or  
  (ii) Foreign or international banks;  
  (iii) Multilateral financial institutions;  
  (iv) Foreign Governments owned development financial institutions;  
  (v) Foreign export credit agencies;  
  (vi) Foreign collaborators;  
  (vii) Foreign body corporates;  
  (viii) Foreign citizens;  
  (ix) Foreign authorities or;  
  (x) Persons residents outside India subject to the provisions of Foreign Exchange Management Act, 1999 (42 of 1999).  
c. Amount received as –  
  i) A loan or facility from any banking company; or  
  (ii) From the state Bank of India or any of its subsidiary banks; or  
  (iii) From a banking institution notified by the Central Government under section 51 of the Banking Regulation Act, 1949 (10 of 1949); or  
  (iv) A corresponding new bank as defined in clause(d) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980); or  
  (v) From a cooperative bank as defined in clause (b-ii) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934).  
d. Amount received as loan or financial assistance from –  
  (i) Public Financial Institutions notified by the Central Government; or  
  (ii) Any regional financial institutions; or  
  (iii) Insurance companies; or  
  (iv) Scheduled Banks as defined in the Reserve Bank of India Act,1934 (2 of 1934).  
e. Amount received against issue of commercial paper or any other instruments issued in accordance with the guidelines or notification issued by the Reserve Bank of India.  
f. Amount received by the company from any other company.  
g. Amount received and held pursuant to an offer made in accordance with the provisions of the Act towards subscription to any securities including share application money or advance towards allotment of securities pending allotment, so long as such amount is appropriated only against the amount due on allotment of securities applied for.  
h. Amount received from a person who, at the time of the receipt of the amount, was a director of the company or the relative of the director of a private company.  
i. (A) Amount raised by the issue of bonds or debentures secured by a first charge or a charge ranking paripassu with the first charge on any assets referred to in Schedule III of the Act excluding intangible assets of the company; or  
  (B) bonds or debentures compulsorily convertible into shares of the company within ten years.  
j. Amount raised by the issue of non-convertible debentures not constituting a charge on the assets of the company and listed on recognized stock exchange as per applicable regulations made by Securities and Exchange Board of India.  
k. Amount received from an employee of the company not exceeding his annual salary under a contract of employment with the company in the nature of non-interest bearing security deposit.  
l. Non-interest bearing amount received and held in trust.  
m. Amount received in course of , or for the purposes of the business of the company-  
  (i) As an advance for supply of goods or provision of services accounted for in any manner whatsoever provided that such advance is appropriated against supply of goods or provision of services within a period of three hundred and sixty five days from the date of acceptance of such advance.  
  (ii) As advance accounted for in any manner whatsoever, received in connection with consideration for immovable property under an agreement or arrangement, provided that such advance is adjusted against such property in accordance with the terms of agreement or arrangement.  
  (iii) As security deposit for performance of the contract of supply of goods or provision of services.  
  (iv) As advance received under long term projects for supply of capital goods except those covered under item (b) of sub- clause (xii) clause (c) of sub- rule (1) of rule (2) of the Companies (Acceptance of Deposits) Rules, 2014.  
  (v) As an advance towards consideration for providing future services in the form of a warranty or maintenance contract as per written agreement, if the period for providing such services does not exceed the period prevalent as per common business practice or five years, from the date of acceptance of such service whichever is less.  
  (vi) As advance received and allowed by any sectoral regulator or in accordance with directions of Central or State Government.  
  (vii) As an advance for subscription towards publication, whether in print or electronic to be adjusted against receipt of such publications.  
  (viii) Amount brought in by promoters of the company by way of unsecured loans in pursuance of the stipulation of any lending financial institution.  
  (ix) Amount received by a Nidhi company in accordance with the rules made under section 406 of the Act.  
  (x) Amount received by way of subscription in respect of chit under the Chit Funds Act, 1982(4 of 1982).  
  (xi) Amount received by company under any collective Investment scheme in compliance with regulations framed by the Securities and Exchange Board of India.  
  (xii) Amount of twenty five lakh rupees or more received by a start up company, by way of convertible note (convertible into equity shares or repayable within a period not exceeding five years from the date of issue) in a single tranche, from a person.  
  (xiii) Amount received by a company from –  
  (A) Alternate Investment Funds;  
  (B) Domestic venture Capital Funds;  
  (C) Infrastructure Investments Trusts;  
  (D) Real Estate Investment Trusts;  
  (E) Mutual Funds registered with the Securities and Exchange Board of India.  
     
     

Other Readings :

Reporting of Outstanding Loans and Advances to MCA in E-form DPT-3

ROC Filings (New) , Active 22A, MSME form 1 and DPT-3 by CS Arun Jain

Declaration of Commencement of Business by Company

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Form MGT-7A: Simplified Annual Return Filing for OPCs and Small Companies

Posted on by Fastlegal Team

In India, compliance with the Companies Act, 2013, is a critical responsibility for all registered companies. The Ministry of Corporate Affairs (MCA) mandates the filing of annual returns to ensure transparency and accountability in corporate governance. To ease the compliance burden on smaller entities, the MCA introduced Form MGT-7A, a simplified version of the annual return form tailored for One Person Companies (OPCs) and small companies. This blog post provides a comprehensive overview of Form MGT-7A, its applicability, key features, filing process, due dates, and penalties for non-compliance, written from the perspective of a Company Secretary in India.

What is Form MGT-7A?

Form MGT-7A is an abridged annual return form introduced under the Companies (Management and Administration) Amendment Rules, 2021, effective from the financial year 2020-21. It is designed specifically for One Person Companies (OPCs) and small companies, as defined under Section 2(85) of the Companies Act, 2013. Unlike the more comprehensive Form MGT-7, which is mandatory for other companies, Form MGT-7A requires fewer details, making compliance simpler and less resource-intensive for smaller entities.

Definition of a Small Company

As per Section 2(85) of the Companies Act, 2013, a small company is a company (other than a public company) that meets the following criteria:

  • Paid-up share capital: Not exceeding ₹2 crore (or a higher amount as specified, up to ₹10 crore).
  • Turnover: Not exceeding ₹40 crore (or a higher amount as specified, up to ₹100 crore).

However, a company is not considered a small company if it is:

  • A holding or subsidiary company.
  • A company registered under Section 8 (non-profit organizations).
  • A company governed by a special act.

OPCs, by their nature, are single-member companies and are also eligible to file Form MGT-7A.

Key Features of Form MGT-7A

Form MGT-7A is designed to reduce the compliance burden on OPCs and small companies by requiring less detailed information compared to Form MGT-7. The key features include:

  1. Simplified Format: Unlike Form MGT-7, which requires extensive details about directors, key managerial personnel (KMP), and remuneration, Form MGT-7A focuses on essential information, making it easier to complete.
  2. No Mandatory Company Secretary Certification: For OPCs and small companies, Form MGT-7A does not require certification by a practicing Company Secretary. It can be signed using the Digital Signature Certificate (DSC) of a director.
  3. Key Information Required: The form captures the following details as of the close of the financial year:
    • Registered office details, Corporate Identification Number (CIN), Permanent Account Number (PAN), and principal business activities.
    • Particulars of associate companies (including joint ventures).
    • Details of shares, debentures, and other securities, along with the shareholding pattern.
    • Details of members, promoters, and debenture-holders, including changes since the previous financial year.
    • Details of meetings of members (for small companies), the board, and its committees, along with attendance records.
    • Details of penalties or punishments imposed on the company, its directors, or officers, and any appeals made.
    • Certification of compliances and disclosures as prescribed.
  4. Exemptions from Certain Disclosures: Unlike Form MGT-7, Form MGT-7A does not require details such as:
    • Composition of the board of directors or KMP.
    • Remuneration details of directors or KMP.
    • Detailed shareholder information (now submitted via an Excel template as of recent updates).
  5. Recent Updates (Effective July 14, 2025): The MCA has introduced changes to Form MGT-7A under the Companies (Management and Administration) Amendment Rules, 2025. These include:
    • Submission of shareholder and debenture-holder lists via a standardized Excel template.
    • A new section for gender-wise shareholder data.
    • A mandatory photograph of the registered office showing the external building and company name, as per Section 12 requirements.
    • Integration of Form MGT-8 fields for applicable companies, eliminating separate PDF uploads.

Applicability of Form MGT-7A

Form MGT-7A is mandatory for:

  • One Person Companies (OPCs): Single-member companies incorporated under the Companies Act, 2013.
  • Small Companies: Companies meeting the paid-up capital and turnover criteria mentioned above.

All other companies, including private limited companies, public companies, and listed companies, must file Form MGT-7. Additionally, listed companies or companies with a paid-up share capital of ₹10 crore or more or a turnover of ₹50 crore or more must have their Form MGT-7 certified by a practicing Company Secretary in Form MGT-8.

Filing Process for Form MGT-7A

Filing Form MGT-7A is a straightforward process that can be completed electronically via the MCA portal. Below are the steps to file Form MGT-7A:

  1. Download the Form: Access Form MGT-7A from the MCA portal under the “Annual Filing e-Forms” category.
  2. Fill in the Details: Provide the required information, including:
    • Company registration details (CIN, PAN, registered office address).
    • Principal business activities.
    • Details of shares, debentures, and shareholding patterns.
    • Details of meetings, penalties, and compliance certifications.
    • For FY 2024-25 onwards, upload shareholder and debenture-holder details via the prescribed Excel template and attach a photograph of the registered office.
  3. Attach Required Documents: The following documents must be attached:
    • List of shareholders and debenture-holders (via Excel template).
    • List of directors.
    • Approval letter for any extension of the Annual General Meeting (AGM), if applicable.
    • Optional attachments, as needed.
  4. Digital Signature: The form must be digitally signed by a director of the company using a valid DSC and Director Identification Number (DIN). No Company Secretary certification is required unless specified for certain cases.
  5. Pre-Scrutiny Check: Use the “Pre-Scrutiny” button on the MCA portal to validate the form for technical errors. Rectify any issues before proceeding.
  6. Upload and Pay Fees: Log in to the MCA portal, upload the validated form under the “Upload e-Forms” section, and pay the prescribed filing fee. The fee varies based on the company’s nominal share capital:
    • Less than ₹1 lakh: ₹200
    • ₹1 lakh to ₹5 lakh: ₹300
    • ₹5 lakh to ₹25 lakh: ₹400
    • ₹25 lakh to ₹1 crore: ₹500
    • Above ₹1 crore: ₹600
  7. SRN Generation: Upon successful submission, a Service Request Number (SRN) is generated for tracking purposes. A challan detailing the fee payment is also issued.
  8. Acknowledgment: After processing by the Registrar of Companies (ROC), an acknowledgment is sent to the company’s official email address.

Due Dates for Filing Form MGT-7A

  • For Small Companies: Form MGT-7A must be filed within 60 days from the date of the Annual General Meeting (AGM). The AGM must be held on or before September 30 following the close of the financial year (March 31). Thus, the due date is typically November 29 each year.
  • For OPCs: The due date is within 60 days from the expiry of 180 days from the close of the financial year. For example, for the financial year ending March 31, 2025, the 180-day period ends on September 27, 2025, making the filing due by November 26, 2025.

If the AGM is not held, the form must be filed within 60 days from the date the AGM should have been held.

Penalties for Non-Compliance

Non-compliance with the filing of Form MGT-7A attracts significant penalties under the Companies Act, 2013. Since 2018, the penalty for delayed filing has been set at ₹100 per day of default, with no upper limit. This applies to both the company and its officers in default. Additionally, failure to file may lead to:

  • Adverse impact on the company’s compliance record.
  • Difficulty in obtaining approvals or engaging in certain business activities.
  • Potential disqualification of directors under Section 164(2) of the Companies Act, 2013.

To avoid hefty penalties, OPCs and small companies must ensure timely and accurate filing of Form MGT-7A.

Recent Amendments (Effective July 14, 2025)

The MCA’s notification dated May 30, 2025, introduced key changes to Form MGT-7A to enhance filing accuracy and transparency:

  • Excel Template for Shareholder Data: Shareholder and debenture-holder details must now be submitted via a standardized Excel template, similar to PAS-3 filings, ensuring uniformity and ease of processing.
  • Gender-Wise Shareholder Data: A new section requires companies to provide gender-wise shareholder information, promoting demographic transparency.
  • Registered Office Photograph: Companies must attach a photograph of the registered office showing the external building and company name, aligning with Section 12 requirements.
  • Integration of Form MGT-8: For applicable companies, Form MGT-8 fields are now integrated into Form MGT-7A, eliminating the need for separate PDF uploads.
  • Support for CIRP/Liquidation: Companies undergoing Corporate Insolvency Resolution Process (CIRP) or liquidation can now file Form MGT-7A directly via the MCA V3 portal.

These updates, effective for filings related to the financial year ending March 31, 2025, aim to streamline compliance and improve data accuracy.

Importance of Form MGT-7A

Form MGT-7A serves as a critical tool for maintaining transparency and accountability in OPCs and small companies. It provides stakeholders, including shareholders, creditors, and potential investors, with essential information about the company’s operations, governance, and financial health. Key benefits include:

  • Regulatory Compliance: Ensures adherence to the Companies Act, 2013, and MCA regulations.
  • Transparency: Provides a snapshot of the company’s non-financial health, ownership structure, and management.
  • Ease of Compliance: The simplified format reduces the administrative burden on small companies and OPCs.
  • Stakeholder Confidence: Accurate and timely filing enhances trust among investors, regulators, and other stakeholders.

Practical Tips for Company Secretaries

As a Company Secretary, ensuring seamless compliance with Form MGT-7A requires careful planning and attention to detail. Here are some practical tips:

  1. Verify Eligibility: Confirm that the company qualifies as an OPC or small company based on the latest paid-up capital and turnover thresholds.
  2. Use the MCA Help Kit: Leverage the MGT-7A help kit on the MCA portal for guidance on filling out the form accurately.
  3. Prepare Documents in Advance: Compile all required documents, including shareholder lists and registered office photographs, before initiating the filing process.
  4. Check for Updates: Stay informed about MCA notifications, such as the recent amendments effective July 14, 2025, to ensure compliance with the latest requirements.
  5. Engage Professionals: While Form MGT-7A does not require Company Secretary certification, engaging a practicing Company Secretary or chartered accountant can ensure error-free filing, especially for companies with complex structures.
  6. Track Deadlines: Use compliance calendars to monitor AGM and filing deadlines to avoid penalties.

Conclusion

Form MGT-7A is a game-changer for OPCs and small companies, offering a simplified and cost-effective way to meet annual return filing requirements under the Companies Act, 2013. By reducing the compliance burden and focusing on essential information, it allows smaller entities to prioritize their core business operations while maintaining transparency and accountability. As a Company Secretary, staying updated on MCA amendments, such as those effective from July 14, 2025, and ensuring timely and accurate filing of Form MGT-7A is crucial for fostering good corporate governance and avoiding penalties. For seamless compliance, consider leveraging professional services or MCA resources to navigate the filing process with confidence.

For further assistance or queries on Form MGT-7A filing, feel free to contact a practicing Company Secretary or visit the MCA portal at www.mca.gov.in.

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How to Declare and Pay Dividends in Accordance with Companies Act 2013

Posted on by Fastlegal Team

In this blog post we will discuss on process for declaration of Dividend and payment of Dividend in Accordance with Companies Act, 2013, Declaring and paying dividends is a significant aspect of a company’s interaction with its shareholders. In India, the procedure of dividend declaration and payment is governed by the Companies Act, 2013. Below is a step-by-step guide on how to declare and payment dividends for companies operating under this act.

Step 1: Ascertain Profit Availability

Before declaring any dividend, the board of directors must ensure that there are sufficient profits. As per the Companies Act, dividends can be paid out of:

  • Current financial year’s profits
  • Profits from previous financial years after providing for depreciation
  • Money provided by the government for dividend payment in government companies

Ensure that adequate provisions are made for all unpaid dues, depreciation, and contingencies.

Step 2: Hold Board Meeting in Process for Declaration of payment of Dividend

A meeting of the Board of Directors should be convened by giving notice to all the directors of the company as per Section 173 of the Act. In this meeting, the board should:

  • Consider the profit and loss accounts
  • Decide the quantum of dividends
  • Fix the date for Annual General Meeting (AGM)

Record the minutes of the meeting as per Section 118 of the Act.

Step 3: Declare Dividend at AGM

The shareholders of the company must approve the dividend at the Annual General Meeting:

Process for Declaration of Dividend
  • The board’s recommended dividend is put forward to the members in the AGM
  • The declaration is subject to the approval of shareholders
  • The dividend declared should not exceed the amount recommended by the Board

Step 4: Deposit Dividend Amount

Within 5 days of the declaration, the company must deposit the total amount of dividend in a separate bank account as per Section 123 of the Act.

Step 5: Dividend Payment

  • The company should pay or dispatch the dividends within 30 days from the declaration date to the entitled shareholders
  • Electronic modes of payment are preferred
  • Ensure proper documentation and record-keeping of the payment

Step 6: Transfer to Unpaid Dividend Account

In the process for Declaration of Dividend , Any dividend amount that remains unpaid or unclaimed after 30 days of its declaration should be transferred to the ‘Unpaid Dividend Account’ as per Section 124 of the Act. The company should also inform the shareholders about this transfer.

Step 7: Transfer to Investor Education and Protection Fund (IEPF)

If any amount in the ‘Unpaid Dividend Account’ remains unclaimed or unpaid for a period of 7 years, the company shall transfer it to the Investor Education and Protection Fund established under Section 125 of the Companies Act.

Step 8: Maintain Statutory Registers and Records

The company must maintain the prescribed registers and records, including:

  • The register of dividends (Form SH-7)
  • Any documentation related to unpaid dividends

Step 9: Compliance and Reporting

  • File the necessary forms with the Registrar of Companies (RoC) within the prescribed timelines.
  • Ensure compliance with tax laws regarding dividend distribution tax (DDT), as applicable.

Step 10: Address Discrepancies and Grievances

The company should setup a mechanism to address any discrepancies and grievances that shareholders might have regarding dividend payments.

Following these steps in accordance with the Companies Act of 2013 helps ensure legal compliance and good corporate governance practices. It protects the interests of the shareholders and maintains the company’s reputation in the corporate ecosystem.

For additional information for in the process for declaration of dividend and payment compliance, always refer to the latest version of the Companies Act and consult with legal professionals.

Note: As of the writing of this article, the Corporate Laws in India are subject to changes, and as such, the process outlined above might have been updated. Please ensure to check the latest provisions in the Companies Act, 2013, and amendments thereafter.

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Company Fresh Start Scheme – 2020 , File Company Returns without Additional Fee

Posted on by Fastlegal Team

What is this Company Fresh Start Scheme – 2020 (CFSS-2020)  for

Company Fresh Start Scheme -2020 is for Waiver for Payment of Additional Fee for Filing of E forms with ROC/MCA and Immunity from launch of prosecution or proceedings for imposing penalty

Applicable for

  • Companies which has not filed Annual Return and Financial Statements to ROC /MCA i.e. Form AOC-4, AOC-4 XBRL, AOC-4 CFS,  Form MGT-7
  • Companies which has not filed any E Forms that are required to be filed to ROC /MCA and not filed i.e. Form MGT-14, ADT-1, Form DPT-3 , Form DIR-12, Form 20A, INC 22

Period for Which Returns Can be filed under CFSS-2020

  • From 01-04-2020 to 30-09-2020

Fee Payable for Filing of Documents

  • Normal Filing Fee

What is Form CFSS-2020

  • E Form
  • Required to be Filed with MCA
  • Within 6 Months after the End of the Scheme
  • No Filing Fee for E Form CFSS-2020

Non Applicability of CFSS-2020

  • Company under Strike off
  • Amalgamated Companies
  • Applications filed for obtaining Status of Dormant Companies
  • Vanishing Companies
  • Form SH-7 for Increase in Authorized Share Capital
  • Form CHG-1 , CHG-4, CHG-8, CHG-9 related to Charge

Inactive Companies

Shall File

  • Application for Obtaining Status of Dormant Company
  • STK-2 for Strike of Name of Company

Action by ROc/MCA

  • If Pending Returns/ Documents are not filed
  • MCA/ROC will take action as per provisions of Companies Act, 2013 which provides for very high penalties