Regulation compliance is crucial to uphold accountability and transparency in today’s evolving corporate environment. A key document with importance in corporate governance is Form MGT-14. This form was created by the Indian Ministry of Corporate Affairs (MCA) to allow businesses to submit specific resolutions and agreements to the RoC annual compliance. Let’s explore Form MGT-14’s complexities and business ramifications in further detail.
What is Form MGT-14?
A copy of each Agreement signed Resolution accepted, and Explanatory Statement under Section 102 shall be lodged with the Registrar of Companies India by Section 117(3) of the Companies Act 2013. Additionally, within 30 days of their passage, businesses must file these resolutions on Form MGT-14 along with the necessary payments. As a result, the Companies Act of 2013 established Form MGT-14 to provide a framework for directors to submit resolutions passed at various Board Meetings.
Purpose of Form MGT-14
Form MGT-14 is mainly used to file resolutions. The decision-making made by the Company’s shareholders, directors, and creditors at various board meetings is referred to as “Resolutions” in this context. A Liquidator or Company must submit the specifics of the decisions and agreements made in such a meeting using E-Form MGT 14 to the Registrar of Companies in India to register Resolutions and Agreements.
To file resolutions, most people use Form MGT 14. The decisions made by the Company’s shareholders, directors, and creditors at various Board Meetings are referred to as “Resolutions” in this document. To register Resolutions and Agreements, a liquidator or business must submit information about the decisions and agreements taken in such a meeting using E-Form MGT 14 to the Registrar of Companies in India.
Form MGT-14 for Private Limited Companies
Private Companies are exempt from the filing requirement for resolutions taken according to Section 179(3) of the New Companies Act of 2013 or Board powers to be exercised during the Board meeting. Therefore, when the Board exercises its authority under Section 179(3) and Rule 8 of the updated Companies (Meetings of Board & its Powers) Rules, 2014, Private Companies no longer need to submit an electronic form MGT-14 to the ROC on all 13 occasions.
It grants Private Companies the opportunity to have their own class of capital and voting rights and exemption from related-party transactions amongst private holding companies. The Private Limited Companies have received some relief under Section 62 of the revised Company Act of 2013, and specific procedures for taking member deposits and general meeting compliances for Private limited company registration have been eliminated.
List of Resolutions in Form MGT 14
Form MGT-14 must be submitted to the Registrar of Companies (RoC) in India for several decisions. Usually, it is used to submit specific files about board resolutions or shareholder resolutions. The form contains information such as the meeting’s date, nature, the specifics of the resolution adopted, etc. Standard solutions submitted using Form MGT-14 include:
Ordinary Resolution
An ordinary resolution requires the support of a simple majority. It is approved if a solution has more yes votes than no, including the chairman’s optional casting vote. If a meeting is called with a maximum of 21 days’ notice, voting shall be by show of hands or poll. The standard resolutions often cover the following issues:
- Information about the accepted public deposits.
- Participation at any creditors’ meeting.
- If the name or trademark is too similar to an existing company name or registered trademark, the corporation must change it after receiving guidance from the central government. A director may be removed before the end of their tenure.
- Corporate attendance at business gatherings.
- If it is discovered that the filing of false information obtained the name, the company must change its name after seeking assistance from the registrar.
- Dissolution after consideration of the Company Liquidator’s report.
- A statutory auditor may be proposed by anyone except a retiring auditor.
- The board granted the authority outlined in Section 179(3) clauses (d) through (f). There is now a managing director, full-time director, or manager.
- Enabling participation in non-cash operations by a corporation’s director, holding, subsidiary, or associate company.
- The company’s voluntary dissolution due to the end of its term or the occurrence of any circumstance for which the regulations call for abolition.
- Contracting with a related party when the company’s paid-up capital exceeds the minimum requirement or the transaction value exceeds the limit.
Special Resolution
A special resolution receives the support of 75% of the members present and voting, necessitating that at least three times as many persons vote in favour of the key as against it, whether through a show of hands, a poll, an in-person vote, or a proxy vote. The general meeting notice must specify whether a resolution will be submitted as a special resolution. The unique solutions often address the following topics:
- Information about the company that should be examined.
- The registrar receives a request to remove a name from the register.
- The idea is to combine struggling companies with any other company.
- A court’s dissolution of an organisation.
- Disposal of the company’s books and records when it will disintegrate or has finished being wound up.
- Moving the registered office from a city in one state to another.
- Business closing voluntarily.
- To give the liquidator permission to take shares, money, or other assets as payment for the sale of a property.
- Approval of the legally binding agreement amongst the creditors of an upcoming dissolver.
- Granting certain rights to the liquidator of the corporation.
- The Memorandum of Association has been modified.
- If the money raised is not put to use, the object will be changed.
- Altering the association’s articles of incorporation.
- Alteration to the terms of a contract or the objectives stated in the prospectus.
- Depository receipts issued by a foreign nation.
- Changes to shareholders’ rights.
- Sweat equity shares are distributed.
- Stock options are granted to employees.
- A securities private placement.
- Loans or debentures with a share conversion option are available.
- There is a reduction in share capital.
- Employees benefit when fully paid shares are purchased or subscribed for.
- Information on share repurchases.
- The amount of compensation received due to a merger or amalgamation or due to purchasing trust securities.
- Give the debt owed by a director time to be repaid. Organise a loan for the board of directors.
Board Meetings
Section 68 of the 2013 Companies Act’s approval for the buyback of securities must be addressed in the Board resolution. Additionally, the following problems demand attention:
- Issuing securities in or outside of India, such as debentures.
- Information on the organisation’s loan application.
- Board and financial reports are approved.
- To expand operations for the business.
- Information on corporate fusions, acquisitions, and mergers.
- Assuming control of a company or purchasing a majority stake in one.
- Examination of the subsidiary’s financial records and other files.
- Permission to make a political contribution.
- Accepting one’s own suggestion.
- A managing director’s appointment can be made, renewed, extended, or have the conditions altered.
- Claiming the outstanding investors’ share balance.
- The company commits money or provides a loan, guarantee, or security. Agreement or contract between two or more parties.
- The hiring of senior management personnel who are full-time employees of the organisation.
- Appointment of a managing director or management team who another organisation already employs.
Penalty for late filing of Form MGT-14
If the Resolution or Agreement required by Section 117, subsection (1), is not filed with an additional filing fee before the deadline indicated in Section 403, the following penalty will be imposed.
- If a company is the defaulting party, the minimum fine is INR 1 lakh, and if the failure recurs after the first fine, there will be a daily fee of INR 500 per day, up to INR 25 lakh.
- Suppose a party in default is an officer of a firm, including its liquidator: Lowest INR 50,000. A daily fee of INR 500 for each day up to INR 5 lakh will be charged if the failure recurs after the initial penalty.
Conclusion
Form MGT-14 is a crucial tool for fostering accountability, openness, and adherence to the law in corporate governance. Its importance cannot be overstated because it is a critical mechanism for documenting and making significant public choices inside an organisation. Adopting Form MGT 14 principles promotes an organisational culture of openness and integrity while ensuring compliance with the Companies Act.
