The Companies Act, 2013, has brought with it a number of compliances to ensure transparency and accountability during corporate decision-making. The filing of e-Form MGT-14 with the Registrar of Companies (ROC) is one of such important compliances. The question of when MGT-14 should be filed, be it in connection with board resolutions, special resolutions, or ordinary resolutions, is always a subject of doubt among many companies and professionals.
This paper gives a detailed description of e-Form MGT-14, its usage, schedules, exceptions, and real-life examples so that companies remain on the right side of the law.
What is e-Form MGT-14?
MGT-14 is an electronic version that is required to be filed under the Companies Act, 2013, when submitting some resolutions and agreements to the ROC.
According to section 117(1) of the Companies Act, it is an obligation of each of the companies to supply a copy of some of the resolutions and agreements to the ROC within 30 days following the adoption of the same resolution. The form serves as a legal document and evidence of critical corporate actions by the shareholders or directors.
Legal Basis – Sections 117 and 179
- Section 117(3): It requires all special resolutions to be filed together with some ordinary resolutions in MGT-14.
- Section 179(3): Contains a list of certain resolutions of the board, which need to be filed in MGT-14.
All these provisions taken together constitute the guideline on when companies should submit MGT-14.
When is e-Form MGT-14 Required?
The nature of the resolution passed determines whether MGT-14 is to be filed or not. In general, it is applicable to three types:
1. Special Resolutions
Every other special resolution to shareholders made at a general meeting ought to be filed in MGT-14. These include:
- Change in Memorandum of Association (MOA) or Articles of Association (AOA).
- Moving the registered office from one state to another.
- Company change of name.
- Issue of sweat equity shares or employee stock option plans (ESOPs)
- Reduction of share capital
- Maintaining statutory registers outside the registered office.
- Buy-back of shares approval.
- Authority to give loans or guarantees in excess of the limits in Section 186.
Given that special resolutions are material corporate decisions with at least a 75 percent majority, their registration with the ROC guarantees their due registration as transparent.
2. Some Ordinary Resolutions
Although not all ordinary resolutions must be filed, MGT-14 is specifically required by law for some of them. Examples include:
- Auditors to be appointed by the Board in a casual vacancy.
- Consent in some instances is in the financial statements and the Report of the Board.
- Resolutions adopted by virtue of Section 180 to borrow powers that have exceeded the stipulated limits.
These are standard resolutions, and they are legally playable and are thus reportable to ROC.
3. Resolutions of the Board by Section 179(3)
Board resolutions are considered to be one of the most significant categories where MGT-14 should be filed. Some of the decisions of the Board that have to be filed are enumerated in section 179(3) of the Companies Act, 2013. These include:
- To issue securities, such as debentures.
- To take money on loan (except by the issue of debentures).
- To invest the capital of the company.
- To issue loans, guarantee loans or give security over loans.
- In order to certify financial statements and the Board Report.
- In order to diversify the company’s business.
- To sanction amalgamation, merger or reconstruction.
- To acquire a large or controlling share or to overtake a company.
Whenever a board makes a resolution on these issues, MGT-14 is required to be filed by the company within 30 days with the ROC.
Timeline for Filing
MGT-14 should be registered within 30 days of the resolution.
It must be filed along with:
- An authenticated copy of the resolution passed.
- Explanatory statement (where general meeting resolutions are to be made)
- Replica of the notice of meeting.
Late filing will incur extra fees and penalties, and therefore, compliance with the assortments becomes of the essence.
Exemptions with regard to Private Companies
The private companies have some exemptions given by the Ministry of Corporate Affairs (MCA).
- In Section 179(3) of MGT-14, private companies are not expected to submit board resolutions.
- They are, however, still required to submit special resolutions under Section 117(3).
This easing of compliance makes the burden of compliance on private companies less, yet the key decisions of shareholders are still reported.
Sanctions against Non-Compliance
Late filing of MGT-14 within the stipulated time is not only subject to penalties but also to an extra fee.
- The penalty payable by the company is Rs. 10,000, and in case of default, which is not remedied, Rs. 100/day, but not more than Rs. 2,00,000.
- All the company officers are liable to default, pay Rs. 25,000.
Therefore, filing early is not just a compliance issue; it is also a cost-saving process.
Why is Filing MGT-14 Important?
The aim of the MGT-14 requirement is:
- Transparency: There is access to the real record of big company decisions by shareholders and regulators.
- Accountability: Directors and officers make decisions on behalf of the company and are accountable.
- Corporate Governance: guarantees the operation of companies in a fair and legal manner.
- Legal Record: Resolutions that are filed are taken as evidence in the event of conflict or regulatory inspection.
Conclusion
One of the most significant compliance requirements of companies under the Companies Act, 2013, is the filing of e-Form MGT-14. It refers to special resolutions, certain ordinary resolutions and certain board resolutions. As much as the private companies have certain waivers, the public companies should be keen to submit their filings within the stipulated period of 30 days to avoid punishment.
In the case of professionals, the knowledge of when MGT-14 is needed is good to maintain a seamless management of compliance, and in business, it forms a good foundation of corporate governance and transparency.
Companies can reduce the risks and consequences of litigation, ensure regulatory goodwill, and build trust with their stakeholders by tracking resolutions and submitting MGT-14 properly.
