Applicability of E-Form MGT-7A

The Ministry of Corporate Affairs vide Companies (Management and Administration)Amendment Rules, 2021 dated 05.03.2021, introduced a great amendment in terms of applicability of annual return for every companies. As per the amended Companies (Management and Administration) Amendment Rules, 2021, the following clause has been substituted, in rule 11 for sub-rule (1), which is read as follows:-

(The link for notification of the same has been attached herewith)

MCA mandates new Form & MGT-7 & MGT 7A for OPC & small companies

Let us understand in detailed about the applicability of newly introduced E-Form MGT7A.

The Ministry of Corporate Affairs has notified an amendment in the Companies (Specification of Definitions Details) Rules, 2014 i.e Companies (Specification of Definitions Details) Amendment Rules, 2021 that came into force on 1st April 2021, according to which definition of small company has been revised, (The link for notification of the same has been attached herewith)

MCA revises threshold for paid up capital and turnover for Small Companies

Before amendment the definition of small company as per section 2(85) was read as:

Small Company means a company, other than a public company —

(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or

(ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:

After the amendment the revised definition is as follows:

Small Company means a company, other than a public company of which the paid-up share capital and turnover does not exceed two crore rupees and twenty crores respectively.

After combining both the above notifications it is clearly understood that revised small companies and One Person Company shall now mandatorily file E-Form MGT-7A.

But now the next question arises, from when this e-form shall be applicable???

As per the amended Companies (Management and Administration) Amendment Rules, 2021, which was effective since 05 March, 2021, hence shall be understood that this e-form is applicable from financial year 2020-21 onwards.

Technically speaking as per the revised definition of small companies the criteria of paid-up capital AND turnover both shall does not exceed two crore rupees and twenty crores respectively.

But practically while filing the e-form if any of the criteria is present, we are allowed to file eform MGT-7A.