Section 117: Resolutions and Agreements to be Filed Under the Companies Act 2013

Running a company in India involves navigating a complex web of regulations. Staying compliant isn’t just about avoiding penalties; it’s fundamental to the smooth functioning and legal standing of your business. One crucial aspect of this compliance framework is Section 117 of the Companies Act, 2013. This section acts as a cornerstone for corporate transparency, mandating that companies report certain significant decisions and agreements to the government. Specifically, it requires the filing of specific company resolutions and agreements with the Registrar of Companies (ROC). This post aims to demystify Section 117, clarifying exactly which resolutions and agreements to be filed under the companies act 2013, outlining the filing process (Form MGT-14), and explaining the serious implications of non-compliance. For directors and small business owners, understanding these requirements is vital to maintaining good corporate governance, avoiding hefty fines, and ensuring your company remains in good legal standing.

Understanding Section 117 of the Companies Act, 2013

Understanding the ‘why’ behind a regulation often makes compliance easier. Section 117 isn’t just bureaucratic red tape; it serves a vital purpose within India’s corporate legal structure. For further understanding of legal frameworks affecting business structures, you might consider reading about Company Registration in India.

What is the Core Purpose of Section 117?

The primary goal of Section 117 is to ensure transparency in a company’s major decisions and commitments. By requiring certain resolutions and agreements to be filed with the Registrar of Companies (ROC), the Act creates a public record accessible to shareholders, potential investors, creditors, and regulatory authorities. This accessibility fosters accountability within the company’s management and board. Knowing that significant decisions are documented and publicly available encourages more careful deliberation and adherence to legal procedures. Ultimately, Section 117 significantly enhances corporate governance by making key corporate actions visible and verifiable, building trust and confidence in the company’s operations. It ensures that stakeholders are informed about decisions that could materially affect the company’s structure, finances, or operations.

The Legal Mandate: Filing Resolutions and Agreements

Section 117 isn’t a suggestion; it’s a clear legal mandate. It explicitly requires companies to file copies of certain resolutions passed (by shareholders or the board) and specific agreements entered into with the ROC. This filing obligation is a core component of the Section 117 companies act resolutions guidelines India. Failure to comply is not merely an administrative oversight but a statutory default with financial penalties attached. The law views these filings as essential for maintaining the integrity of corporate records held by the ROC, which serves as the central repository for company information in India. Therefore, companies must have robust internal processes to identify which resolutions and agreements fall under the scope of Section 117 and ensure timely filing to meet their legal obligations.

For those setting up operations, having a strong internal process for these requirements is as crucial as Setting Up An Accounting System for My Small Business.

Key Resolutions and Agreements to be Filed Under Section 117

Identifying precisely which decisions require filing is the first crucial step towards compliance. This section details the specific types of resolutions and agreements to be filed under the companies act 2013. The requirement covers various shareholder and board decisions, as well as certain agreements.

Special Resolutions (As per Section 114)

A cornerstone of Section 117 filings involves Special Resolutions. A special resolution, as defined under Section 114 of the Companies Act, 2013, is one passed by a supermajority – specifically, the votes cast in favour must be at least three times the votes cast against it (a 75% majority of members present and voting). These resolutions typically pertain to significant changes in the company’s structure or constitution. Common examples that must be filed via Form MGT-14 include:

Alteration of the Memorandum of Association (MOA): Changes to the company’s fundamental charter, like altering its objects clause or liability clause.
Alteration of the Articles of Association (AOA): Modifications to the company’s internal rules and regulations, as per Section 14.
Changing the company’s registered office: Specifically, moving the registered office from one state to another or outside the local limits of the city, town, or village where it is currently situated.
Changing the company’s name: Requires both a special resolution and central government approval (Section 13).
Reduction of share capital: Subject to confirmation by the National Company Law Tribunal (NCLT) under Section 66.
Buy-back of shares: Authorisation for the company to repurchase its own shares under Section 68.
Appointment of auditors: In certain cases, like appointing auditors other than the retiring auditor, or expressly resolving that the retiring auditor shall not be re-appointed.
Winding up: Resolutions related to the voluntary winding up of the company.

For more information about winding up and related processes, review our Winding Up of Companies: Voluntary and Compulsory Procedures Explained.

Resolutions Agreed by All Members

Section 117(3)(b) brings certain unanimous resolutions into the filing requirement. It specifies that any resolution agreed upon by all members of a company, which, if not unanimously agreed upon, would have needed to be passed as a special resolution, must also be filed with the ROC. This ensures that even if the higher voting threshold of a special resolution is bypassed due to unanimous consent, the significant nature of the decision is still formally recorded.

Certain Board Resolutions (As specified under Section 179(3))

While most day-to-day board resolutions don’t require filing, Section 117(3)(g) mandates the filing of resolutions passed by the Board of Directors concerning specific powers outlined in Section 179(3). These represent significant financial and strategic decisions:

To make calls on shareholders for unpaid amounts on their shares.
To authorise the buy-back of securities under Section 68.
To issue securities, including debentures, within or outside India.
To borrow monies (beyond certain limits often specified in the AOA or by shareholders).
To invest the funds of the company.
To grant loans, provide guarantees, or offer security for loans.
To approve the company’s financial statements and the Board’s report.
To diversify the business activities of the company.
To approve amalgamation, merger, or reconstruction schemes.
To take over another company or acquire a controlling or substantial stake in another company.

Filing these specific board resolutions ensures transparency regarding major actions undertaken by the company’s management.

Resolutions Requiring Unanimous Consent

Beyond the specific types mentioned above, any resolution that, according to the Companies Act itself or the company’s Articles of Association (AOA), requires unanimous consent from either the board or the shareholders must generally be filed under Section 117. This often applies to critical matters where complete agreement is deemed necessary for the decision’s validity or implementation.

Specific Agreements

Section 117 doesn’t just cover resolutions; it also mandates the filing of certain agreements. A key example provided in Section 117(3)(d) is any agreement related to the appointment, re-appointment, renewal of appointment, or variation of the terms of appointment of a Managing Director. This ensures that the terms governing the company’s key managerial personnel are publicly documented. Other agreements might also fall under this requirement if they effectively embody a decision that would otherwise require a filable resolution. Proper resolutions and agreements filing under companies act India is essential, and this includes careful registration of resolutions under companies act 2013 India.

The Filing Process: Complying with Section 117

Once you’ve identified that a resolution or agreement needs to be filed under Section 117, the next step is understanding the procedural requirements. Adhering to the correct process, using the right form, and meeting the deadline are crucial for compliance.

Identifying the Correct Form: E-Form MGT-14

The Companies Act, 2013, prescribes specific electronic forms for various filings with the Registrar of Companies (ROC) through the Ministry of Corporate Affairs (MCA) portal. For filing resolutions and agreements under Section 117, the designated form is E-Form MGT-14. This form is designed to capture all the necessary details about the resolution passed or the agreement made, including the date of passing/execution, details of the meeting (if applicable), the text of the resolution, and supporting documents. Using any other form or method for this filing will not meet the statutory requirement. Familiarity with E-Form MGT-14 is therefore essential for company secretaries and directors responsible for compliance.

Timeline for Filing

The timeline for filing under Section 117 is strict and non-negotiable without incurring penalties. The Act mandates that E-Form MGT-14, along with the required attachments, must be filed with the ROC within 30 days of passing the resolution or making the agreement. This 30-day period starts from the date the resolution was passed in the relevant meeting (Board meeting or General meeting) or the date the agreement was executed. Missing this deadline automatically triggers penal provisions under the Act. Therefore, companies need efficient internal processes to ensure that relevant decisions are identified, documented, and filed well within this timeframe.

Documents and Information Required for MGT-14 Filing

Successfully filing E-Form MGT-14 requires attaching specific documents and providing accurate information. While the exact requirements might vary slightly based on the nature of the resolution or agreement, the common prerequisites include:

Certified True Copy (CTC) of the Resolution(s): A copy of the special resolution, relevant board resolution, or unanimously agreed resolution, duly certified as true by a director or the company secretary.
Copy of the Agreement(s): If filing pertains to an agreement (like a Managing Director’s appointment agreement), a copy of the executed agreement is required.
Explanatory Statement under Section 102 (if applicable): For special resolutions passed at a general meeting, the notice calling the meeting must include an Explanatory Statement detailing the purpose and implications of the proposed resolution. A copy of this statement is typically required as an attachment.
Copy of altered MOA/AOA (if applicable): If the resolution resulted in changes to the Memorandum or Articles of Association, a copy of the altered documents might be required.
Details of the Meeting: Information such as the type of meeting (Board/General), date of the meeting, and number of members/directors present and voting.

Ensuring these documents are ready and accurate before initiating the filing process is crucial.

Filing Fees

Filing E-Form MGT-14 is not free. The Companies Act prescribes fees for various filings, payable through the MCA portal at the time of submission. The fee for filing MGT-14 typically depends on the authorised share capital of the company. The MCA portal has an integrated payment gateway, and the applicable fee is calculated automatically based on the company’s details. It’s advisable to check the latest fee structure on the MCA portal, as these amounts can be revised. Failure to pay the correct fee will result in the form being rejected or considered incomplete. (You can usually find a fee calculator or schedule on the MCA website under the ‘MCA Services’ section).

Filing Procedure via MCA Portal

The entire filing process for E-Form MGT-14 is done online through the official Ministry of Corporate Affairs (MCA) portal. Here’s a brief outline:

Download the E-Form: Obtain the latest version of E-Form MGT-14 from the MCA portal’s ‘Forms and Downloads’ section.
Fill the Form: Complete the form offline, providing all required details accurately. This includes the Company Identification Number (CIN), meeting details, resolution specifics, etc.
Attach Documents: Attach scanned copies of all necessary documents (CTC of resolution, agreement, explanatory statement, etc.) as PDFs.
Check Form: Use the ‘Check Form’ feature in the PDF form to validate the entered data.
Affix DSC: Affix the valid Digital Signature Certificate (DSC) of a director or authorised signatory (e.g., Company Secretary). A DSC is mandatory for e-filings on the MCA portal.
Pre-scrutiny: Click the ‘Pre-scrutiny’ button. The form will perform basic checks.
Login and Upload: Log in to the MCA portal (https://www.mca.gov.in/), navigate to the e-filing section, and upload the saved MGT-14 form.
Pay Fees: Pay the applicable filing fees online through the available payment options (credit card, debit card, net banking).
Acknowledgement: Upon successful upload and payment, a Service Request Number (SRN) is generated, and an acknowledgement challan is produced. Keep this SRN for future reference.

Understanding these agreements filing requirements companies act India and the MGT-14 process is key to seamless compliance.

Consequences of Non-Compliance with Section 117 Filing

Ignoring the mandate of Section 117 and failing to file the required resolutions or agreements within the stipulated 30-day timeframe can lead to significant negative consequences for both the company and its responsible officers. The Companies Act, 2013 imposes strict penalties for such defaults.

Penalties on the Company

Section 117(2) outlines the financial penalties applicable if a company fails to file the resolution or agreement as required. The penalty structure has been subject to amendments, moving towards a stricter regime. Currently, the penalty imposed on the company is substantial. As per the latest provisions (after the Companies (Amendment) Act, 2020), the penalty is Ten Thousand Rupees (₹10,000), and in case of continuing failure, a further penalty of One Hundred Rupees (₹100) for each day during which such failure continues, subject to a maximum of Two Lakh Rupees (₹2,00,000). This structure emphasizes the need for prompt filing, as delays can quickly escalate the financial burden on the company. It’s crucial to consult the latest version of the Act or seek professional advice for the exact current penalty amounts, but the key takeaway is that non-compliance is costly.

Penalties on Officers in Default

The liability for non-compliance doesn’t stop with the company. Section 117(2) also holds the officers in default personally liable. An “officer in default” typically includes directors, the Managing Director, Whole-Time Director, Key Managerial Personnel (KMP like CEO, CFO, CS), or any person under whose directions the Board is accustomed to act, or any person charged by the Board with the responsibility of complying with that provision. For failure to file under Section 117, every officer of the company who is in default is liable to a penalty of Ten Thousand Rupees (₹10,000), and in case of continuing failure, with a further penalty of One Hundred Rupees (₹100) for each day during which such failure continues, subject to a maximum of Fifty Thousand Rupees (₹50,000). This personal liability underscores the importance for directors and KMPs to ensure robust compliance mechanisms are in place.

Additional Consequences

Beyond the direct monetary penalties prescribed under Section 117(2), non-compliance can have broader negative repercussions for the company. Consistent failure to meet statutory filing requirements like Section 117 can damage the company’s reputation and lower its compliance score maintained by regulatory authorities. This can lead to increased scrutiny from the ROC and other government bodies. Furthermore, an incomplete or inaccurate public record can create difficulties in fundraising, as potential investors and lenders often conduct due diligence, including reviewing ROC filings. Non-compliance might also lead to legal disputes, for instance, if the validity or enforceability of an unfiled resolution or agreement is challenged. Ensuring timely and accurate company resolutions and agreements compliance India is therefore critical not just for avoiding penalties but also for maintaining operational smoothness and stakeholder trust.

Why Proactive Compliance with Section 117 Matters

Compliance with Section 117 should not be viewed merely as a box-ticking exercise. Proactively managing these filings offers significant benefits and safeguards the company’s interests in several ways. It’s an integral part of responsible corporate citizenship.

Ensuring Good Corporate Governance

Timely and accurate filing of resolutions and agreements under Section 117 is a fundamental aspect of good corporate governance. It promotes transparency by making significant corporate decisions accessible to stakeholders and the public. This transparency fosters accountability among the board and management, as their major actions are formally documented and recorded with a statutory authority. It demonstrates the company’s commitment to operating within the legal framework and adhering to procedural requirements. This structured approach to recording decisions helps prevent ambiguity and potential disputes later on, contributing to a more stable and predictable corporate environment. Strong governance practices are increasingly valued by investors and other stakeholders.

Avoiding Significant Penalties

As detailed earlier, non-compliance with Section 117 attracts substantial monetary penalties for both the company and its officers in default. The per-day penalty for continuing default can quickly accumulate, creating a significant financial burden, especially for small and medium-sized businesses. Proactive compliance – identifying required filings early and submitting E-Form MGT-14 within the 30-day deadline – is the most straightforward way to avoid these penalties entirely. Investing time and resources in setting up effective internal tracking and filing mechanisms is far more cost-effective than paying fines and dealing with the consequences of default later.

Building Stakeholder Confidence

A company that consistently meets its statutory compliance obligations, including Section 117 filings, sends a positive signal to its stakeholders. Investors, lenders, suppliers, customers, and regulatory authorities view compliance as an indicator of stability, reliability, and responsible management. Accurate and up-to-date ROC records build trust and confidence, which can be crucial when seeking investment, securing loans, entering into major contracts, or even attracting talent. Conversely, a record marred by non-compliance and penalties can raise red flags and damage the company’s credibility in the market.

Maintaining Accurate Company Records

The Registrar of Companies serves as the official repository of information about companies registered in India. Filing resolutions and agreements under Section 117 ensures that the company’s records held by the ROC are accurate, complete, and up-to-date regarding significant decisions and structural changes. This is vital for legal validity and public perception. Accurate records prevent confusion, support legal proceedings if necessary, and provide a clear historical trail of important corporate actions. Maintaining this accuracy through proactive compliance simplifies future interactions with regulatory bodies and ensures the company’s statutory information reflects its current status.

Conclusion

Navigating the requirements of the Companies Act, 2013, is essential for every business operating in India. Section 117 stands out as a critical compliance point, demanding careful attention. As we’ve explored, this section mandates the filing of several key corporate decisions, primarily encompassing special resolutions, specific board resolutions related to significant powers (like borrowing, investing, issuing securities), resolutions requiring unanimous consent, and certain crucial agreements, notably those concerning the appointment of a Managing Director.

The key takeaway for all directors and small business owners is the non-negotiable requirement to file these specified resolutions and agreements to be filed under the companies act 2013 with the Registrar of Companies using E-Form MGT-14 within 30 days of the decision or agreement. Adherence to this timeline is paramount for ensuring company resolutions and agreements compliance India. The consequences of oversight or delay are significant, involving hefty monetary penalties for both the company and its officers in default, alongside potential damage to the company’s reputation and stakeholder confidence. Proactive compliance isn’t just about avoiding fines; it’s about upholding good corporate governance and maintaining accurate, transparent records.

Don’t let Section 117 compliance become a source of stress or potential liability. Review your company’s recent resolutions and agreements to ensure all necessary filings have been made correctly and on time. If you need expert assistance with understanding your obligations, managing ROC filings, or ensuring overall adherence to the Companies Act, 2013, contact TaxRobo today. Our team of experts can help you navigate complex company secretarial requirements, ensuring your business stays compliant and focused on growth.

FAQ Section

Q1: What is the exact deadline for filing Form MGT-14 under Section 117?
A: Form MGT-14 must be filed with the Registrar of Companies (ROC) within 30 days of passing the relevant resolution or making the relevant agreement. The count starts from the date of the meeting or the date of execution of the agreement.
Q2: Do all Board Resolutions need to be filed with the ROC via MGT-14?
A: No, not all Board Resolutions require filing. Only those specified under Section 117(3), primarily covering significant decisions listed in Section 179(3) (like resolutions to borrow money, invest funds, issue securities, authorise buy-back, approve financial statements, approve mergers/acquisitions, etc.), need to be filed using Form MGT-14. Routine operational board resolutions generally do not require filing.
Q3: What are the consequences if we miss the 30-day filing deadline for a required resolution?
A: Failure to file E-Form MGT-14 within 30 days results in penalties as prescribed under Section 117(2) of the Companies Act, 2013. Both the company and the officers in default (like directors or KMPs) are liable. The penalty includes a fixed amount plus a daily penalty for the period of continued default, subject to specified maximum limits. Currently, this is ₹10,000 plus ₹100 per day (max ₹2 Lakh) for the company, and ₹10,000 plus ₹100 per day (max ₹50,000) for each officer in default.
Q4: We are a small private limited company. Does Section 117 still apply to us?
A: Yes, Section 117 applies to all companies registered under the Companies Act, 2013, including private limited companies, regardless of their size or turnover (unless a specific exemption is provided for certain types of private companies under notifications, which is rare for Section 117 basics). If your private company passes any of the resolutions (like special resolutions, specific board resolutions under 179(3)) or enters into agreements covered by Section 117, filing Form MGT-14 within 30 days is mandatory.
Q5: Where can I find the official E-Form MGT-14 and related instructions?
A: You can download the official E-Form MGT-14, along with detailed instructions for filling it out, directly from the Ministry of Corporate Affairs (MCA) portal. Navigate to the ‘MCA Services’ tab, then find the ‘E-Filing’ or ‘Company Forms Download’ section. The official portal address is https://www.mca.gov.in/. Always ensure you are using the latest version of the form available on the portal.

Section 117.Resolutions and agreements to be filed under the companies act 2013