Annual return filing is the submission of a yearly report by companies. This report contains details of the company’s financial information and performances over the previous year. All incorporated entities in India must file annual returns each year with the Registrar of Companies. The return includes a list of the company’s directors, shareholders, shares issued and more.
Filing annual returns is crucial as it shows that a company legally exists. Not filing means the company can be removed from the register. The Companies Act requires all companies file returns annually, which is due on the date of incorporation or the last return. Filing returns helps stakeholders like investors assess the financial health and risks of the company and serves as the basis for taxes.
The annual return serves as a mechanism to provide transparency regarding a company’s status, which in turn helps stakeholders see financial health and risks. It also serves as a basis for taxes.