Company & Directors Face Penalty from MCA for Non-Compliance with DIN Disclosure in Financial Statements [Read Order]

In the recent order of adjudication passed by the Ministry of Corporate Affairs ( MCA ) Registrar of Companies, a penalty totaling 18 lakhs for 3 consecutive financial years was imposed on a company and its directors because the company failed to obtain shareholders' approval for major related party transactions.

This company has been registered under the Companies Act, 2013, and the authorised capital of the company is Rs. 10 lakhs.

During the inquiry that was conducted by the adjudicating authority, it was revealed from the financial statements for the years 2016 to 2019 of the company that the directors did not mention their DIN ( Director Identification Number ) under their signature.

Become PF & ESIC Pro: Basic to Advance Course - Enroll Today

The adjudicating authority concluded that During the course of the inquiry, it was observed that the company and its Directors had failed to comply with the provisions of section 158 of the Companies Act, 2013, in mentioning their DIN under their signatures in the financial statements filed by the company for 3 consecutive financial years and are thus liable for penal action. It is to be noted that a penalty of Rs. 6 lakhs was imposed on the company and directors together for each defaulting financial year.

 Section 158 of the Companies Act, 2013 provides that: "Every person or company, while furnishing any return, information, or particulars as are required to be furnished under this Act, shall mention the Director Identification Number in such return, information or particulars in case such return, information, or particulars relate to the director or contain any reference to any director.”

The order also contained that the notice must pay the penalty individually via e-payment on the MCA website under "Pay Miscellaneous Fees" within 90 days, and an appeal can be filed with the Regional Director (Northern Region), Ministry of Corporate Affairs, within 60 days using Form ADJ, along with a certified copy of this order.

This order was issued by Seema Rath, Registrar of Companies & Adjudicating Officer Uttar Pradesh, Kanpur. In this order, the penalty was imposed on both the company and its directors.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates