Failure to Regularize Additional Director by company: MCA imposes Penalty on Company and Directors

In the recent order of adjudication passed by the Ministry of Corporate Affairs ( MCA ) Registrar of Companies, a penalty of Rs. 6 lakhs was imposed on a private limited company and its directors for the failure to regularize the additional company by the company.

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

In this case, Mr. Kuwar Bahadur was appointed as an additional director on 25.02.2017 but was never regularized. By virtue of Section 161(1) of the Companies Act, 2013, an additional director can only hold office until the next Annual General Meeting ( AGM  ). The adjudicating authority observed that there was a clear violation of the law, making the company and its directors liable for penal action under Section 172 of the Companies Act.

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Although a show cause notice dated 11-06-24 was issued to the company and its officers, no reply was furnished due to which the matter was not called for hearing and thus the penalty was imposed.

This order was issued by Seema Rath, Registrar of Companies & Adjudicating Officer, Uttar Pradesh, Kanpur.

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.

It was also stated that non-compliance may attract further action under Section 454(8) of the Companies Act, 2013.

To Read the full text of the Order CLICK HERE

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