MCA Imposes Penalty on Company and Directors for Failure to Approve and File Financial Statements and Board’s Report
It was found that the Board of Directors did not approve the financial statements and Board's reports for 2 consecutive years through a Board resolution, and they were not filed with the Registry.
In the adjudication order passed by the Ministry of Corporate Affairs (MCA) Registrar of Companies under Section 454 of the Companies Act, 2013, the company and its directors were penalized with Rs. 3.5 lakhs for failure to approve and file financial statements and the board’s reports. In this case, the company M/s BCL Homes Limited has been incorporated under the Companies Act, 1956,...
In the adjudication order passed by the Ministry of Corporate Affairs (MCA) Registrar of Companies under Section 454 of the Companies Act, 2013, the company and its directors were penalized with Rs. 3.5 lakhs for failure to approve and file financial statements and the board’s reports.
In this case, the company M/s BCL Homes Limited has been incorporated under the Companies Act, 1956, with a paid-up capital of Rs. 8.49 crores.
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Coming to the facts of the present case, the Central Government directed the office of the MCA to inspect the books and papers of the company. A Show Cause Notice and Preliminary Findings Letter were issued to the company and its directors on 28-2-2023, with a further summons sent on March 15, 2024, seeking additional information. But the company failed to furnish any reply.
During the inspection, it was found that the Board of Directors of the company has not approved the financial statements and the Board's report for the financial years ending on 31.03.2021 & 31.03.2022 by means of passing a Board resolution, as the same have not been filed with the Registry.
Provisions of Section 179(3) of the Companies Act, 2013, states that: “A meeting of the Board shall be called by giving not less than seven days' notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means:
Provided that a meeting of the Board may be called at shorter notice to transact urgent business, subject to the condition that at least one independent director, if any, shall be present at the meeting:
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Provided further that in case Of absence of independent Directors from such a meeting of the Board, decisions taken at such a meeting shall be circulated to all the Directors and shall be final only on ratification thereof by at least one independent director, if any.”
Noting that there was a serious violation, a total penalty of Rs. 3.5 lakhs was imposed on the company and its directors. The order of adjudication was issued by Kamna Sharma (Registrar of Companies& Adjudication Officer).
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