MCA penalizes Company and Directors for Non-Disclosure of Director Changes in Board Report [Read Order]

In the adjudication passed by the Ministry of Corporate Affairs (MCA) Registrar of Companies under Section 454 of the Companies Act, 2013, a total penalty of Rs. 3.5 lakhs was imposed on a company and its directors for failing to address the auditor’s remarks in board reports for the financial year (FY) 2018-19.

The company named Ummid Mutual Benefit Nidhi Limited was registered under the Companies Act, 2013, on 15-3-2017, and its authorized capital is Rs. 20 lakhs.

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After examining the board reports of the company for the FY ending on 31-03-2018, it was observed by the adjudicating authorities that the directors of the company failed to include the details of the changes in the directors of the board for the financial year 2017-18 as required under Section 134(3)(q) of the Companies Act,2013.

The adjudicating authority reached the conclusion that the company violated the provisions of Section 134(3)(q) of the Companies Act, 2013, and was liable for penal consequences.

Section 134(3)(q) of the Companies Act states that "There shall be attached to statements laid before a company in general meeting, a report by its Board of Directors, which shall include:-

(q) such other matters as may be prescribed."

Further, Section 134(8) of the Companies Act 2013, which deals with the penalty which is imposed, states that: “If a company is in default in complying with the provisions of this section, the company shall be liable to a penalty of three lakh rupees, and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.”

Although a show cause notice (SCN) was issued to the company and its officers on 4-3-2024, no reply was furnished, and as the company and its officers neglected to respond to the SCN, and thus no hearing was scheduled.

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The adjudicating authority reached the conclusion that the company violated the provisions of Section 138(3)(q) of the Companies Act and imposed a total of Rs. 3 lakhs on the company and Rs. 50,000 on the defaulting directors under Section 134(8) of the Companies Act, and they were instructed to make payment by way of demand draft within 90 days of the receipt of the order.

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

To Read the full text of the Notification CLICK HERE

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