MCA Penalizes Director for Incomplete Disclosure of Interests [Read Order]

In the recent order of adjudication passed by the Ministry of Corporate Affairs ( MCA ) Registrar of Companies, a penalty of Rs. 1 lakh was imposed on a private limited 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. 2 crores.

During the inquiry, it was found that the director, Mr. Mohammad Usman, failed to fully disclose his directorships as required under Section 184(1) of the Companies Act, 2013. While he disclosed his interests in Szb Machines Private Limited and Chindi Medi43 Consultants Private Limited on 12-11-2018, he omitted his directorship in YTL Manufacturing Private Limited, effective from 09-10-2018.  The adjudicating authority observed that this constitutes a violation of Section 184(1), making him liable for penalties under Section 184(4) for the financial year 2018-19.

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By virtue of Section 184( 4 ) of the Companies Act, the maximum penalty that can be imposed on the director for contravening the provisions of Section 184 is Rs. 1 lakh.

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.

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.

To Read the full text of the Order CLICK HERE

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