The Registrar of Companies (ROC), Telangana, Hyderabad has passed an adjudication order against Virupaksha Organics Limited, imposing a grand total penalty of Rs.79.4 Lakhs on the company and its key managerial personnel for failing to appoint a Company Secretary (CS) and Chief Financial Officer (CFO).
The arraigned company, Virupaksha Organics Limited is a Hyderabad-based manufacturer of active pharmaceutical ingredients and had filed a suo-motu application along with its Managing Director under Section 454 of the Companies Act, 2013.
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The Application company had been required to appoint a Company Secretary (CS) and Chief Financial Officer on March 25, 2006 due to having a paid-up capital of Rs.2,00,00,000 and having been required to do so as per Section 203(5) of the Companies Act, 2013 read with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
The Ministry of Corporate Affairs (MCA) initiated action following irregularities highlighted during a routine audit. Subsequent investigation conducted by the MCA revealed violations linked to corporate governance and financial disclosure requirements. Virupaksha Organics was accused of failing to meet regulatory standards concerning the maintenance of financial records and compliance with prescribed statutory norms.
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The company, in its defense, argued that the lapses were unintentional and occurred due to procedural oversight. It further contended that corrective measures had been initiated to address the gaps while praying for exemptions from applicable penalties for non-compliance.
The MCA observed that Section 203 of the Act had been amended to levy penalty with effect from 02.11.2018 by means of the Companies (Amendment) Act, 2019. In light of such finding, the ROC proceeded to levy penalties on Virupaksha Organics, its directors and the key managerial personnel of the Company for having grossly violated their duties of maintaining proper financial records, a critical aspect of corporate accountability.
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In furtherance, the ROC proceeded to levy a two-fold penalty on the company and 7 of its key personnel – one, a penalty of Rs.39,70,000/- for non-appointment of Company Secretary and two, a penalty of Rs.39,70,000/- for non-appointment of Chief Financial Officer.
The ROC directed the arraigned company to use the MCA website to pay the penalty through their own income within 90 days of receipt of the order and file form INC-28, while attaching a copy of order and payment challan.
This order reaffirms the MCA’s commitment to enforcing corporate accountability and ensuring that companies adhere strictly to statutory requirements. The case serves as a reminder of the regulatory expectations placed on corporations and the consequences of failing to meet them.
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