Company Suo-Moto Admits Demat Compliance Default: MCA Penalizes Company, Directors, CFO, CS and Subscriber of Shares
MCA did not impose a penalty on the independent directors. It identified Whole time directors, Director, CFO, CS and subscriber of shares as officers in default.
MCA did not impose a penalty on the independent directors. It identified Whole time directors, Director, CFO, CS and subscriber of shares as officers in default.Baby Memorial Hospital Limited, a Kerala based Hospital and an unlisted public company, whole-time directors, Chief Financial Officer ( CFO ) and CompanySecretary ( CS ) and subscriber of shares has been penalized by the Ministry ofCorporate Affairs ( MCA ) for violations related to dematerialisation of securities.
MCA did not impose a penalty on the independent directors. It identified Whole time directors, Director, CFO, CS and subscriber of shares as officers in default. A total Rs. 2,10,000 has been imposed altogether.
The Company, in a suo-motu application filed through Form GNL-1, admitted to delays and defaults in complying with the provisions of Section 29(1A) of the Companies Act, 2013, read with Rule 9A(2) and 9A(3)(b) of the Companies (Prospectus and Allotment of Securities) Rules, 2014. Further clarifications were submitted by the Company on 02.09.2024, 09.01.2025, and 04.06.2025.
Under Rule 9A(2), every unlisted public company is mandated to ensure that the entire holding of securities of its promoters, directors, and key managerial personnel is in dematerialised form prior to making any offer for issue of securities, buyback, bonus shares, or rights offer.
Additionally, Rule 9A(3)(b) requires that any holder of securities subscribing to new securities on or after 02.10.2018 must first convert all existing holdings into demat form.
In the present case, the company made several share offers based on approvals from Board and Extraordinary General Meetings. However, it failed to ensure full dematerialisation of securities held by promoters, directors, and KMPs prior to such offers, thereby breaching Rule 9A(2).
Specifically, during the third preferential allotment dated 05.06.2023, M/s. Trinity Finsec Private Limited, an offeree already holding 22,11,598 equity shares in physical form, subscribed to 80,64,510 equity shares without dematerialising their existing holdings, which directly violated Rule 9A(3)(b). These shares were only dematerialised on 27.12.2023.
Accordingly, the MCA invoked Section 450 of the Companies Act, 2013, which prescribes a penalty for contraventions where no specific penalty is provided elsewhere. It imposed following penalties:
| S. No. | Name of the Applicant | Category | Total Penalty(Rs) |
| 1 | Baby Memorial Hospital Limited | Company | 30,000 |
| 2 | Alexander Kadakketh Geevarghese | Managing Director | 30,000 |
| 3 | Anitha Alexander | Whole-time Director | 30,000 |
| 4 | Anju Mariam Alex | Whole-time Director | 30,000 |
| 5 | Vineeth Abraham | Whole-time Director | 30,000 |
| 6 | Jacob Kalluvila Babu | Director | 30,000 |
| 7 | Vasant Kumar Santosh Kumar | Chief financial Officer | 10,000 |
| 8 | Roshin | Company Secretary | 10,000 |
| 9 | M/s. Trinity Finsec Private Limited | Subscriber of Shares | 10,000 |
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| Total | Rs. 2,10,000 |
The company has been directed to pay this amount through the MCA portal under the "Pay Miscellaneous Fees" category within 90 days of the receipt of the order. Proof of payment is to be submitted through e-Form INC-28.
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