Debenture Money Collected Before Special Resolution & MGT-14 Filing: MCA imposes Lesser Penalty considering Startup Status [Read Order]

The Ministry of Corporate Affairs ( MCA ), has penalised a private company and its two directors for collecting debenture application money from investors before obtaining shareholders’ approval through a special resolution and before filing e-Form MGT-14.

As per the adjudication order, the company Bon Fresh Foods Private limited had issued and allotted 59,50,000 compulsorily convertible debentures (CCDs) of ₹10 each to various investors through private placement/preferential allotment, based on shareholder sanction granted at a meeting held on 15.10.2019.

However, ROC noted that the company had obtained the debenture application monies prior to passing the special resolution and prior to filing MGT-14.

This violated Section 117(3)(g) read with Section 179(3)(c) of the Companies Act, 2013, and attracted penalty under the residuary provision Section 450.

The ROC initiated e-adjudication proceedings and issued notice on 26.11.2025.

In response, the company submitted that it continued to be recognised as a DPIIT-registered startup, was incurring losses, and requested imposition of a reduced penalty. During the hearing, the company’s representative submitted the plea for a lesser penalty considering the startup status.

Therefore, the ROC, accepting this submission, applied Section 446B and imposed a reduced penalty of ₹5,000 each on the company and its directors.

Accordingly, penalties were levied on Bon Fresh Foods Private Limited and its directors with directions to rectify the default and pay the penalty within 90 days of receipt of the order.

The ROC also clarified that the directors must pay the penalty from their personal sources, and an appeal against the order can be filed before the Regional Director, Chennai within 60 days in Form ADJ.

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