MCA Penalises Private Company and Three Directors for Non‑Compliance with Secretarial Standards in Board Report [Read Order]

The Ministry of Corporate Affairs (MCA) has passed an adjudication order penalising a company and three of its directors for violation of Section 118(11) of the Companies Act, 2013. The order followed an inquiry conducted under Section 206(4), which revealed non‑compliance with Secretarial Standard‑1 (SS‑1) in the Board’s Report attached to the financial statements as of March 31, 2017.

Section 118(10) mandates that every company must observe Secretarial Standards with respect to board and general meetings, as specified by the Institute of Company Secretaries of India and approved by the Central Government.

Para 9 of SS‑1 requires disclosure in the Board’s Report of the number and dates of meetings of the Board and its committees, along with director attendance. The inquiry found that while the number and dates of board meetings were disclosed, details of committee meetings and director attendance were omitted, constituting a violation.

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Based on the inquiry report, the, MCA directed initiation of adjudication proceedings. Notices were issued in February 2025, and an e‑hearing was held in April 2025, attended by a practising company secretary representing the company.

The company argued that since it had only eight shareholders, it was not required to constitute a Stakeholders Relationship Committee, and therefore disclosures relating to committee meetings did not arise.

However, the MCA concluded that the omission of committee meeting details and director attendance violated Section 118(10) read with SS‑1, making the company and its directors liable under Section 118(11).

In its order, the MCA imposed penalties of ₹25,000 on the company and ₹5,000 each on directors Bala Venckat Kutti, Gnanaprabhakaran Kuttuvar Krishnaiyer, and Niranjan Raosaheb Jagtap.

The penalties reflect the statutory amounts prescribed under Section 118(11). The order directs rectification of the default and payment of penalties within 90 days via the MCA’s e‑Adjudication portal, with the stipulation that directors must pay from personal sources.

The MCA further clarified that appeals may be filed before the Regional Director, Chennai, within 60 days in Form ADJ, accompanied by a certified copy of the order. It also warned that failure to pay penalties within the prescribed period would attract consequences under Section 454(8), including potential prosecution.

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