MCA Penalizes Company and Directors for Violation of Section 12 of Company's Act

The inspection, which was triggered by red flags in the company’s compliance history, uncovered that Lokapujya Buildcon Private Limited has moved its registered office from the address mentioned in the MCA21 records without following the mandatory procedures. According to the MCA’s findings, the company had not only failed to file the requisite forms (such as INC-22) but had also continued to operate from the new premises without updating its official records. This has been viewed as a deliberate attempt to withhold vital information from the regulators and stakeholders.

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Section 12(4) of the Companies Act clearly mandates that any change in the situation of a company’s registered office must be intimated to the RoC within 30 days. Failure to comply with this provision attracts penalties and could potentially lead to further regulatory action. The MCA inspection report noted that this non-disclosure could disrupt regulatory communication and raises suspicions about the company’s intent.

In addition to the violation under Section 12, the inspection unearthed several other compliance issues, including lapses in maintaining statutory registers, failure to update details of directors on record, and discrepancies in financial reporting. While no evidence of fraudulent activities was established, the report hinted at a consistent pattern of negligence that may not bode well for the company’s governance image.

Lokapujya Buildcon’s failure to maintain transparency by not disclosing its new address puts its investors, creditors, and even the government at a disadvantage. Communications sent by statutory authorities could potentially go unanswered, delaying processes such as tax assessments, audit queries, or even litigation notices. This non-compliance not only undermines stakeholder trust but also reflects poorly on the company’s commitment to corporate ethics.

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The MCA has directed the RoC to initiate penal proceedings under Section 12(8), which empowers the authority to levy fines for such violations. In some cases, consistent non-compliance can even lead to the striking off of a company’s name from the register.

The Ministry has, in recent months, increased its scrutiny over companies that are either dormant, shell entities, or show patterns of habitual non-compliance. Companies are expected to keep their statutory filings up to date, maintain accurate records, and ensure that any change, whether in office address or directorship, is transparently communicated to the authorities.

As the MCA continues its crackdown, companies would do well to view this not just as enforcement, but as a wake-up call to re-evaluate their compliance health and avoid unnecessary entanglements with the law.

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