Reporting Errors in Form MGT-7A : MCA Fines Company and its Directors under Small Company Rule [Read Order]

The Ministry of Corporate Affairs ( MCA ) has imposed a penalty on a company and its directors for errors and omissions in its annual return filing that is Form MGT-7A.

The company, Shreekrishna Impex Ventures Limited had filed a suo motu application seeking adjudication of penalties for non-compliance in its FY 2021-22 annual return filed in Form MGT-7A.

After verification, the authority found multiple defects in the return. The company failed to properly disclose in the relevant segment the board meeting held on 31.03.2022 for taking note of the resignation of a director.

Additionally, the details relating to board meetings and director attendance were wrongly stated. Additionally, an incorrect shareholding list was attached to the e-form. These inaccuracies were treated as statutory non-compliances in annual return reporting requirements.

After SCN and hearing, the Adjudicating Officer concluded that the company and its officers in default were liable for penalty under Section 450, which applies where no specific penalty is separately prescribed.

The default period was computed from 19.10.2022, the date of filing of Form MGT-7A for FY 2021-22 and treated as a continuing contravention.

The ROC, however, noted that the entity qualified as a “small company” under Section 2(85) of the Act based on its paid-up capital and turnover.

Accordingly, Section 446B was applied and capped the penalty at ₹1,00,000 for the company and ₹25,000 each for the officers in default instead of the higher standard limits