Violation of Section 149(4) of Companies Act: MCA imposes Rs. 7 lakh Penalty on Company & Directors [Read Order]

In the adjudication order passed by the Ministry of Corporate Affairs (MCA) Registrar of Companies under Section 454 of the Companies Act, 2013, the company and its directors were penalized Rs. 7 lakhs for violating the provisions of Section 149(4) of the Companies Act, 2013.

In this case, the company M/s BCL Homes Limited has been incorporated under the Companies Act, 1956, with a paid-up capital of Rs. 8.49 crores. 

 Coming to the facts of the present case, the Central Government directed the office of the MCA to inspect the books and papers of the company.  A Show Cause Notice and Preliminary Findings Letter were issued to the company and its directors on 28-2-2023, with a further summons sent on March 15, 2024, seeking additional information. But the company failed to furnish any reply.

Step by Step Guide of Preparing Company Balance Sheet and Profit & Loss Account Click Here

It was found that the company and its officers failed to comply with Section 149(4) of the Companies Act, 2013, regarding the appointment of independent directors under the Companies (Appointment and Qualification of Directors) Rules, 2014.

Section 149(4) of the Companies Act, 2013, states that "As per Section 149(4) of the Companies Act, 2013, every listed public company shall have at least one-third of the total number of directors as independent directors and the Central Government may prescribe the minimum number of independent directors in case of any class or classes of public companies and as per Rule 4(1) of the Companies (Appointment and Qualification of Directors) Rule, 2014, the following class or classes of Companies shall have at least two directors as independent directors-

(i) the public companies having paid up share capital of ten crore rupees or more; or

 (ii) the public companies having a turnover of one hundred crore rupees or more; or

 (iii) the public Companies which have, in aggregate, outstanding, loan, debentures and deposits, exceeding fifty crore rupees."

Complete Ready to Use PDFs of 200+ Agreements Click here

Noting that there was a serious violation, a total penalty of Rs. 7 lakhs was imposed on the company and its directors. The order of adjudication was issued by Kamna Sharma (Registrar of Companies& Adjudication Officer).

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates