RoC Imposed Huge Penalties for Failure to Furnish Copy of Resolution with the RoC in form MGT-14
The Company was incorporated in 2016 and was a Nidhi Company. The Company failed to file the Board Resolution passed for approval of Financial with RoC as per Section 117(3)(g) and 179(3)(g) of the Companies Act, 2013. Accordingly, the Company has violated the provisions of Section 117(3)(g) and 179(3)(g) of the Companies Act. The Company furnished a response that non-compliance was an unintentional error made by the professional.
Hon’ble RoC held that The company being a Nidhi Company does not attract the Provision of lesser penalty under section 445(8) of the Companies Act,2013. Therefore, the penalty was levied on the Company of INR 10 Lacs and the Directors of INR 4.50 Lacs for the period of FY 2016-17 to FY 2020-21.
Article:
1. Facts of the case
- M/s Mursiri Kamdhenu Nidhi Limited (“The Company”) was incorporated in 2016 and has its registered office in Trichy, Tamil Nadu.
- The Ministry rejected the Form NDH-7 (Form for Filing Application for declaration as Nidhi and for updation of Status by Nidhi) filed by the company on the ground that the Company has not filed the Board Resolution passed for approval of Financial with RoC as per Section 117(3)(g) and 179(3)(g) of Companies Act, 2013.
- Accordingly, the Company has violated the provisions of Section 117(3)(g) and 179(3)(g) of the Companies Act.
- The RoC issued a show cause notice for such a violation.
- The Company furnished a response that non-compliance was an unintentional error made by the professional.
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2. Relevant Legal Extract
Relevant provisions of the Companies Act, 2013 are reiterated below for ready reference:
- Section 117 of the Companies Act, 2013
“117. Resolutions and Agreements to be Filed
(1) A copy of every resolution or any agreement, in respect of matters specified in sub-section (3) together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the Registrar within thirty days of the passing or making thereof in such manner and with such fees as may be prescribed.
(2) If any company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified therein, such company shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees and every officer of the company who is in default including liquidator of the company, if any, shall be liable to a penalty of ten thousand rupees and in case of continuing failure, after the first during which such failure continues, subject to a maximum of fifty thousand rupees.”
(3) The Provision of this section shall apply to
(g) resolutions passed in pursuance of sub-section (3) of 179.
..”
- Section 179 of Cthe ompanies Act, 2013:
“179. Powers of Board
(3) The Board of Directors of a company shall exercise the following powers on behalf of the company through resolutions passed at meetings of the Board, namely: —
(g) to approve financial statements and the Board’s report;”
3. Analysis of Non-compliance by Hon’ble Registrar of Company
The Hon’ble RoC made the following analysis:
- The company is a Nidhi Company and does not attract the Provision of a lesser penalty under section 445(8) of the Companies Act,2013.
- The Company has failed to furnish MSGT-14 regarding the Board Resolution passed for approval of Financial Statements for the Financial Year 2016-17 to 2O2O-21.
- Therefore, the company has contravened Section 117(3)(g) and Section 179(3)(g) of the Companies Act, 2013 for such a financial year.
- Hence, the company and its Officer in default are Liable for penalty under Section 117(2) of the Companies Act, 2013.
4. Penalty Imposed
Hon’ble Registrar of Company imposed the following penalties on the Company and its Directors:
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