MCA Imposes 9 Lakh Penalty for Inadequate Board Meetings
The Registrar of Companies in Rajasthan, Jaipur, has imposed
significant penalties on M/s EMBASSY INFRATECH INDIA LIMITED and its directors
for failing to comply with Section 173 of the Companies Act, 2013. The
violations involve not conducting the required minimum of four board meetings
annually and the non-maintenance of statutory registers at the registered
office address. This article provides details of the case, the reasons for the
penalties, and their financial implications.
Detailed Analysis:
The case centers around a serious breach of Section 173 of
the Companies Act, 2013. During an inspection conducted by the office of the
Registrar of Companies in Rajasthan, it was discovered that M/s EMBASSY
INFRATECH INDIA LIMITED did not maintain books of accounts or statutory
registers at its recorded registered office address. Additionally, the company
failed to hold the minimum required four board meetings every year.
Section 173 of the Companies Act, 2013, mandates that every
company must hold the first board meeting within thirty days of its
incorporation. Subsequently, a minimum of four board meetings should be held
annually, with no more than one hundred and twenty days intervening between
consecutive meetings.
The violation of these crucial provisions was addressed
through an adjudication notice dated 28.03.2022. The notice provided the company
with an opportunity to rectify the defaults and was scheduled for a hearing on
11th April 2022 at the Registrar of Companies’ office in Jaipur.
During the hearing, neither the company nor any of its
directors appeared on behalf of the company. Furthermore, the defaults remained
unrectified as of the hearing date. Consequently, it was concluded that every
director of the company was in default.
To penalize the company and its directors for the violations
of Section 173 of the Companies Act, 2013, the Registrar of Companies imposed
significant penalties. The company was penalized with 3,00,000/- rupees, and
each of the eight directors in default faced penalties of 75,000/- rupees. This
led to a cumulative penalty of 3,00,000/- rupees for the company and a total of
6,00,000/- rupees for its directors.
The penalties were calculated for each financial year as
follows: For the financial year 2015-16, the company faced a penalty of
2,00,000/- rupees, and each director was penalized with 50,000/- rupees. For
the financial years 2016-17 and 2017-18, the same penalties were imposed on the
company and its directors. The case was subsequently disposed of with this
order.
Conclusion:
The case involving M/s EMBASSY INFRATECH INDIA LIMITED
highlights the importance of adhering to the statutory requirements outlined in
the Companies Act, 2013. Compliance with these requirements, including holding
the minimum number of board meetings annually, is crucial to fulfill legal
obligations.
The violations of Section 173 of the Companies Act, 2013,
led to significant financial penalties. The company and its directors are
obligated to pay these penalties in accordance with the order. Failure to do so
may result in further legal consequences.
Companies and their directors should exercise diligence in
ensuring compliance with all relevant provisions of the Companies Act, 2013, to
avoid financial penalties and legal complications. Conducting board meetings
within the prescribed timeframes and maintaining accurate records are
fundamental aspects of corporate governance and legal compliance.
******
Registrar of
Companies, Rajasthan, Jaipur In the matter of Companies Act 2013
And
In the matter of adjudication proceeding under section 454
(3) of Companies Act, 2013
And
In the matter of
adjudication proceeding for the violation of section 173 of the Companies Act,
2013.
And
In the matter of
Fact of the Case
1. It is noticed that the books of accounts or statutory
registers are not at all maintained or kept at the said recorded Registered
Office address by the company, nor minimum number of four meetings of its Board
of Directors were held every year in such a manner as the company has left the
place to an undisclosed location. Thereby violating the provisions of Section
173 of the Companies Act 2013.
2. As per provision of section 173 of the Companies Act
2013, every company shall hold the first meeting of the Board of Directors
within thirty days of the date of its incorporation and thereafter hold a
minimum number of four meetings of its Board of Directors every year in such a
manner that not more than one hundred and twenty days shall intervene between
two consecutive meetings of the Board.
3. The aforesaid violation was taken up with the company and
its officers in default vide adjudication Notice dated 28.03.2022 for violation
of section 173 of the companies Act, 2013 giving an opportunity of beinfli
heard on 11th April, 2022 at 11 A.M. in the committee room of the 0/0 Register
of the Companies Corporate Bhawan, G – 6 & 7, Residency Area, Civil Lines,
Jaipur-302001.
4. No one has appeared today on behalf of Company and other
directors. Further, the default is not rectified as on date. Hence, it is
concluded that every director of the Company is defaulted. On carefully
examination and considering the fact of the case, I am on conclusion that the
provision of section 173 of the Companies Act, 2013 have not been complied with
by the Company and its directors.
ORDER
“That keeping in mind all the relevant facts, penalty of Rs.
3,00,000/- (Rs. Three Lacs only) is hereby imposed on Company and Rs. 75,000/-
(Rs. Seventy-Five Thousand only) each for 8 directors in default for violation
of section 173 of the Companies Act, 2013.”
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