Adjudicating Order for violation of Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) under Section 118 (10) of the Companies Act, 2013 (Act)
Every Company shall observe Secretarial Standards (SS) with respect to General Meetings (SS-2) and Board Meetings (SS-1) as specified by the ICSI Pursuant to Section 118 (10) of the Act.
If any default is made in complying with the provisions of this section in respect of any meeting, the Company shall be liable to a penalty of twenty-five thousand rupees and every officer of the Company who is in default shall be liable to a penalty of five thousand rupees;
Facts of the case:
- In case of a particular company, it was observed during enquiry by the investigating officer (IO) that pages of the minutes of Board and General meetings were not consecutively numbered by the Company. Thus, it was declared that the Company and directors have violated provisions of the Act.
- A reasonable opportunity was given to the Company and its directors, however, the reply submitted by the Company was not satisfactory and the competent authority directed to adjudicate the matter.
- The adjudication officer investigated and issued an adjudication notice and a reply to the Adjudication notice was submitted by the Company and its directors stating that ” it had happened inadvertently, and the Company will take care of mentioning the details in future”
- Considering that the said violation had already been concluded by Investigating Officer during Inquiry no further hearing in physical was required to ascertain the violation of the said section.
- Thereafter, the order was passed by the Adjudicating authority imposing penalty of Rs. 25,000 on the Company and Rs.5,000 on each director.
Refer the order passed:
https://www.mca.gov.in/bin/dms/getdocument?mds=5tFjzdXuo94KRch28AGGSg%253D%253D&type=open
This order highlights the significance of following the secretarial standards by the companies and their directors. A minor oversight can have multiple implications, such as causing a mis-statement in the Director’s report, where the companies have to affirm that they have complied with the SS issued by ICSI. Companies and directors are advised to adhere to the compliances to avoid any legal consequence for themselves and the Company.
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