Adjudicating Order for violation of Section 117(3)(g) read with 179(3) of the Companies Act, 2013 relating to non-filing of resolutions by the Nidhi Company
Contributed By: Yogesh Kukreja
Email ids:yogesh@simplybiz.in
Reference of Section 179(3) along with Section 117 of the Companies Act, 2013 (‘Act’) – Powers of Board & Resolutions to be filed.
The Board of Directors of a Company shall exercise the following powers on behalf of the Company by means of resolutions passed at meetings of the Board, namely: —
(a) to make calls on shareholders in respect of money unpaid on their shares
(b) to authorise buy-back of securities
(c) to issue securities, including debentures, whether in or outside India
(d) to borrow monies
(e) to invest the funds of the company
(f) to grant loans or give guarantee or provide security in respect of loans
(g) to approve financial statements and the Board’s report
(h) to diversify the business of the company
(i) to approve amalgamation, merger, or reconstruction
(j) to take over a company or acquire a controlling or substantial stake in another company.
Reference of Section 117 Resolutions and Agreements to be Filed.
A copy of the resolution shall be filed by the Company with the concern ROC within 30 days in the following matters: –
(a) special resolutions
(b) unanimous resolution passed by shareholders
(c) any resolution relating to the appointment, re-appointment, or renewal of the appointment, or variation of the terms of appointment, of a managing director
(d) any resolution passed in class meeting
(e) omitted
(f) any resolution relating to voluntary winding up of the company
(g) resolutions passed in pursuance of sub-section (3) of section 179 (powers of board)
Note- Ministry of Corporate Affairs vide its Notification No. G.S.R. 464(E) dated 5th June, 2015 extended exemptions to Private Limited Companies under various section of the Companies Act, 2013. Nidhi Company is a Public Limited Company and therefore the said Companies are to comply with the provisions applicable to the Public Limited Company. Failure to comply with the provisions of the Companies Act 2013, the Nidhi Company will be liable for penalty. The exemptions mentioned in the above said notification are not applicable to Nidhi Companies.
Facts of the case
The Registrar of Companies had examined that the Nidhi Company and its Directors failed to file Form MGT-14 for resolution passed for the approval of financial statements & Board’s Report for two financial years ending on 31.03.2020 & 31.03.2021 respectively. Filing of Forms with the Regulatory bodies is not only a compliance requirement but also important for the stakeholders and other regulators having an interest in the Company. Considering the same, the Adjudication officer issued a Show Cause Notice (SCN) under Section 454 of the Act to the Nidhi Company and its Directors. As per Section 454 read with Rule 3(4) of the Companies Act, 2013, the reply to such notices shall be filed in electronic mode within specified time. The Company in the above case gave a reply which was not tenable under the provisions of the said Act, hence, considering the facts and circumstances of the case, the Adjudicating officer imposed a penalty on the Nidhi Company and its Directors in the following manner as prescribed below.
Penalty Provision
Section 117(2) of the Companies Act, 2013 states that, if any Company fails to file the resolution or the agreement 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, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of fifty thousand rupees.
Penalty Imposed by Registrar of Companies on Nidhi Company and it’s Officers in Default
Penalty Amount | ||||
| Name of person on whom penalties are imposed | Total no. of days of default | First default | Penalty for no. of days default | Total penalty amount |
| On company | 777 | 10,000 | 100*777=77,700 | 87,700 |
| 442 | 10,000 | 100*442=44,200 | 54,200 | |
| On 1st director | 777 | 10,000 | 100*777=77,700 | 50,000 (maximum limit) |
| 442 | 10,000 | 100*442=44,200 | 50,000 (maximum limit) | |
| On 2nd director | 777 | 10,000 | 100*777=77,700 | 50,000 (maximum limit) |
| 442 | 10,000 | 100*442=44,200 | 50,000 (maximum limit) | |
| On 3rd director | 777 | 10,000 | 100*777=77,700 | 50,000 (maximum limit) |
| 442 | 10,000 | 100*442=44,200 | 50,000 (maximum limit) | |
Note– 777 days- 04.01.2021 to 20.02.2023
442 days- 05.12.2021 to 20.02.2023
Refer the order passed- https://www.mca.gov.in/content/mca/global/en/data-and-reports/rd-roc-info/roc-adjudication-orders.html
Conclusion The object of filing forms/ documents of Company on MCA portal is in the public interest, to enable the investor, public and whosoever interested in the Company can access the fundamental information about the Company and its management. Non filing of forms/documents is not only a violation of the provisions of the Act but results in denial of information to the various stakeholders and public at large.
SimplyCorp is a solution that offers comprehensive and end-end management of Corporate Governance & Secretarial Compliances covering all stages of entity life cycle. If want to know more on the compliance requirements and outsource the same to us, please write to our Product Head – Vaishali Vohra at the mail ID vaishali@simplybiz.in or SimplyCorp@simplyBiz.in.
Leave A Comment