[Case Study] Consequences of not filing the resolution in MGT-14 Form with the RoCs

[2022] 143 taxmann.com 413 (Article)

1. Filing of resolution with the Registrar of Companies

Companies hold the meetings of the board of directors/shareholders/creditors of the company and pass resolutions. At the board meeting, the resolutions are passed by the board of directors while in the general meetings the resolutions are passed by the shareholders of the company which could be either ordinary resolution which are passed by simple majority or special resolutions which are passed with two third of majority. A company is required to file with the concerned Registrar of Companies certain resolutions and agreements. These are to be filed after being passed at the meeting of the board/shareholders/creditors of the company. The particulars of such resolutions or/and agreement are to be filed through e-form MGT-14. The provisions of section 117 of the Companies Act 2013 and the rules made thereunder, are applicable regarding registration of certain resolutions and agreements which are to be filed with the Registrar of Companies. The e-form MGT-14 is required to be filed with the Registrar of Companies within 30 days of passing of the resolution or of the making of the agreement. However, the private companies are exempted from filing board resolutions and the private companies are required to file the specified resolutions passed at the general meeting.

2. Relevant provisions of the Companies Act

The following are the relevant provisions under the Companies Act 2013 relating to filing of the resolutions through e-form MGT-14.

3. Section 117(1) of the Companies Act, 2013

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

Rule 24 of the Companies (Management and Administrations) Rules, 2014 provides that

“A copy of every resolution or any agreement required to be filed, together with the explanatory statement under section 102, if any’ shall be filed with the Registrar in Form No. MGT.14 along with the fee”.

4. Penal provisions for default/non-compliance

Section 117(2) of the Companies Act, 2013 prior to Companies (Amendment) Act, 2020 vide notification dated 28th September, 2020 amendment effective from 21st December 2020
lf 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 he liable to a penalty of one lakh rupees and in case of continuing failure, with further penalty of five hundred rupees for each day after the first during which such failure continues subject to a maximum of twenty-five 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 fifty thousand rupees and in case of continuing failure, with further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees.

4.1 Section 117(2) of the Companies Act, 2013 got amended with effect from 21st December 2020 which now reads as follows:—

lf 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, 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.

5. Consequences of default/violation – action from the Regulator

To understand the consequences of any default in complying with section 117(1) of the Companies Act 2013 relating to filing of the special resolution passed by the company in MGT-14 form let us go through one of the decided case law on this matter very recently – during the month of September 2022 – by the Registrar of Companies of Ahmedabad.

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