[Opinion] ROC Penalizes Directors of a Company for Failing to Notify the Change of Residential Addresses to the Central Government

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  • Last Updated on 9 May, 2024

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ROC Penalty

Prof R Balakrishnan – [2024] 162 taxmann.com 256 (Article)

1. A small brief about this case

Director identification number (DIN) is a unique identification number allotted to a person wanting to be a director of a company. To obtain DIN, the concerned person needs to make an application in e-form DIR-3. As per MCA, all directors holding the DIN will have to submit their KYC details annually in e-form DIR-3KYC.As per Rule 12(1) of the Companies (Appointment and Qualification of Directors) Rules 2014, any change in particulars of directors is required to be intimated to the Central Government within 30 days of the change in particulars in the prescribed e-form DIR-6 which is to be filed pursuant to rule 12 (1) of the Companies (Appointment and Qualification of Directors) Rules 2014 along with evidence of documents for the change. In short, any changes or modifications, the same to be intimated by submitting e-form DIR-6 on the MCA Portal. For example, in the case of a location change of a director, he or she is required to inform this change by submitting e-form DIR-6 alongside the necessary attested particulars.

In this particular case two of the directors of M/s Somen Venture Private Limited did not intimate the Ministry of Corporate Affairs about their change of address, as mandated by Rule 12 of the Companies (Appointment and Qualification of Directors) Rules, 2014 which came to the light when the regulator started investigating a complaint filed by the owner of a premises about the unauthorized use of his premises by the company. The violation –i.e., the non-intimation of the changes persisted for 211 days, resulted in a penalty of Rs. 2.21 Lakh to each of the director of the company in accordance with section 450 of the Companies Act, 2013 for which the Registrar of Companies/Adjudicating Officer of Patna passed an order. Let us go through this case in order to know the rationale behind passing the order along with applicable provisions of the Act and rules.

2. The relevant provisions pertaining to this case is that of Rule 12 of the Companies (Appointments and Qualifications of Directors) Rules 2014 which inter alia provides as under:

Companies (Appointments and Qualifications of Directors) Rules 2014
Rule 12 – Intimation of Changes in Particulars Specified in DIN Application
Rule Provision
12(1) Every individual who has been allotted a Director Identification Number under these rules shall, in the event of any change in his particulars as stated in Form DIR-3. intimate such change(s) to the Central Government within a period of thirty days of such change(s) in Form DIR-6 in the following manner, namely;
12(1) (i) The applicant shall download Form DIR-6 f from the portal, fill in the relevant changes, verify the Form and attach duly scanned copy of the proof of the changed particulars and submit electronically;.
12(1)(ii) the form shall be digitally signed by a chartered accountant in practice or a company secretary in practice or a cost accountant in practice;
12(1) (iii) the applicant shall submit the Form DIR-6:
12(2) The Central Government, upon being satisfied, after verification of such changed particulars from the enclosed proofs, shall incorporate the said changes lunges and inform the applicant by way of a letter by post or electronically or in any other mode confirming the effect of such change in the electronic database maintained by the Ministry.
12(3) The DIN cell of the Ministry shall also intimate the changes(s) in the particulars of the director submitted to it in Form DIR-6 to the concerned Registrar(s) under whose jurisdiction the registered office of the company (s) in which such individual is a director is situated.
12(4) The concerned individual shall also intimate the change(s) in his particulars to the company or companies in which he is a director within fifteen days of such change.
Penal section for non-compliance/default if any
Section 450 – Punishment where no specific penalty or punishment is provided
450 If a company or any officer of a company or any other person contravenes any of the provisions or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition direction or exemption in relation to any mater has been accorded, given, or granted and to which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be liable to a penalty of ten thousand rupees and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person. 
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