[Opinion] ROC Drops Proceedings Against Company for Late Filing of Form DIR-12 Due to MCA V3 Portal Issues – A Case Study
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- Last Updated on 4 June, 2024
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Prof R Balakrishnan – [2024] 163 taxmann.com 60 (Article)
Background of this case
1. This is the classic case where the company M/s Shiv Vilas Resorts Private Limited faced the problem of filing the e-form DIR-12 subsequent to the filling up of the vacancy of the company secretary during the MCA V3 implementation process initiated by the Ministry of Corporate Affairs. Though the company had complied with the requirement of filling up the vacancy of the company secretary in time, they could not file the form DIR-12 for the newly appointed company secretary. The form was filed much later when the MCA V3 problems were sorted out.
In the meantime, the Registrar of Companies initiated the action against the company for violating the Companies Act 2013 in terms of section 203(1) of the Act. During the personal hearing, the company represented the matter and explained the difficulties faced by them and also provided documents to the satisfaction of the Registrar that the company had complied with the requirement well in time, but the form could not be filed due to the MCA V3 problem. The company’s stand was accepted by the Registrar of Companies, and he passed an order holding that the company had complied with the requirements and levied no penalty upon them for late filing of the form.
This is an interesting case in which the regulator dropped the proceedings against the company and its directors after making the proper representations.
Provisions relating to this case under the Companies Act 2013.
2. The relevant provisions pertaining to this case are section 203 of the Companies Act 2013, read with Rules 8 and 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014. The extracts of the provisions are given below.
| Companies Act 2013 Chapter XIII – Appointment and Remuneration of Managerial Personnel Section 203 – Appointment of key managerial personnel. |
|
| Section | Provision |
| 203 (1) | Every company belonging to such class or classes of companies, as may be prescribed, shall have the following whole-time key managerial personnel,— |
| 203(1)(i) | Managing director, or Chief Executive Officer or manager and in their absence, a whole-time director; |
| 203(1)(ii) | Company secretary; and |
| 203(1)(iii) | Chief Financial Officer |
| Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 Rule 8 – Appointment of Key Managerial Personnel |
|
| Rule | Provision |
| 8 | Every listed company and every other public company with a paid-up share capital of ten crore rupees or more shall have full-time key managerial personnel. |
| Rule 8A – Appointment of Company Secretaries in companies not covered under Rule 8 | |
| 8A | Every private company which has a paid-up share capital of ten crore rupees or more shall have a whole-time company secretary |
| (five crores substituted by ten crores through Companies (Amendment) Rules 2020and applicable with effect from 01.04.2020) | |
| Penal section for non-compliance / default if any (prior to substitution by the Companies (Amendment) Act 2019 w.e.f 02.11.2018 |
|
| 203(5) | If a company contravenes the provisions of this section, the company shall be punishable with a fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every director and key managerial personnel of the company who is in default shall be punishable with fine which may extend to fifty thousand rupees and where the contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues. |
Consequences of default/violation
3. To understand the consequences of any default / non-compliance while complying with the provisions of section 203 of the Companies Act 2013 relating to the appointment of a company secretary / filling up the vacancies arising from the position of company secretary within the specified time frame and the related procedures to be complied with, let us go through the decided case law by the Registrar of Companies of Jaipur on this matter on 22nd November 2023 relating to M/s. Shiv Vilas Resorts Private Limited
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