The Ministry of Corporate Affairs (MCA) has recently imposed penalties on Petron Minerals & Metals Limited for non-maintenance of minutes book and related documents, violating Section 118 of the Companies Act, 2013. Let’s delve into the details of this enforcement action.
Detailed Analysis
1. Violation of Section 118:
- Petron Minerals & Metals Limited failed to furnish certified copies of books of accounts and minutes of board meetings/general meetings since incorporation, as required by Section 118 of the Companies Act, 2013.
- Section 118 mandates companies to prepare and sign minutes of proceedings of general meetings, board meetings, and resolutions passed by postal ballot, and maintain them within thirty days of the conclusion of each meeting.
2. Provisions of the Act:
- Section 118(11) stipulates a penalty of twenty-five thousand rupees for companies and five thousand rupees for officers in default in case of non-compliance with the provisions of this section.
- A show cause notice was issued to the officer in default, followed by the imposition of penalties as per the provisions of the Companies Act, 2013.
3. Imposition of Penalties:
- Considering the non-compliance, a penalty of 25,000/- was imposed on Petron Minerals & Metals Limited and Rs. 5,000/- on the defaulting directors.
- The penalty amount is to be paid by the company and directors within 90 days of receipt of the order to the Ministry of Corporate Affairs.
4. Appeal Process:
- The company has the option to file an appeal against the order within sixty days from the date of receipt, in accordance with the provisions of the Companies Act, 2013.
- Non-compliance with the order may lead to further regulatory action as per Section 454(8) of the Act.
Conclusion
The penalty imposed by the Ministry of Corporate Affairs underscores the importance of compliance with statutory provisions related to the maintenance of minutes and other documents by companies. It serves as a reminder to corporate entities and directors to ensure meticulous adherence to regulatory requirements to avoid legal repercussions. This enforcement action reflects the government’s commitment to upholding corporate governance standards and promoting transparency in corporate affairs. Companies must proactively address compliance gaps and adopt robust mechanisms for maintaining records in accordance with the Companies Act, 2013, to mitigate regulatory risks and safeguard their interests
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES, Uttar Pradesh
37/17, Westcott Building, The Mall,
Kanpur — 208001 (U.P.)
Phone : 0512 — 2310443/2310227
ORDER FOR VIOLATION OF SECTION 118 OF THE COMPANIES, ACT, 2013 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES 2014 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) AMENDMENT RULES, 2019.
IN THE MATTER OF PETRON MINERALS & METALS LIMITED
Appointment of Adjudicating Officer:-
1. The Ministry of Corporate Affairs vide its gazette notification no A-42011/112/2014-Ad.II dated 24.3.2015, has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 & Companies (Amendment) Act, 2020 for adjudging penalties under the provisions of this Act.
Company: –
2. The Company PETRON MINERALS & METALS LIMITED has been registered under the provisions of the Companies Act, 2013 on 06,02.2014, and is having its registered office situated at 24.02.2016, and is having its registered office situated at P. No. 1033 SA, Kataula Gaushpur Main Road Airport, Post- Bamrauli, Ps. Dhoomanganj,Prayagraj, Allahabad-211 012 (Uttar Pradesh). The authorized capital of the company is Rs. 5,00,000/-
3. During inquiry, the company and its directors were called upon to furnish certified copies of Books of accounts of the company since incorporation and certified copies of Minutes of Board Meetings/General Meetings since incorporation. However, the same has not been furnished by the company and its directors before the Inquiry Officer, hence it is proved that the company and its directors are not maintaining the Minutes Book and its related documents. Hence the company and its directors have violated the provisions of Section 118 of the Companies Act, 2013.
Provisions of the Act:-
1. Section 118 of the Act reads as under:-
Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting and resolutions passed by postal ballot.—(1) Every company shall cause minutes of the proceedings of every general meeting of any class of shareholders or creditors, and every resolution passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned, or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered.
Section 118(11) of the Companies Act,2013 reads as under :-
(11) 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.
4. Accordingly, a Show Cause Notice No. No.LC/ADJ/ROC/UP/2022/Petron/6401 to 6406 Dated 22.12.2023 was issued to officer in default under section 118 of the Companies Act, 2013. The company has not furnished any reply.
5. Hence, the company and its Directors have failed to comply with the provisions of section 118 of the Companies Act, 2013 thereby attracting the penal provisions mentioned under Section 118(11) of the Act.
6. Having considered the facts and circumstances of the case and after taking into account the factors above, I hereby impose a penalty of 25,000/- on the company and Rs.5,000/- on the defaulting Directors under section 118 of the Companies Act, 2013 and Companies (Amendment) Act, 2020 for failure to make compliance of the section 118 of the Act. It is of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticee.
7. The Noticee shall pay the amount of penalty by way of Demand Draft in favour of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, payable at Delhi, within 90 days receipt of this order. The Demand Draft shall be forwarded to this office Address.
8. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodi Road, New Delhi, within a period of sixty days from the date of receipt of this order, in Form ADJ setting forth the grounds of appeal and shall be accompanied by a certified copy of this order. [Section 454(5) & 454(6) of the Act, read with Companies (Adjudication of Penalties) Rules, 2014).
9. Attention is also invited to section 454(8) of the Companies Act, 2013, in the event of non-compliance of this order. In Case appeal is made 0/0 Registrar of Companies, U.P. maybe informed alongwith the penalty imposed & the payments made.
Order No. LC/ADJ/ROC/UP/2023?Petron/7530 to 7544 Dated: 04th March 2024
(Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur
