Non-providing minutes of Board Meeting approving Financial Statements: MCA Imposes Penalty
The Ministry of Corporate Affairs (MCA) recently imposed penalties on EUEB India Private Limited for violating rules pertaining to board meetings under the Companies Act, 2013. Specifically, the company failed to provide minutes of the board meeting where financial statements for the fiscal year 2019-2020 were approved.
EUEB India Private Limited, registered under the Companies Act in 2019, found itself in hot water when the Directorate initiated an inquiry under section 206(4) of the Companies Act, 2013. The inquiry aimed to investigate the company’s compliance with section 173, which mandates holding a minimum number of board meetings annually and timely approval of financial statements.
The inquiry uncovered lapses in compliance, notably the absence of satisfactory responses regarding board meeting minutes from one of the directors, Mr. Himanshu Kapoor. Despite receiving a Show Cause Notice from the adjudicating authority, EUEB India and its officers failed to furnish a reply, leading to the imposition of penalties.
Under section 173 of the Companies Act, 2013, every company is required to hold board meetings within stipulated intervals and provide due notice to directors. Failure to adhere to these provisions attracts penalties, as outlined in section 173(4), amounting to twenty-five thousand rupees for each defaulting officer.
Furthermore, section 466B specifies penalties for non-compliance by certain categories of companies or their officers, capping the penalty at half of the specified amount or a maximum of two lakh rupees. EUEB India, classified as a small company, faced penalties amounting to twelve thousand five hundred rupees for each officer in default.
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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 — 2310323/2310443
NO.07/01/ADJ-173/ EUEB INDIA /
Dated: 12/01/2023
ORDER FOR VIOLATION OF RULE 173 OF THE COMPANIES (APPOINTMENT AND QUALIFICATION OF DIRECTORS) RULES 2014 AND READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES 2014 & COMPANIES (AMENDMENT) ACT, 2020
IN THE MATTER OF EUEB INDIA PRIVATE LIMITED
Appointment of Adjudicating Officer: –
1. The Ministry of Corporate Affairs vide its gazette notification no A-42011/112/2014-AD 11 dated 24.03.2015, has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules,2014 under the provisions of this Act.
Company: –
2. Whereas the Company Eueb India Private Limited has been registered under the provisions of Companies Act on 03/10/2019 with Roc, Kanpur, and Having Registered Office at A-402, Sector 47, NOIDA Gautam Buddha Nagar UP 201303/, The authorized capital of the company is Rs. 10,00,000/,
3. The Directorate vide its letter no. Inq./Guard/2021/10971 dated 17.12.2021 and Ministry’s letter no. F. No. CL-II-08/131/2021-DGCoA-MCA dated 13.12.2021 directed to conduct the inquiry u/s. 206(4) of the Companies Act, 2013, against the said company. The Inquiry Officer (IC)) has sought clarification/information for the minutes of the board meeting in which the financial statement for the year 2019-2020 approved by board. The reply furnished by one of the Director Mr. Hianshu Kapoor not found satisfactory. Accordingly, the Inquiry officer has reported the said violation in the Inquiry Report dated 31.03.2022. The Directorate vide its letter No. Inquiry/206(4)/Eueb India /RD(NR)/2022/3144 dated 07.06.2022 has accorded the penal action for non-compliance of section 173 of the Companies Act, 2013. Thus, it is evident that the company and its Directors have failed to comply with the provisions of section 173 of the Companies Act, 2013, thereby attracting the penal provisions mentioned under Section 173 (4) of the Act.
4. Accordingly, a Show Cause Notice No. 07/01/Adjudication-Rule12-A/ EUEB INDIA /5620-5622 dated 17.11.2023 was issued to its officer in default under Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014 by this office. This office has not received the said letter undelivered also.
5. The Company and its officers in default have failed to furnish any reply to the said Show Cause Notice, hence no hearing was fixed in this matter. Further, neither the defaulting director nor any representative of the director has either furnished his reply or has appeared before the undersigned which has further strengthened the apprehension that the Director of the company has failed to comply with the provisions of Section 173 of the Companies Act, 2013 thereby attracting the penal provisions mentioned under Section 173(4) of the Act.
Provisions of the Act:-
6. Section 173 of the Companies Act, 2013 provides that: –
(i) Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board: Provided that the Central Government may, by notification, direct that the provisions of this subsection shall not apply in relation to any class or description of companies or shall apply subject to such exceptions, modifications or conditions as may be specified in the notification.
(ii) The participation of directors in a meeting of the Board may be either in person or through video conferencing or other audio visual means, as may be prescribed, which are capable of recording and recognising the participation of the directors and of recording and storing the proceedings of such meetings along with date and time:
Provided that the Central Government may, by notification, specify such matters which shall not be dealt with in a meeting through video conferencing or other audio visual means.
(iii) A meeting of the Board shall be called by giving not less than seven days’ notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means:
Provided that a meeting of the Board may be called at shorter notice to transact urgent business subject to the condition that at least one independent director, if any, shall be present at the meeting:
Provided further that in case of absence of independent directors from such a meeting of the Board, decisions taken at such a meeting shall be circulated to all the directors and shall be final only on ratification thereof by at least one independent director, if any.
Section 173 (4) of the Companies Act, 2013 provides that
“Every officer of the company whose duty is to give notice under this section and who fails to do so shall be liable to a penalty of twenty-five thousand rupees.”
7. As per provisions of section 466B of the Companies Act, 2013 provides that “Notwithstanding anything contained in this act, if penalty is payable for non-compliance of any of the provisions of this act by a One Person Company, Small Company, start-up company or producer company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other persons, as the case maybe be, shall be liable to a penalty which shall not be more than one half of the penalty specified in such provisions subject to a maximum of two lakh rupees I case of a company one lakh rupees in case of an officer who is in default or any other person, as the case may be”.
8. Order:
Having considered the facts and circumstances of the case and after taking into account the factors above, i hereby impose penalty as prescribed under section 173(4) of the Act. The default of the penalty imposed on the company (Being Small Company as per section 2(85) of the Act) and officers in default are shown in the table below:
|
Nature of default Section
|
Relevant section under the Co.Act.2013 | Name of persons on whom penalty imposed | Maximum Penalty (Rs.) | Final Penalty imposed as per Sec. 466B (Rs.) |
| Non- providing of minutes of the board meeting in which the financial statement for the year 20192020 approved by board (173) | 173 (4) | Himanshu Kapoor |
25000 | 12500 |
| Wang Ke | 25000 | 12500 |
I am of this opinion that penalty is commensurate with the aforesaid failure committed by the notice(s).
9. The Noticee shall pay the amount of penalty so imposed through MCA21 portal only as per rule 3(14) of Companies (Adjudication of Penalties) 2014. within 90 days receipt of this order. The company needs to file InC-28 as per the provisions of the act, attaching the copy of adjudication order alongwith payment challans..
10. 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 ADS 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].
11. Attention is also invited to section 454(8) of the Companies Act, 2013, in the event of noncompliance of this order. In Case appeal is made 0/o Registrar of Companies, U.P. maybe informed alongwith the penalty imposed & the payments made.
(Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur
NO.07/01/AN-173 / EUEB INDIA. / 6733 to 6735
