Deer Smart India Private Limited, a company registered under the Companies Act, 2013, failed to comply with Section 90 of the Act, which mandates the filing of e-form BEN-2 to declare significant beneficial owners (SBOs). The company, incorporated on 17th October 2019, and wholly owned by Deer Smart HK Co. Limited, violated these provisions.
Violation and Proceedings
The Registrar of Companies, Uttar Pradesh, initiated adjudication proceedings under Section 454 of the Companies Act, 2013, against Deer Smart India Private Limited. The violation pertained to the non-filing of e-form BEN-2, which documents SBOs and their interests in the company, within the stipulated time frames.
Company’s Response
In response to the Show Cause Notice (SCN), the company admitted the delay in filing and provided justifications. They claimed to have issued form BEN-4 to Deer Smart HK Co. Limited promptly but failed to file form BEN-2 until 23rd February 2024, after receiving the SCN.
Adjudication of Penalty
The Adjudicating Officer, Mr. Avadesh Swami, and the company’s representative, CS Abhineet Srivastava, appeared during the hearing. It was established that the company delayed filing BEN-2 for 1158 days from 21st December 2020 to 22nd February 2024. The penalty calculation, as per Section 90(11) of the Act, totaled Rs. 6,54,000.
- Deer Smart India Private Limited: A penalty of Rs. 5,00,000 was imposed, the maximum allowable under the Act for such delays.
- Mr. Wen Hua Zhang (Director): A penalty of Rs. 1,00,000 was imposed.
- Mr. Avadhesh Swami (Director): A penalty of Rs. 54,000 was imposed.
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 No. 03/16/SBO/UP/2024/Deer Smart/ Dated : 28/06/2024
ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 FOR VIOLATION OF PROVISONS OF SECTION 90 OF THE COMPANIES ACT, 2013.
IN THE MATTER OF DEER SMART INDIA PRIVATE LIMITED
(CIN: U31900UP2019FTC122443)
Date of hearing: 24.04.2024
Present on behalf of Company and its Applicants: Mr. Avadesh Swami , director of the company and CS Abhineet Srivastava , Practicing Company Secretary (Membership number -42180) .
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 for adjudging penalties under the provisions of this Act.
2. The Company DEER SMART INDIA PRIVATE LIMITED (herein after referred to as “the Reporting company”) has been registered under the provisions of the Companies Act, 2013 on 17.10.2019, and is having its registered office situated at 24.02.2016, and is having its registered office situated at Unit No – 509, Floor 5th Tower C I-Thum Tower Sector-62 Noida, Gautam Buddha Nagar, Uttar Pradesh,201301, India. The authorized capital of the company is Rs.100,000.00/-
3. The shareholding details of ‘the reporting company’ as per list of shareholders attached to e-form MGT-7 for FY 2022-2023 is as follows:-
| S. No. | Name of the Shareholder | No. of Shares held | Percentage of holding |
| 1. | Deer Smart HK Co. Limited | 9,999 | 99.99 |
| 2. | Mr. Zhang Wenhua (nominee of Deer Smart HK Co. Limited) | 1 | 0.01 |
| TOTAL | 10,000 | 100 | |
4. Provisions of the Companies Act,2013
That the provisions of Section 90 of the Companies Act, 2013 reads:-
Section 90:- (1) Every individual, who acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds beneficial interests, of not less than twenty-five per cent. or such other percentage as may be prescribed, in shares of a company or the right to exercise, or the actual exercising of significant influence or control as defined in clause (27) of section 2, over the company (herein referred to as “significant beneficial owner”), shall make a declaration to the company, specifying the nature of his interest and other particulars, in such manner and within such period of acquisition of the beneficial interest or rights and any change thereof, as may be prescribed:
Provided that the Central Government may prescribe a class or classes of persons who shall not be required to make declaration under this sub-section.
(2) Every company shall maintain a register of the interest declared by individuals under sub-section (1) and changes therein which shall include the name of individual, his date of birth, address, details of ownership in the company and such other details as may be prescribed.
(1) The register maintained under sub-section (2) shall be open to inspection by any member of the company on payment of such fees as may be prescribed.
(3) Every company shall file a return of significant beneficial owners of the company and changes therein with the Registrar containing names, addresses and other details as may be prescribed within such time, in such form and manner as may be prescribed.
(4A) Every company shall take necessary steps to identify an individual who is a significant beneficial owner in relation to the company and require him to comply with the provisions of this section.
(5) A company shall give notice, in the prescribed manner, to any person (whether or not a member of the company) whom the company knows or has reasonable cause to believe—
(a) to be a significant beneficial owner of the company;
(b) to be having knowledge of the identity of a significant beneficial owner or another person likely to have such knowledge; or
(c) to have been a significant beneficial owner of the company at any time during the three years immediately preceding the date on which the notice is issued, and who is not registered as a significant beneficial owner with the company as required under this section.
(6) The information required by the notice under sub-section (5) shall be given by the concerned person within a period not exceeding thirty days of the date of the notice.
(7) The company shall—
(a) where that person fails to give the company the information required by the notice within the time specified therein; or
(b) where the information given is not satisfactory,
apply to the Tribunal within a period of fifteen days of the expiry of the period, specified in the notice, for an order directing that the shares in question be subject to restrictions with regard to transfer of interest, suspension of all rights attached to the shares and such other matters as may be prescribed.
(8) On any application made under sub-section (7), the Tribunal may, after giving an opportunity of being heard to the parties concerned, make such order restricting the rights attached with the shares within a period of sixty days of receipt of application or such other period as may be prescribed.
(9) The company or the person aggrieved by the order of the Tribunal may make an application to the Tribunal for relaxation or lifting of the restrictions placed under sub-section (8), within a period of one year from the date of such order:
Provided that if no such application has been filed within a period of one year from the date of the order under sub-section (8), such shares shall be transferred, without any restrictions, to the authority constituted under sub-section (5) of section 125, in such manner as may be prescribed,. (9A) The Central Government may make rules for the purposes of this section.
(10) If any person fails to make a declaration as required under sub-section (1), he shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of one thousand rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees.
(11) If a company, required to maintain register under sub-section (2) and file the information under sub-section (4) or required to take necessary steps under sub-section (4A), fails to do so or denies inspection as provided therein, the company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a 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 and every officer of the company who is in default shall be liable to a penalty of twenty-five thousand rupees and in case of continuing failure, with a further penalty of two hundred rupees for each day, after the first during which such failure continues, subject to a maximum of one latch rupees.
(12) If any person willfully furnishes any false or incorrect information or suppresses any material information of which he is aware in the declaration made under this section, he shall be liable to action under Section 447.
(i) That Section 2(27) of the Act defines ‘control’:
“control” shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner.
That Section 2(1) of the Companies (Significant Beneficial Owners) Rules, 2018 of the Act defines `significant influence’ as the power to participate, directly or indirectly, in the financial and operating policy decisions of the reporting company but is not control or joint control of those policies.
5. The reporting company being a wholly owned subsidiary of Deer Smart HK Co. Limited (“Deer Smart, HK”) and on examination of the filings made by the reporting company’ in MCA-21 Registry, there is no e- form BEN-2 which has been filed by the reporting company, and thus there was reason to believe that ‘the reporting company’ ought to have made compliance with Section 90 of the Companies Act, 2013 i.e. declaration of beneficial ownership by filing e-form BEN-2 of ‘the reporting company’, till the time of issuance of notice under Section 206(1) of the Act, 2013 vide letter No. 03/16/SBO/UP/2024/Deer Smart/ 7007 to 7009 dated 13.02.2024.
6. The reporting company submitted its reply on the matter vide email dated 24.02.2024 submitting that they had issued form BEN-4 to “Deer Smart, HK” on 18.10.2019 and thereafter subsequently the reporting company has filed form BEN-2 on 23.02.2024 vide SRN F92618040. The reporting company has declared Mr.Zhang Wenhua and Mr. Wang Shaojun as Significant beneficial owner holding 61.28% and 15.00 % shares respectively (after issuance of letter from this office dated 13.02.2024)
7. On the observation made at Para 6 above, there existed sufficient reason(s) that ‘the reporting company’ should have filed form BEN-2 declaring its Significant Beneficial Owner in terms of Section 90 r/w the Companies (Significant Beneficial Owners) Rules, 2018 of the Companies Act, 2013, (herein after referred as SBO Rules), hence forward a Show Cause Notice (SCN) was issued to `the reporting company’, its directors and KMP for non-compliance of Section 90 r/w SBO rules made thereunder, vide letter 03/16/SBO/UP/2024/Deer Smart/7007 to 7009 dated 15.04.2024 and date of hearing was fixed on 24.04.2024.
8. Response of the reporting company to SCN issued under Section 90 of the Act:
Authorized representative CS Abhineet Srivastava , Practicing Company Secretary (Membership number -42180) appeared on behalf of the Company and Mr. Avadesh Swami , director of the company also appeared and admitted to the delay in filing of BEN-2 even though the reporting company had received the declaration in form BEN-1 on 21.10.2019.
Further the reporting company had filed form BEN-2 vide F92618040 dated 23.02.2024 wherein they have declared Mr.Zhang Wenhua and Mr. Wang Shaoj un as beneficial owners by virtue of shares and voting rights in shares (61.28% and 15.00 % shares respectively) which is in violation of Section 90(4) of the Act read with Rule 4 of the Companies (Significant Beneficial Owners) Rules, 2018 thereby attracting the penal provisions mentioned under Section 90(11) of the Act.
9. Adjudication of Penalty:
Taking in consideration the above facts based on the submissions made by the reporting company and the documentary information and evidences filed by them in response to the SCN issued by the Registrar, it becomes evident that the reporting company has delayed in filing e-form BEN-2. Further, the same has also been admitted by the company in its reply.
Having arrived at this conclusion, the default u/s 90 r/w SBO Rules under the Companies Act, 2013, stands established. The default period is counted from the date of decriminalization of default w.e.f. 21.12.2020 till the date of filing BEN-2 i.e 22.02.2024 for violation of Section 90 (4) r/w SBO Rules made thereunder and the default period is for 1158 days.
A. Calculation of Penalty imposed for violation of Section 90 r/w SBO Rules made there under of the Companies Act, 2013:-
| Violation Section | Penalty imposed on & Period | Calculation of penalty amount (in Rs.) | Penalty imposed as per Section 90(11) of the Companies Act, 2013 (in Rs.) |
| A | B | C | D |
| Section 90(4) of CA, 2013
For delay in filing of c-form BEN-2 |
DEER SMART INDIA PRIVATE LIMITED
(Company) Default of 1158 days i.e. from 21.12.2020 to 22.02.2024 |
Rs.1,00,000 + 1158 days x Rs.500 Rs.6,79,000/-
Subject to maximum Rs.5,00,000/- |
Rs. 5,00,000/- |
| Wenhua Zhang (Director)
From 17.10.2019 to till date) Default of 1158 days i.e. from 21.12.2020 to 22.02.2024. |
Rs.25,000 + 1158 days x Rs.200 = Rs.2,56,600/-
Subject to maximum Rs. 1,00,000/- |
Rs.1,00,000/- | |
| Avadhesh Swami
(Director from 30.09.2023 to till date) Default of 145 days i.e. from 30.09.2023 to 22.02.2024 |
Rs.25,000 + 145 days x Rs .200 = Rs.54,000/-
Subject to maximum 1,00,000/- |
Rs.54,000/- | |
| TOTAL PENALTY | Rs.6,54,000/- |
10. The company and its officers shall pay the said amount of penalty through online mca.gov.in (under Misc. Head) or 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 and intimate this office with the proof of penalty so paid. The Demand Draft shall be forwarded to this office address.
11. 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].
12. 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 the Registrar of Companies, U.P may be informed alongwith the penalty imposed and the payments made.
(Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur.
03/16/SBO/UP/2024/Deer Smart/1911 to 1913
Dated: 28-06-2024
