The Ministry of Corporate Affairs (MCA) has imposed a significant penalty on Acia Communications Technology (India) Private Limited for failing to appoint a resident director as required under the Companies Act, 2013. The violation occurred for an extended period, and both the company and its directors are facing financial penalties. This article discusses the details of the violation and the penalties imposed.
Detailed Analysis
Acia Communications Technology (India) Private Limited, incorporated in 2016 under the jurisdiction of the Registrar of Companies, Karnataka, is the subject of a suo-motu application submitted to the MCA. The company acknowledged that since its incorporation, it had not appointed at least one director who met the requirement of residing in India for a minimum of 182 days during a financial year. Section 149(3) of the Companies Act, 2013, mandates that every company must have at least one director who stays in India for a total of not less than 182 days during the financial year.
Upon review, it was determined that Acia Communications Technology (India) Private Limited had failed to appoint a resident director from the date of its incorporation until April 22, 2021. The company rectified this deficiency by appointing two resident individuals, Mr. Joseph Vattarmbit Anthony and Mr. Navneet Hrishikeshan, as directors on April 23, 2021. This violation extended for a total of 1703 days.
A hearing was conducted as part of the adjudication process, with Mr. Sandeep Kulkarni, a practicing company secretary, representing the company and its directors. Subsequently, the company provided details of the officers who were in default and the details of resident directors in a letter dated August 17, 2023.
As per Section 149(3) of the Companies Act, every company must have at least one director residing in India for a total period of not less than 182 days during the financial year.
Section 172 of the Companies Act specifies that if a company defaults in complying with any of the provisions of Chapter XV (which includes Section 149) for which no specific penalty or punishment is provided, the company and every officer in default may be liable for a penalty. The penalty for such default is fifty thousand rupees, with an additional penalty of five hundred rupees for each day of continuing failure, up to a maximum of three lakh rupees for the company and one lakh rupees for an officer in default.
Acia Communications Technology (India) Private Limited is not classified as a small company under the provisions of Section 2(85) of the Companies Act, 2013.
Conclusion
The Ministry of Corporate Affairs’ decision to impose significant penalties on Acia Communications Technology (India) Private Limited highlights the importance of complying with statutory requirements. The failure to appoint a resident director, as mandated by Section 149(3) of the Companies Act, 2013, resulted in penalties for the company and its directors.
The penalties levied in this case serve as a reminder to all companies to ensure that they meet their compliance obligations and adhere to legal requirements. Companies must take these obligations seriously, as even seemingly procedural violations can result in substantial financial penalties.
It is imperative for businesses and directors to be aware of their responsibilities and obligations under the Companies Act to avoid regulatory non-compliance and the associated penalties. Companies should promptly pay any penalties imposed to prevent further legal action, as failure to comply with the order could result in additional consequences under Section 454(8) of the Companies Act, 2013.
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Ministry of Corporate Affairs
Registrar of Companies, Karnataka
Kendriya Sadan, 2nd Floor, ‘E’ Wing,
Koramangala, Bengaluru – 560 034
Phone : 080-25537449/2/33105
E-mail ID: roc.bangalore@mca.gov.in
File No. ROC(B)/ Adj.Ord.454-149(3)/Acia /Co.No.95984/2023/ Date: 12.09.2023
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-API’ dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter referred to as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of the Companies Act. 2013.
2. The company, Acia Communications Technology (India) Private Limited (hereinafter referred to as Company) was incorporated on 24.08.2016 under the jurisdiction of Registrar of Companies, Karnataka and the registered office of the company is presently situated at Brigade South Parade, No. 10, Mahatma Gandhi Road. Bangalore – 560001, Karnataka.
3. The company has filed a suo-motu application on 20.07.2023 and submits that since incorporation, the company was not able to have at least one director who stayed in India for a total period of not less than 182 days during the financial years. It is seen that the company was required to have at least one director who stays in India for a total period of not less than 182 days during the financial year as per the provisions of section 149 of the Act.
4. Hence it is observed that the company did not appoint a resident director right from the date of incorporation till 22.04.2021, as two resident individuals, namely, Mr. Joseph Vattarmbit Anthony and Mr. Navneet Hrishikeshan were appointed as directors on 23.04.2021. Hence the company has violated the provisions of Section 149(3) of the Companies Act, 2013 for a period from 24.08.2016 to 22.04.2021. i.e., 1703 days.
5. Pursuant to the adjudication application filed by the company. Notice of hearing was sent on 27.07.2023 and physical hearing was held on 10.08.2023. It was attended by Mr. Sandeep Kulkami practising company secretary appeared on behalf of the company and directors and made his submissions. The company thereafter submitted its details of officers who are in default and details of resident directors vide letter dated 17.082023.
6. As per section 149(3) of the Act, even/ company shall have at least one director who stays in India for a total period of not less than one hundred and eighty-two days during the financial year.
7. As per section 172 of the Act if a company is in default in complying with any of the provisions of this Chapter (Chapter X8 and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees. and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three latch rupees in case of a company and one latch rupees in case of an officer who is in default.
8. It is seen that the company, being a subsidiary company, does not fall under the definition of a small company as per the provisions of section 2(85) of the Companies Act, 2013. Therefore, the provisions of imposing lesser penalty as per the section 4468 of the Act shall not be applicable in this case.
9. Therefore, having considered the facts and circumstances of the case and the submissions made by the company/ director through their authorized representative, in view of the above said violation, and in exercise of the powers vested under Section 454(3) of the Companies Act 2013, I do hereby impose penalty in the following manner on the company and all the officers in default during the period of offence committed:
|
S. No. |
Particulars | Duration of Default | Calculation of Penalty |
Penalty imposed |
| 1 | Company | 24.08.2016 to 22.04.2021 1703 days | Rs. 9,01,000 (58000+ (500*9702)) | Rs. 3,00,000 (Maximum Penalty) |
| 2 | Janene Irene Asgeirsson, Director | 24.08.2016 to 08.04.2021 1689 days | Rs. 8.94,000 (50,000+ (500*9688)) | Rs. 1,00.000 (Maximum Penalty) |
| 3 | Bhupendra Chandulal Shah, Director | 24.082016 to 22.04.2021 1703 days | Rs. 9,01,000 50,0oo+ (500*9702)) | Rs. 1,00,000 (Maximum Penalty) |
| 4 | John Francis Gavin, Director | 24.08.2016 to 22.04.2021 1703 days | Rs. 9,01,000 (50,000+ (500*1702)) | Rs. 1,00,000 (Maximum Penalty) |
| 5 | Vineet Mishra, Director | 24.08.2016 to 22.04.2021 1703 days | Rs. 9,01,000 (50,000+ (500*9704) | Rs. 1,00,000 (Maximum Penalty) |
10. The company and its directors / key managerial personnel, as applicable, are hereby directed to pay the penalty amount as tabulated above within 90 days from the date of receipt of this Order and file Form INC-28 attaching a copy of the Order and payment challans. In case of directors, such penalty amount is required to be paid out of their own funds. The noticee shall pay the said amount of penalty online by using the website mca.gov.in (Miscellaneous head) specifying the details of this Order and the noticee who is paying the penalty.
11. Appeal, if any, against this Order may be filed with the Regional Director (South East Region), Hyderabad within a period of 60 days from the date of receipt of this Order in form AD) setting forth the grounds of appeal and shall be accompanied by a certified copy of this Order.
12. Your attention is also invited to section 454(8) of the Companies Act 2013 in case of non-compliance of this Order wherein necessary penal action will be initiated under 454(8)0) and 454(8)80 of the Companies Act, 2013 against the company and directors / key managerial personnel without further notice in the matter.
(Sanjay Sood)
Registrar of Companies, Karnataka
and Adjudicating Officer
