Resonance Eduventures Limited, along with its MD & CEO, Shri Ram Kishan Verma, and CS, Shri Abhinav Gautam, has been penalized by the Ministry of Corporate Affairs (MCA) for non-compliance with the Companies Act, 2013. The violation pertains to the failure to constitute the Nomination and Remuneration Committee during a specific period. This article provides an in-depth analysis of the case, highlighting the facts, penalties imposed, and compliance details.
1. Adjudication Proceeding and Violation This order relates to adjudication proceedings under Section 454(3) of the Companies Act, 2013, read with Section 178. The violation in question concerns the failure to constitute the Nomination and Remuneration Committee as mandated by Section 178 of the Companies Act, 2013, read with Rule 6 of Companies (Meetings of Board and its Powers) Rules, 2014. This non-compliance occurred during the period from November 19, 2019, to April 15, 2021.
2. Notice and Hearing The Registrar of Companies, Rajasthan, Jaipur, issued a notice for adjudication on March 28, 2023, to Resonance Eduventures Limited, its directors, officers in default, and key managerial personnel (KMP). The hearing was scheduled for April 11, 2023, providing the concerned parties with an opportunity to present their case.
3. Representation on Behalf of the Company During the hearing on April 11, 2023, Shri Akshit Kumar Jangid, a Fellow Company Secretary (FCS), appeared on behalf of the Company and Party No. 01 to 03. It was acknowledged that the company had indeed violated Section 178 of the Companies Act, 2013, read with Rule 6 of Companies (Meetings of Board and its Powers) Rules, 2014, during the specified period. The company had rectified this by constituting the Nomination and Remuneration Committee, effective from April 15, 2021. Shri Akshit Kumar Jangid, FCS, requested the imposition of the minimum penalty for this offense.
4. Legal Provisions Violated Section 178 of the Companies Act, 2013, was cited, emphasizing the requirement for companies to constitute the Nomination and Remuneration Committee. This committee is responsible for identifying qualified individuals for directorial and senior management roles, recommending their appointment and removal, and formulating policies related to remuneration.
5. Penalty Imposed Taking into consideration the violation of Section 178, the Registrar of Companies imposed penalties on Resonance Eduventures Limited, Shri Ram Kishan Verma (MD & CEO), and Shri Abhinav Gautam (CS). The penalties imposed are as follows:
- Resonance Eduventures Limited: ₹5,00,000/-
- Shri Ram Kishan Verma (MD & CEO): ₹1,00,000/-
- Shri Abhinav Gautam (CS): ₹1,00,000/-
The total penalty amounts to ₹7,00,000/-.
6. Payment of Penalty The company is directed to pay a penalty of ₹5,00,000/-, and Shri Ram Kishan Verma (MD & CEO) and Shri Abhinav Gautam (CS) are each required to pay ₹1,00,000/-. These penalties should be settled within 90 days from the receipt of the order through appropriate challans on the MCA Portal. Importantly, the penalties imposed on the directors must be paid from their personal accounts.
7. Consequences of Non-Payment Failure to pay the penalty within the specified period will result in legal action under Section 454(8) of the Companies Act, 2013. This provision outlines the consequences for non-payment.
8. Conclusion: This case highlights the importance of companies adhering to the corporate governance requirements outlined in the Companies Act, 2013. The imposition of a substantial penalty on Resonance Eduventures Limited, its MD & CEO, and CS serves as a reminder to companies and their officers to comply with statutory obligations, particularly those related to the constitution of committees such as the Nomination and Remuneration Committee. Non-compliance can lead to significant financial penalties and legal consequences, emphasizing the need for robust corporate governance practices. Companies should prioritize compliance to avoid penalties and maintain a strong corporate governance framework.
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Registrar of Companies, Rajasthan, Jaipur
Order No. ROC-JP/Adj./2023-24/Sec 178/CA 2013
In the matter of Companies Act 2013
In the matter of adjudication proceeding under section 454(3) read with section 178 of the Companies Act, 2013 r/w Rule 6 of Companies (Meetings of Board and its Powers) Rules, 2014 punishable under section 178(8) of the Companies Act, 2013.
And
In the matter of
1. Resonance Eduventures Limited
2. Shri Ram Kishan Verma (MD & CEO)
3. Shri Abhinav Gautam (CS)
Date of hearing: 11.04.2023
Present
Shri C.M. Karl Marx, Registrar of Companies, Rajasthan, Jaipur
Sh. Akshit Kumar Jangid, FCS on behalf of Company and Party No. 01 to 03.
Adjudication Order
That the company through Sh. Ram Kishan Verma, MD & CEO has Suo-moto, made an application to adjudicate the violation committed by company by not constituting Nomination and Remuneration committee as required by the section 178 of the Companies Act, 2013 r/w Rule 6 of Companies (Meetings of Board and its Powers) Rules, 2014 for the period 19.11.2019 to 15.04.2021.
That this office had issued notice for adjudication dated 28.03.2023 for violation Section 178 of the Companies Act, 2013 r/w Rule 6 of Companies (Meetings of Board and its Powers) Rules, 2014 punishable under section 178(8) of the Companies Act 2013 to the Company and its Directors/ Officers in Default/ KMP. The opportunity of being heard was provided to the company and its directors / officers in default/KMP on 11.04.2023.
That on the date of hearing i.e. 11.04.2023 Sh. Akshit Kumar Jangid, FCS ,appeared on behalf of the Company and Party No. 01 to 03. Sh. Akshit Kumar Jangid, FCS submitted that the company has violated 178 of the Companies Act 2013 r/w Rule 6 of Companies (Meetings of Board and its Powers) Rules, ,2014 punishable under section 178(8) of the Companies Act 2013 by not constituting Nomination and Remuneration committee as required by the
provisions of the section 178 of the Companies Act, 2013 r/w Rule 6 of Companies (Meetings of Board and its Powers) Rules, 2014 for the period 19.11.2019 to 15.04.2021. Further it was submitted that the company has constituted Nomination and Remuneration committee w.e.f. 15.04.2021. Further it was prayed to adjudicate the offence for not constituting Nomination and Remuneration committee of the company by imposing minimum penalty. Appointment and cessation of Directors were taken as per MCA portal.
That in view of the above facts the undersigned has reasonable cause to believe that the provision of Section 178 of the Companies Act, 2013 r/w Rule 6 of Companies (Meetings of Board and its Powers) Rules, 2014 had not complied with as required under law by the Company for the period 19.11.2019 to 15.04.2021 and its directors/officers in default/KMP and therefore liable for penal action under section 178(8) of the Companies Act, 2013 r/w sec 454 of the Companies Act, 2013.
That section 178 of the Companies Act, 2013 states that: –
178. Nomination and Remuneration Committee and Stakeholders Relationship Committee.
(1) The Board of Directors of every listed public company and such other class or classes of companies, as may be prescribed shall constitute the Nomination and Remuneration Committee consisting of three or more non-executive Directors out of which not less than one-half shall be independent directors: Provided that the chairperson of the company (whether executive or non-executive) may be appointed as a member of the Nomination and Remuneration Committee but shall not chair such Committee.
(2) The Nomination and Remuneration Committee shall identify persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and shall specify the manner for effective evaluation of performance of Board, its committees and individual Directors to be carried out either by the Board, by the Nomination and Remuneration Committee or by an independent external agency and review its implementation and compliance].
(3) The Nomination and Remuneration Committee shall formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration for the Directors, key managerial personnel and other employees.
(4) The Nomination and Remuneration Committee shall, while formulating the policy under sub-section (3) ensure that—
(a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the company successfully;
(b) relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and
(c) remuneration to Directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals:
Provided that such policy shall be placed on the website of the company, if any, and the salient features of the policy and changes therein, if any, along with the web address of the policy, if any, shall be disclosed in the Board’s report.(5) The Board of Directors of a company which consists of more than one thousand shareholders, debenture-holders, deposit-holders and any other security holders at any time during a financial year shall constitute a Stakeholders Relationship Committee consisting of a chairperson who shall be a non-executive director and such other members as may be decided by the Board.
(6) The Stakeholders Relationship Committee shall consider and resolve the grievances of security holders of the company.
(7) The chairperson of each of the committees constituted under this section or, in his absence, any other member of the committee authorised by him in this behalf shall attend the general meetings of the company.
(8) In case of any contravention of the provisions of section 177 and this section, the company shall be liable to a penalty of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of one lakh rupees.
Provided that inability to resolve or consider any grievance by the Stakeholders Relationship Committee in good faith shall not constitute a contravention of this section.
Explanation.—The expression “senior management” means personnel of the company who are members of its core management team excluding Board of Directors comprising all members of management one level below the executive Directors, including the functional heads.”
That Rule 6 of Companies (Meetings of Board and its Powers) Rules, 2014
states that: –
“6. Committees of the Board. –
The Board of directors of 2/every listed public company] and a company covered under rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 shall constitute an ‘Audit Committee’, and a ‘Nomination and Remuneration Committee of the Board’.”
That in exercising of the power conferred U/s 454 of the Companies Act, 2013 undersigned has passed the adjudication order imposing penalty as under:
Penalty imposed on the Company Resonance Eduventures Limited, Shri Ram Kishan Verma (MD & CE01 and Shri Abhinav Gautam (CS), for violation of Section 178 of the Companies Act, 2013 r/w Rule 6 of Companies {Meetings of Board and its Powers) Rules, 2014 punishable under section 178(8) of the Companies Act, 2013. :-
| Accused | Penalty (fix) | Penalty imposed |
| Resonance Eduventures Limited | 5,00,000/- | 5,00,000/- |
| Shri Ram Kishan Verma (MD & CEO) | 1,00,000/- | 1,00,000/- |
| Shri Abhinav Gautam (CS) | 1,00,000/- | 1,00,000/- |
| Total | 7,00,000/- |
That taking in above facts total penalty of 5,00,000/- is imposed on the company and Rs 1,00,000/- on each Officer in default/KMP namely Shri Ram Kishan Verma (MD & CEO) and Shri Abhinav Gautam (CS) to be paid as stated herein above within 90 days from the receipt of order vide appropriate challan on MCA Portal. The penalty imposed on the Directors should be paid from their personal account.
That failure to pay penalty within the stipulated period the company and its director / officers in default are liable for legal action U/s 454(8) of Companies Act 2013.
The matter stands disposed of in accordance with the order above.
Signed on 11.04.2023
(C.M. Karl Marx)
Registrar of Companies,
Rajasthan, Jaipur
