Company & Directors Penalized for Failing to Issue Securities in Dematerialized Form

The Office of the Registrar of Companies (ROC), Punjab and Chandigarh, issued a penalty order against M/s BCL Homes Limited and its directors under Section 454 of the Companies Act, 2013, for non-compliance with Section 29(1)(b) and Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014. The company failed to issue securities in dematerialized form as mandated. Despite summons and a show-cause notice, no response was provided, leading to an inspection report that confirmed the violation. A penalty of ₹2,00,000 was imposed on the company, while its directors were individually fined ₹50,000 each. The penalties must be paid through the Ministry of Corporate Affairs portal. The company and its directors can appeal the decision within 60 days to the Regional Director, Northern Region. Failure to comply with the order within 90 days may result in additional fines or imprisonment for the officers in default.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF
COMPANIES PUNJAB AND CHANDIGARH,
CORPORATE BHAWAN
PLOT NO.4-B, SECTOR 27B, CHANDIGARH
PHONE NO.172-2639415, 2639416

No. ROC CHD/ADJ/ 979 to 983

 Dated: 08/01/2025

ORDER UNDER SECTION 454 FOR VIOLATION OF SECTION 29(1)(B) OF THE COMPANIES ACT, 2013 READ WITH RULE 9A OF THE COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES) RULES, 2014 READ WITH COMPANIES (ADJUDICATION  OF PENALTIES) RULES, 2014

IN THE MATTER OF M/S BCL HOMES LIMITED (CIN: U00082CH2005PLCO29291)

1. Appointment of Adjudicating Officer

The Ministry of Corporate Affairs vide its gazette notification no. S.O. 831(E) dated 24.3.2015, has appointed the undersigned as Adjudicating Officer (AO) 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 adjudicating penalties under the provisions of this Act.

2. Company: –

Whereas the Company M/s BCL HOMES LIMITED (hereinafter referred to as “the Company”) is a company registered with this office under the Provisions of the Companies Act, 2013/1956 (or previous Acts in force, as applicable) having its registered office situated at Shop No 140, Village Dariya, Chandigarh, India, As per data available at MCA website, the other details as on 31.03.2022 are as under:

3. Relevant Provisions of the Companies Act, 2013 which are applicable in the  present case Provision of Section 29 of the Companies Act, 2013 are as under: –

29. Public Offer of Securities to be in Dematerialized Form.

(1) Notwithstanding anything contained in any other provisions of this Act,—

(a) every company making public offer; and

(b) such other class or classes of companies as may be prescribed, shall issue the securities only in dematerialized form by complying with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder.

(1A) In case of such class or classes of unlisted companies as may be prescribed, the securities shall be held or transferred only in dematerialized form in the manner laid down in the Depositories Act, 1996 and the regulations made thereunder.

(2) Any company, other than a company mentioned in sub-section (1), may convert its securities into dematerialised form or issue its securities in physical form in accordance with the provisions of this Act or in dematerialised form in accordance with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder.

Relevant Rules are as under:-

(I) Rule 3(12) of Companies (Adjudication of Penalties) Rules, 2014

“While adjudging quantum of penalty, the adjudicating officer shall have due regard to the following factors, namely-

a) size of the company

b) nature of business carried on by the company,

c) injury to public interest,

d) nature of the default,’

e) repetition of the default,’

f) the amount of disproportionate gain or unfair advantage; wherever quantifiable, made as a result of the default: and

g) the amount of loss caused to an investor or group of investors or creditors as a result of the default

Provided that, in no case, the penalty imposed shall be less than the minimum penalty prescribed, if any, under the relevant section of the Act.”

(ii) Rule 3 (13) of Companies (Adjudication of Penalties) Rules, 2014 which read as under:

“In case a fixed sum of penalty is provided for default of a provision, the adjudicating officer shall impose that fixed sum, in case of any default therein.”

(iii) Rule 9A of Companies (Prospectus and Allotment of Securities) Rules, 2014 which read as under:

Rule 9A- Issue of securities in dematerialized form by unlisted public companies.-

(1) Every unlisted public company shall –

(a) Issue the securities only in dematerialized form; and

(b) Facilitate dematerialization of all its existing securities

in accordance with provisions of the Depositories Act, 1996 and regulations made there under

(2) Every unlisted public company making any offer for issue of any securities or buyback of securities or issue of bonus shares or rights offer shall ensure that before making such offer, entire holding of securities of its promoters, directors, key managerial personnel has been demateriarised in accordance with provisions of the Depositories Act 1996 and regulations made there under.

(3) Every holder of securities of an unlisted public company,_

(a) who intends to transfer such securities on or after 2nd October, 2018, shall get such securities dematerialised before the transfer; or

(b) who subscribes to any securities of an unlisted public company (whether by way of private placement or bonus shares or rights offer) on or after 2nd October, 2018 shall ensure that all his existing securities are held in dematerialized form before such subscription.

(4) Every unlisted public company shall facilitate dematerialisation of all its existing securities by making necessary application to a depository as defined in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 and shall secure International security Identification Number (1SIN) for each type of security and shall inform all its existing security holders about such facility.

(5) Every unlisted public company shall ensure that

(a) it makes timely payment of fees (admission as well as annual) to the depository and registrar to an issue and share transfer agent in accordance with the agreement executed between the parties;

(b) it maintains security deposit at all times, of not less than two years, fees with the depository and registrar to an issue and share transfer agent in such form as may be agreed between the parties; and

(c) it complies with the regulations or directions or guidelines or circulars, if any, issued by the securities and Exchange Board or Depository from time to time with respect to dematerialisation of shares of unlisted public companies and matters incidental or related thereto.

(6) No unlisted public company which has defaulted in sub-rule (5) shall make offer of any securities or buyback its securities or issue any bonus or right shares till the payments to depositories or registrar to an issue and share transfer agent are made.

(7) Except as provided in sub-rule (8), the provisions of the Depositories Act 1996 the securities and Exchange Board of India (Depositories and participants) Regulations, 2018 and the securities and Exchange Board of India (Registrars to an Issue and share Transfer Agents) Regulations, 1993 shall apply mutatis mutandis to dematerialisation of securities of unlisted public companies.

(8) Every unlisted public company governed by this rule shall submit Form PAS-6 to the Registrar with such fee as provided in Companies (Registration Offices and Fees) Rules,2014 within sixty days from the conclusion of each half year duly certified by acompany secretary in practice or chartered accountant in practice. (8A) The company shall immediately bring to the notice of the depositories any difference observed in its issued capital and the capital held in dematerialised form.

(9) The grievances, if any, of security holders of unlisted public companies under this rule shall be filed before the Investor Education and protection Fund Authority.

(10) The Investor Education and protection Fund Authority shall initiate any action against a depository or participant or registrar to an issue and share transfer agent after prior consultation with the securities and Exchange Board of India

(11) This rule shall not apply to an unlisted public company which is:

(a) a Nidhi;

(b) a Government company or

(c) a wholly owned subsidiary.

4. Facts about the case: –

That the Central Government has directed this office to conduct the inspection of books and papers of the Company. The Show cause Notice cum Preliminary Finding Letter was issued to the company and directors on 28.02.2023. A summon was sent to the directors of the company seeking information with regard to various points on 15.3.2024. However, no reply has been received from the company or directors.

Accordingly, an Inspection report was prepared by the Inspecting officer and submitted the same to RD-NR vide Letter No. ROC-CHD/Inspection /BCL Homes/1002 dated 26.03.2024. As per remarks made by the CS in practice in attachment to Form no. MGT- 7 for the financial year ended 31.03.2019, the company has not complied with the provision of Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014. Therefore, the company & its officers have violated the provisions of Section 29(1)(b) of the CA, 2013 read with rule 9A of the Companies (Prospectus and Allotment of Securities) Rules 2014 and the company and officers in default are liable to penalty under section 450 of the Companies Act,2013.

5. Adjudication of penalty:

Now, in exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and having considered the facts of the case, I hereby impose the penalties for violation of Section 29(1)(b) of the CA,2013 read with Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules 2014 on the company and its directors under Section 450 of the Companies Act, 2013 as under :-

I am of this opinion that penalty is commensurate with the aforesaid failure committed by the addressee and penalty so imposed upon the Officers-in-default shall be paid from their personal sources/income.

It is further directed that penalty imposed shall be paid through the Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Companies (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.

6. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi 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].

7. Please note that as per Section 454(8):

(i), where a company fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be, within a period of ninety days from the date of the receipt of the copy of the order, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, and

(ii) in case of an officer of a company who is in default, such officer shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.

8. In terms of the provisions of sub-rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, copy of the order is being sent to the following as under:

No. ROC CHD/Adj/979 to 983

   Dated:  08/01/2024