In a recent case, the Registrar of Companies (ROC) imposed penalties on a company and its officers in default for non-compliance with the provision of Section 149 read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014. This article delves into the details of the case and emphasizes the importance of adhering to these requirements.
The ROC imposed penalty amounting to INR 3,00,000 on company and INR 1,00,000 on each officer in default. The penalties were imposed due to the company’s failure to appoint a woman director within the prescribed time frame. Section 149 of the Companies Act, 2013 states that every listed company and public company meeting specific financial criteria must have at least one woman director. The criteria include a paid-up share capital of INR 100 crore or more or a turnover of INR 300 crore or more.
Time Frame for Appointing Women Directors: According to the law, a company must appoint a woman director within six months from the date of its incorporation for a new company, or within three months from the date of a vacancy, or before the immediate next board meeting, whichever is later. However, the law does not explicitly define the time frame for appointing a woman director during the conversion of a private company to a public limited company. However the Registrar of Companies (ROC), NCT of Delhi & Haryana, issued an order (No. ROC/D/Adj/2022/Section 149(1)/6276 to 6281) dated October 21, 2022, in the matter of Terrestrial Foods Limited wherein penalty is being imposed starting from the date of conversion of a company into a public limited company. This indicates that companies undergoing conversion should strive to comply with the requirement of appointing a woman director on or before the conversion process to avoid future difficulties.
Companies should ensure that they regularly review their compliance with the provision of having a woman director, considering the latest audited financial statements. Failing to comply with these requirements not only exposes companies to penalties but also raises concerns about their commitment to gender equality and inclusivity.
Conclusion: The recent case involving penalties imposed on a company and its officers highlights the importance of adhering to the provision of appointing women directors in Indian companies. While the law does not explicitly define the time frame for appointing a woman director during the conversion of a private company to a public limited company, companies should strive to comply with the requirement before the conversion process to avoid future difficulties. Embracing gender diversity and inclusivity in boardrooms is not only a legal obligation but also a strategic move that can enhance corporate governance and decision-making capabilities.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
Office of The Registrar of Companies, Madhya Pradesh
Sanjay Complex, ‘A’ Block, 3rd Floor, 474 009/
Jayendraganj, Gwalior – 474009.
E.mail: roc.gwalior@mca.gov.in
No. ROC-G/Adj-Penalties/Order/2023/468 Dated;- 01/JUN/2023
Sub: Order under section 454 for violation of Section 149(1) of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014.
Sir,
Please find enclosed herewith copy of order dated 10.01.20.23 passed in the matter of M/s GLOBAL FILMS AND BROADCASTING LIMITED for necessary compliance.
Yours’s faithfully,
Encl: As above.
Mukesh Kumar Soni
Registrar of Companies, (I/C)
Madhya Pradesh, Gwalior.
Copy to:-
The Regional Director(NWR),
RoC Bhavan, Opp. Rupal Park Society, Behind Ankur Bus Stop,
Naranpura, Ahmedabad – 380 013.
Order for Penalty for Violation of Section 149(1) of the Companies Act, 2013
In the matter of Companies Act, 2013
And
In the matter of adjudication proceeding under Sub-section (1) of section149 of
Companies Act, 2013.
And
In the matter of GLOBAL FILMS AND BROADCASTING LIMITED
(CIN: L09233MP1995PLC009505).
1. Ms GLOBAL FILMS AND BROADCASTING LIMITED
SANTOSH TOWER, 148, M.P. NAGAR, BHOPAL,
MADHYA PRADESH, 452001, INDIA.
Email: globalgrive(iDrediffmail.com
Mr. MAJIESH KUMAR JAM (DIRECTOR)
FROM (25.08.2003 TO TILL DATE) (DIN- 01200478, PAN- AEWP,18198N)
35, MAHADEV DARSHAN BUILDING, 3RD FLOOR
EVAN VIKAS KENDRA MARE, SAHAR ROAD,
ANDHERI 400069 MAHARASHTRA INDIA
Email: filmcitvmediaa=ail.com
3. Mr. ANAND JANARDAN DALVI (DIRECTOR)
FROM (30.09.2010 TO TILL DATE) (DIN- 02925642, PAN- AH11PD1875E)
231-232, SIDDHIVINAYAK CHAWL, SHIM NAGAR,
NSS ROAD, ASALPHA VILLAGE, GHARKOPAR (WEST), MUMI3AI
400084 MAHARASHTRA INDIA
Email: umesh4585a,hotmail.com …………..Respondent
Appointment of Adjudicating Officer
1. Ministry of Corporate Affairs vide its Gazette Notification no A-42011/112/2014-Ad.II, dated 24,03.2015 appointed undersigned as Adjudicating Officer (AO) in exercise of the powers conferred by section 454(1) of the Companies Aet, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act
Company
2. Whereas, Company GLOBAL FILMS AND BROADCASTING LIMITED having CIN: L09233MP1995PLC009505, (herein after referred to as “company”) is a registered company with this office under the provisions of Companies Act,. 1956 having its registered office situated at Santosh Tower, 148, M.P. Nagar, Bhopal, Madhya Pradesh, 452001, India, as per the MCA21 Registry.
3. Law relating to Appointment of Women Director in company: –
, .Section 149:
(1) Every company shall have a Board of Directors consisting of individual as directors and shall have-
(a) A minimum number of three directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company; and
(b) A maximum offifteen directors:
Provided that a company may appoint more than fifteen directors after passing a special resolution:
Provided further that such class or classes of companies as may be prescribed, shall have at least one women director..
Rule 3 of the Companies (Appointment and qualification of Directors) Rules, 2014:
The following class of companies shall appoint at least one-woman director-
(i) Every listed company
(ii) Every other public company having-
(a) Paid-up share capital of one hundred crore rupees or more; or
(b) Turnover of three hundred crore rupees or more:
Provided that a company, which has been incorporated under the Act and is covered under provision of second proviso to sub-section (1) of section 149 shall comply with such provisions within a period of six months from the date of its incorporation:
Provided further that any intermittent vacancy of a women director shall be filled-up by the Board at the earliest but no later than immediate next Board meeting or three months from the date of such vacancy whichever is later.
Explanation- For the purposes of this rule, it is hereby clarified that the paid-up share capital or turnover, as the case may be, as on the last date of latest audited financial statements shall be taken into account.
4. Facts about the Case: –
a) As per the Financial Statements filed by the company its Paid-up share capital and turnover as on 31.03.2015 is as under: –
| Paid up Share Capital | Rs. 6,00,00,000/- |
| Turnover | Rs. 2,56,17,395/- |
b) The company is clearly required to appoint a woman director based on Rule 3(i) of Companies (Appointment and qualification of Directors) Rules, 2014 as the said company is a Listed Company.
5. Accordingly, this office had issued show cause notice for violation of section 149(1) of the Companies Act, 2013 to the company and its officer who is in default vide letter no.. ROC-Gwalior/Adj.Pen./Sec.149/2023/90-94 dated 11.04.2023, However, no reply is received from the company, Director namely Mr. Kalakad Sundaram Sathi has submitted reply vide mail dated 01.05.2023 stating that he had filed resignation from the company w..e.f 31.12.2013.
6. Thereafter, “Notices of Inquiry” vide letter No. RoC-Gwalior/Adj.Pen./Sec.149/2023/ 285-289 dated 09.05,2023 were issued to the Company and its officer who is in default as per [Rule 3(3), Companies (Adjudication of Penalties) Rules 2014] and the date of hearing was fixed on 23.05.2023 at 12.30 P.M in the Office of Registrar of Companies, Madhya Pradesh, Sanjay Complex, A block-III floor, Jayendraganj, Gwalior, Madhya Pradesh.
7. No representative of the Company or Directors have appeared on the date so fixed. Whereas CS Devendra Kushwaha has appeared for Ex- director namely Mr. Kalakad Sundaram Sathi. As, no one appeared, Hence, as per Rule 3(8), Companies (Adjudication of Penalties) Rules 2014, the matter is.being proceeded today i.e., 01.06.2023 (ex-parte).
8. Penalty Provision for violation:
Non-compliance of section 149 r/w Rule 3 of Companies (Appointment and qualification of Directors) Rules, 2014 would give rise to liability under section 172 which read as under:
Section 172:
If a company is in default in complying with any of the provisions of this chapter 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 offifty thousand, and in ease 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 lakh rupees in case of a company and one lakh rupees in case of an officer who is in default.]
Order
9. It is evident that the company has not complied with the provision of appointment of women director. Under Section 172, penalty is leviable on the company and its officers who is default. The period of default is being reckoned from the date 21.12.2020 effective date of amendment for section 172 from which penalty has provided through the Companies (Amendment) Act, 2020. Notification dated 28th September, 2020 Amendment Effective from 21st December 2020. The period of default would continue till the Show Cause Notice dated 11.04.2023 has issued. (This period is referred as default ) Therefore, the default period is 840 days (from 21.12.2020 to 11.04.2023)
10. Accordingly, the calculation of penalty is given as under:
|
Nature of Default . |
Violation section under the Companies Act, 2013. | Name of Company/ Director(s)/KMP on whom penalty is imposed |
No. of days of default | Initial Penalty (Rs.)
. |
Penalty for continuing default (Rs.) | Total Penalty imposed by the adjudication officer u/s 172 of Companies Act, 2013 (E+F) (Subject to a maximum of 3 lakh rupees in case of a company and 1 lakh rupees in case of an officer who is in default.) |
| A | B | C | D | E | F | G |
| Company has not appointed the women director in the company |
u/s 149(1) of the Companies Act, 2013
|
On Company | 840 | 50,000 | 4,20,000 | 3,00,000/- |
| Mr. MAFIESH KUMAR JANI (DIRECTOR) | 840 | 50,000 | 4,20,000 | 1,00,000/- | ||
| Mr. ANAND JANARDAN DALVI (DIRECTOR) | 840 | 50,000 | 4,20,000 |
1,00,000/- |
11. The company is hereby directed to pay the penalty amount as per column no. G of above Table. I am of this opinion that penalty is commensurate with the aforesaid failure committed by the Notice 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 Company (Adjudication of Penalties) (Amendment) Rules, 2013 under intimation to this office.
12. The company is hereby directed to rectify the default immediately from the date of receipt of copy of this Order.
13. Appeal against this order may be filed in writing with the Hon’ble Regional Director (NWR), Ministry of Corporate Affairs, Ahmedabad within a period of sixty days from the date of receipt of this order, in Form ADJ (available on Ministry website mca.gov.insetting 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 (Adjudicating of Penalties) Rules, 2014).
14. Your attention is also invited to Section 454(8)(i) and 454(8)(ii) of the Companies Act, 2013, which state that in case of non-payment of penalty amount, 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 officer in default 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 both.
15. 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 GLOBAL FILMS AND BROADCASTING LIMITED, Santosh Tower, 148, P. Nagar, Bhopal, Madhya Pradesh, 452001, India. Mr. MAHESH KUMAR JAN! (DIRECTOR), 35, Mahadev 1 arshan Building, 3rd Floor Jivan Vikas Kendra Marg, Sahar Road, Andheri 400069 Maharashtra India, Mr. ANAND JANARDAN (DIRECTOR), 231-232, Siddhivinayak Chawl, Bhim Nagar, Nss Road, Asaipha Village, Gharkopar (West); Mumbai 400084 Maharashtra India and Regional Director (NWR), Naranapura, Ahmedabad and will also be Uploaded on MCA Website.
The adjudication notice stands disposed off with this order.
(Mukesh Kumar Soni)
Registrar of Companies, (I/C) & Adjudicating officer,
Madhya Pradesh, Gwalior
Signed on this 01′ day of June, 2023.
Place: Gwalior, Madhya Pradesh.
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