Delay in filing of Form BEN-2: MCA imposes Penalty

Registrar of Companies (RoC), NCT of Delhi & Haryana, initiated proceedings against Atomy Enterprise India Pvt Ltd for non-compliance with Section 90 of the Companies Act, 2013, concerning the declaration of Significant Beneficial Owners (SBO). The case stemmed from a notice issued under Section 206(1) to verify compliance. Atomy, a wholly-owned subsidiary of Atomy Co. Ltd., South Korea, initially denied applicability, citing the absence of individual SBOs. However, during proceedings, legal counsel recommended compliance. The company obtained Form BEN-1 from its SBO, Mr. Han-Gill Park, but failed to file Form BEN-2 within the stipulated timeframe, citing technical issues. Despite multiple reminders, the form remains unfiled.

The RoC found Atomy’s explanation unsatisfactory, emphasizing its tacit admission of default. The company’s delay undermines its undertaking to complete compliance formalities. As per Section 90, entities must maintain a register and file returns of SBOs to the Registrar. Failure to adhere attracts penalties.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS,
OFFICE OF REGISTRAR OF COMPANIES,
NCT OF DELHI & HARYANA
4TH FLOOR, IFCI TOWER, 61, NEHRU
PLACE, NEW DELHI -110019

ORDER FOR PENALTY FOR VIOLATION UNDER SECTION 90 OF THE COMPANIES ACT, 2013 IN THE MATTER OF ATOMY ENTERPRISE INDIA PRIVATE LIMITED (CIN: U74999DL2019FTC346490) (SRN: I00090450).

1. Appointment of Adjudicating Officer: –

Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 appointed Registrar of Companies, NCT of Delhi & Haryana as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter known as Act) r/w Companies (Adjudication of Penalties) Rules, 2014 (hereinafter known as “Rules”) for adjudging penalties under the provisions of this Act.

2. Company: –

Whereas ATOMY ENTERPRISE INDIA PRIVATE LIMITED (hereinafter known as “company” or “subject company”) having CIN U74999DL2019FTC346490 is a Private Limited Company registered on 22/02/2019 with this office having registered office address at L-19, LGF Kalkaji, South Delhi, NEW DELHI, Delhi, India, 110019 India. The financial & other details of the subject company for F.Y.2022-23 as available on MCA-21 portal is stated as under:

3. The details of the proceedings:

A1. Issuance of a notice under section 206(1)

A notice was issued to the subject company under section 206(1) of the Act on 07.02.2024 to ascertain the compliance of section 90 of the Act and rules made thereunder. In response to which a reply dated 11.03.2024 was received on 12.03.2024 from the company, wherein it was inter alia stated as under:

a. The Company has filed its annual return in e-form MGT-7 for F/Y 22-23 vide SRN: F91160069

b. The company is a wholly – owned subsidiary and the name of its parent company is ‘Atomy Co. Ltd.’ and stake in the parent company of any individual is not present. The parent company is a member of the company and as per the shareholding pattern of the company no individual is holding majority shares. The company had not received any declaration in Form BEN-1 pursuant to Section 90(1) of the Act. Further, in terms of Rule 2(1)(h) of the Rules, there is no individual who holds any right or entitlement indirectly and can be considered to be Significant Beneficial Owner (SBO). Therefore, the requirement for procuring the declaration in Form BEN-1 is not applicable. Further, the provisions of filing BEN-2 in terms of Section 90(4) of the Act are not applicable to the company.

c. The Company has analyzed the relevant provisions of Section 90 and the rules thereof to identify the individuals who may qualify to be its Significant Beneficial Owner (SBO). In addition to this, it has also discussed and communicated the requirement of the same to its parent company. It has also issued BEN-4 notices to the parent company pursuant to rule 2A(2) of the Companies SBO Rules, 2018 by hand during business trip to the parent company in South Korea.

d. Details of the notice in BEN-4 as well as the reply received to the notice for the last 3 years have been provided below:

e. As the reply to the notice in BEN-4 was received and it was satisfactory, no application has been moved by the Company to the NCLT.

A2. Analysis of the reply of the company received on 20.02.2024

The company had categorically denied about the requirement of compliance of the provisions of section 90 in this case. It was also noted that the mandatory requirement of sending a notice in BEN-4 as per rule 2A (2) of the Companies (Significant Beneficial Owners) Rules, 2018 has been complied.

B1. Issue of SCN to the subject company under section 90 of the Act on 12.04.2024

I. The response of the company to the notice u/s 206(1) was found to be unsatisfactory and accordingly, a SCN was issued to the company and its officers on 12.04.2024. The following points were highlighted in the notice:

a. The subject company vide its reply dated 12.03.2024 had inter alia submitted that Atomy Co. Ltd. is a parent company situated in South Korea and there is no individual who holds majority stake in the parent company and thus there is no individual as SBO. Further, the company had issued three BEN-4 notices and have received replies. However, a copy of the reply was not furnished.

b. The website of Atomy Co. Ltd. (holding Company) shows that it was established consumer-centered network that upholds CEO Park Han-Gills’s principle of – Absolute Quality, Absolute Price.

c. It has also seen that Atomy Co., Ltd. (Holding company) has applied for trademarks in India in 2017 even before the incorporation of the subject company on “Atomy Absolute Collective”, “Atomy Absolute” etc. All these applications were made by Mr. Han Gill Park as the authorized representative. Incidentally, the reference to these trademarks has been given by the (Subject Company) on its website.

d. References were invited to various sources in the public domain where the officers of the subject company had admitted that Dr. Han Gill Park was the leader of the company.

e. All the attending circumstances showed that Mr. Han Gill Park is the SBO in relation to the subject company.

II. The aforesaid issues were brought to the notice of the subject company and itsdirectors vide a SCN dated 12.04.2024, company and associated persons were asked to show cause as to why penalty under Section 90 should not be imposed. During the course of the proceedings an email dated 12^th June, 2024 was received from the company wherein it was inter-alia submitted that:

a. M/s Atomy Enterprise India Limited (subject company) under Section 206(1) of the Companies Act, 2013 for compliances under Section 90 of the Companies Act, 2013, subsequent personal appearance wherein we were apprised about the wide implications of Rule 2(1) (h) sub-rule (iv) of the Companies (Significant Beneficial Owners) Rules, 2018 wherein it has been stated that the individual “has right to exercise, or actually exercises. Significant influence or control, in any manner other than through direct holdings alone”. In this respect, we reached out to Mr. Han-Gill Park informing him about the same and subsequently, Mr. Han-Gill Park sought a second opinion from his legal advisors. While he has not exercised any significant influence or control or has been in touch with the management of Atomy India in influencing and financial or operating policy decisions but given the wide ambit of the statement, “has right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone”, the legal advisors of the Company advised him to follow the compliance required under the said provisions of the Act.

b. Consequently, Mr. Han-Gill Park shall be submitting Form BEN-1 under Section (90) (1) of the Companies Act, 2013 reporting him as a Significant Beneficial Owner. Further, the Company is also undertaking to file Form BEN-2 under Section 90(4) of the Companies Act, 2013 wherein the Company shall be filing a return of its Significant Beneficial Owner.

III. The Company vide email dated 03.07.2024 was asked to provide a copy of form BEN-2 along with Challan. The company acknowledged the receipt of email through return mail and sought an additional time of around 10 days to complete the requisite formalities as Mr. Park is on a business trip and also informed that company is compiling the necessary documents and preparing for the filing formalities and also informed the parent company in South Korea about the same.

IV. Vide email dated 29.07.2024, the company provided the form BEN-1 dated 9th July, 2024 which was received from Mr. Han Gill Park along with self-attested copy of his Passport. Furthermore, vide email dated 14.08.2024, the Company informed that they are experiencing some technical difficulties to file e-Form BEN-2 on V3 portal.

V. Since 14.08.2024, neither any information was received from the company nor e-Form BEN-2 was filed by the company on the MCA 21 portal. Accordingly, vide email dated 04.11.2024, the reason for non-filing of the said e-form was sought from the company to which no response has been received. The reason that the company was facing technical difficulties while filing eform BEN-2 for such a long period does not appear to be valid.

4. Overall Analysis

I. Initially, the company was of the opinion that the provisions pertaining to Section 90 relating to declarations of SBO are not applicable. However, during the pendency of the proceedings, the company obtained a legal opinion for filing the form for compliance of section 90. Accordingly, company sought time to file form BEN-2 upon receiving form BEN-1 from the SBO.

II. It is noted that the company has received form BEN-1 from the SBO [a copy of
the same has also been shared with this office] but till date it has failed to file eform BEN-2, despite the fact that the company on its own had given an undertaking of filing eform BEN-2.

III. There is a tacit admission of default by the company. However, the company is yet to complete its filings on the MCA portal.

5. The relevant provision of Section 90 – Register of significant beneficial owners in a company are as follows:

(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:

(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.

(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.

(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 lakh rupees.

(12) If any person wilfully 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.

Section 450 (Punishment where no specific penalty or punishment is provided)

“If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention Continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person.”

The relevant provision Companies (Significant Beneficial Owners) Rules, 2018:

2(1)(b) “control” means control as defined in clause (27) of section 2 of the Act.

2(1)(h) “significant beneficial owner” in relation to a reporting company means an individual referred to in sub-section (1) of section 90, who acting alone or together, or through one or more persons or trust, possesses one or more of the following rights or entitlements in such reporting company, namely:-

(i) holds indirectly, or together with any direct holdings, not less than ten per cent of the shares;

(ii) holds indirectly, or together with any direct holdings, not less than ten percent of the voting rights in the shares;

(iii) has right to receive or participate in not less than ten per cent. of the total distributable dividend, or any other distribution, in a financial year through indirect holdings alone, or together with any direct holdings;

(iv) has right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone:

Explanation III. – For the purpose of this clause, an individual shall be considered to hold a right or entitlement indirectly in the reporting company, if he satisfies any of the following criteria, in respect of a member of the reporting company, namely:-

(v) where the member of the reporting company is, –

(a) a pooled investment vehicle; or

(b) an entity controlled by the pooled investment vehicle,

based in member State of the Financial Action Task Force on Money Laundering and the regulator of the securities market in such member State is a member of the International Organization of Securities Commissions, and the individual in relation to the pooled investment vehicle,-

(A) is a general partner; or

(B) is an investment manager; or

(C) is a Chief Executive Officer where the investment manager of such pooled vehicle is a body corporate or a partnership entity.

Rule 2A Duty of the reporting company.

(2) Without prejudice to the generality of the steps stated in sub-rule (1), every reporting company shall in all cases where its member (other than an individual), holds not less than ten per cent. of its;-

(a) shares, or

(b) voting rights, or

(c) right to receive or participate in the dividend or any other distribution payable in a financial year,give notice to such member, seeking information in accordance with sub-section (5) of section 90, in Form No. BEN-4.

6. Adjudication of penalty: –

i. For the aforesaid reasons, Mr. Han-Gill Park, CEO of Atomy Co. Ltd. (holding company) is the SBO in relation to the subject company is liable to a penalty under section 90(10) of the Act, due to the failure to report at the time of initiation of the proceedings. However, it is noted that Mr. Park has subsequently submitted form BEN-1 to the company. The non-compliance is reckoned from 21.12.2020 till 08.07.2024 [one day before the submission of form BEN-1 to the company].

ii. The subject company and its officers were required to file BEN-2 within a period of 30 days after receipt of form BEN-1, which it has clearly failed to do so, despite the fact that the company had given a clear undertaking in this regard. The eform BEN-2 ought to have been filed by 09.08.2024. However, the continuous failure on the part of the company and its officers renders them liable under section 90 (11) for a period stretching from 10.08.2024 till date.

iii. Now in exercise of the powers conferred vide Notification dated 24th March, 2015, and having considered the reply submitted and hearings held in the matter, I do hereby impose the penalty as follows:

Table- I

7. Order:

a. Names of parties as mentioned in Table I above are hereby directed to pay the penalty amount as per column no. ‘E’ therein.

b. Pursuant to section 454(3)(b) of the Act, company, its officers are required to file e-form BEN-2 within a period of 60 days from the date of this order, after following the due process.

c. The said amount of penalty shall be paid through online by using the website mca.gov.in (Misc. head) in favor of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, within 90 days of receipt of this order, and intimate this office with proof of penalty paid.

d. Appeal against this order may be filed with the Regional Director (NR), Ministry of Corporate Affairs, B-2 Wing, 2nd Floor, Paryavaran Bhawan, CGO Complex, Lodhi Road, New Delhi-110003 within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website mca.gov.in] setting forth the grounds of appeal and shall be accompanied by a certified copy of the order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014].

e. Your attention is also invited to section 454(8) of the Act in the event of non­compliance of this order.

(Pranay Chaturvedi, ICLS)
Registrar of Companies
NCT of Delhi & Haryana

No. ROC/D/Adj/Order/Section 90/Atomy/8983-8987

Date: 09.12.2024