The Ministry of Corporate Affairs (MCA) recently introduced an artificial intelligence mechanism called the Ministry of Corporate Affairs – Compliance Monitoring System (MCA-CMS) on the MCA 21 portal with an intent is to make compliance procedure simpler.

WHAT IS MCA-CMS?

Ministry of Corporate Affairs – Compliance Monitoring System (MCA-CMS) is the newly introduced online Compliance Monitoring mechanism that works on Artificial Intelligence (AI). The MCA-CMS will allow MCA to issue Show Cause Notice (SCN) to the defaulting Companies through online mode itself. The defaulting Companies are also required to submit their reply to the SCN through MCA-CMS.

HOW WILL THE SHOW CAUSE NOTICE ON MCA-CMS PORTAL LOOK LIKE?

Basis the modalities shared by MCA, the SCN shall be issued from the MCA-CMS portal at the registered email id of the defaulting Company.

This SCN will bear a CMS reference Number which may be in the following pattern:-

F.No. C/RCXXX/XXX/2019/XX/XX-XX

As per the format issued by MCA, the SCN will contain details of the non-compliance, including the relevant Section of the Companies Act, 2013 under which the notice has been issued and timelines for submitting the reply.

WHAT SHOULD COMPANY DO ON RECEIVING A SCN?

Upon receiving the SCN, the Company shall immediately serve a copy of the SCN to all the Directors and Key Managerial Personnels (KMPs) of the Company and it shall be deemed to have been served upon every officer in default of the Company in terms of Section 20 of the Companies Act, 2013.

Thereafter, the Company shall prepare the Reply to the SCN and submit the same alongwith requisite documentary evidence within due date on the MCS-CMS Portal quoting the CMS no. mentioned in the SCN.

WHAT IF NO REPLY TO SHOW CAUSE NOTICE IS SUBMITTED?

In case the Company / Director / KMPs fails to submit reply to the SCN within the prescribed timeline, it would be assumed that the Company has no explanation to offer in regard to the SCN.

As a result, the Registrar of Companies shall take penal actions against the Company, for violation of the provisions of the Companies Act 2013.

HOW TO FILE THE REPLY TO SHOW CAUSE NOTICE ON MCA-CMS?

  •  Log in to www.mcacms.gov.in and click on the link “Reply to show cause notice”;
  • Click on the relevant provision under which SCN has been issued;
  • Feed the CMS reference no. as mentioned in the SCN;
  • The system shall validated the CMS reference no. and upon successful validation, the person shall be required to click sent OTP tab. OTP shall be sent on the Email Id on which the SCN has been received;
  • Thereafter, the person can submit the reply;
  • One can submit the reply upto a maximum 480 words or can simultaneously submit the reply as a PDF attachment (2 PDF files max) and total size of the attachment should not exceed 50MB;
  • Click on the submit button once the reply is complete;
  • The System will show a Confirmation message of the reply submission and the action tab will show the Reply Status;
  • Reply once submitted cannot be altered.

IMPORTANT POINTS TO BE NOTED:

♦ Ensure that the Company’s email id is correct and accessible, since SCN, if any, shall be sent on the Company’s email id;

♦ Reply, if submitted through PDF file shall be on the letter head of the Company and duly signed by the authorised signatory. Request for an opportunity of being heard personally before passing any Order or imposing penalty must form part of the reply;

♦ Currently SCN under the MCA-CMS is being issued for non-compliance under Section 96 and 204 of the Companies Act, 2013. With time we may see other provisions of the Companies Act, 2013 getting covered under MCA-CMS;

♦ On submitting the Reply, the Adjudicating Officer shall pass an Order within 90 days of the date of issue of notice. In case an Order is passed after the aforementioned duration the reason for delay shall be recorded and no such Order shall be invalid merely because of its passing after the expiry of the period;

♦ If aggrieved by the Order of the Adjudicating Officer, the Company can file an appeal before the Regional Director, HAVING JURISDICTION IN THE MATTER in writing within 60 days from the date of the receipt of the Order.

The Article has been Co-authored alongwith CS Raju Shaw, Asstt. Company Secretary, Ramakrishna Forgings Limited.

Disclaimer: The entire contents of this article are solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation by the Author(s). The Author(s) of this Article do not constitute any sort of professional advice or a formal recommendation. The Author(s) has undertaken utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify and confirm the updates from the genuine sources before acting on any of the information’s provided hereinabove.

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3 Comments

  1. KeshavSadani says:

    The Directors would be required to individually submit the reply since the CMS reference numbers are different.

    However, when the Company is replying to the SCN that it has received, it is advisable that the Company, in its letter, should quote the CMS reference number of the SCN received by the Directors and request the Adjudicating Officer to club all the SCN (since subject matter is same) and dispose them accordingly.

  2. Rajesh says:

    If a company has 5 directors & if all directors have received SCN with seperate CMS Reference Numbers, is it necessary for all directors to reply or can one director reply on the company’s behalf quoting his CMS reference number

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