Introduction: The Ministry of Corporate Affairs (MCA) has recently taken stringent action against Fluiconnecto India Private Limited for failing to appoint a company secretary, which is in violation of the Companies Act, 2013. This non-compliance has resulted in a hefty penalty of Rs. 35 lakhs being imposed on the company. In this article, we will delve into the details of this case, the implications, and the broader context of appointing a company secretary.
Appointment of Adjudicating Officer: The MCA appointed an Adjudicating Officer in accordance with the Companies Act, 2013, and Companies (Adjudication of Penalties) Rules, 2014. This officer is responsible for adjudging penalties for violations of the Act.
Company Background: Fluiconnecto India Private Limited is a company registered under the jurisdiction of the Registrar of Companies, Karnataka. The company was incorporated in 2007 and operates from Bengaluru, Karnataka.
Suo-Motu Application: The company filed a suo-motu application acknowledging its non-compliance with the requirement to appoint a whole-time company secretary as per Section 203 of the Companies Act, 2013. This lapse occurred during two distinct periods, from June 2, 2015, to November 30, 2018, and again from December 1, 2019, to June 30, 2022.
Legal Provisions: Section 203(1) of the Companies Act, 2013 mandates that certain classes of companies, as prescribed, must have a whole-time key managerial personnel, including a company secretary. This requirement is reinforced by Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Vacancy Filling: Section 203(4) of the Act stipulates that if the office of any whole-time key managerial personnel is vacated, the vacancy should be filled by the Board within six months.
Adjudication Process: The adjudication process involved the company and its directors attending a physical hearing and making written submissions. This process revealed the extent of the violation.
Penalties Imposed: The violation of Section 203(4) of the Act resulted in significant periods of default for both the company and its directors. As a consequence, penalties have been imposed as follows:
- The company: Penalty of Rs. 5,00,000 for 2,221 days of default.
- Individual directors (Chandra Pratap, Jayaramachandran Giridhar, Giuseppe Bucci, Michael Peter Wallwork, Luca Pozzi, and Prashant Sadanand Shanbhag): Penalty of Rs. 5,00,000 each, varying periods of default.
Applicability of Lesser Penalty: The company’s status as a subsidiary of a foreign company means that the provisions allowing for a lesser penalty do not apply in this case.
Payment and Compliance: The company and its directors have been directed to pay the specified penalties within 90 days from the date of the order. Payment must be made online using the MCA website. It is essential to file Form INC-28 and attach a copy of the order and payment challans.
Appeal Process: Those subject to the penalties have the option to file an appeal with the Regional Director (South Part Region), Hyderabad, within 60 days from the date of receiving the order.
Non-Compliance Consequences: Non-compliance with the order can lead to further penal actions under Section 454(8) and Section 454(8)(0) of the Companies Act, 2013.
Conclusion: The Ministry of Corporate Affairs, in its endeavor to ensure corporate compliance, has imposed a substantial penalty on Fluiconnecto India Private Limited and its directors for failing to appoint a company secretary in violation of the Companies Act, 2013. This case serves as a reminder of the importance of adhering to statutory requirements and the potential financial implications of non-compliance in the corporate world. It underscores the responsibility of companies and their directors to uphold governance standards and fulfill legal obligations.
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MINISTRY OF CORPORATE AFFAIRS
Registrar of Companies, Karnataka
Kendriya Sadan, 2nd Floor, ‘E’ Wing,
Koramangala, Bengaluru – 560 034
Phone : 080-25537449/2/33105
E-mail ID: [email protected]
File No. ROC(8)/Adj-Ord454-203/Flukonnecto/Co.No.111072/2023/ Date: 09.08.2023
ORDER OF ADJUDICATION OF PENALTYALNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALITES) RULES. 2014 FOR VIOLATION OF PROVISIONS OF SECTION 203 OF THE COMPANIES ACT, 2013 READ WITH RUI ES (AS AMENDED FROM TIME TO TIME) FRAMED THEREIN BY FLUICONNECTO INDIA PRIVATE LIMITED
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II dated 24.032015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter referred to as Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of the Companies Act, 2013.
2. The company, Fluiconnocto India Private Limited (hereinafter referred to as Company) was incorporated on 08.08.2007 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka with its registered office situated at No. 156, 59′ Main, Peenya Industrial Suburb-II Stage Bengaluru, Karnataka — 560058.
3. The company has filed a suo-motu application on 16.03.2023 regarding non-appointment of whole-time company secretary i.e. violation of section 203 of the Act. The company has submitted that its paid-up capital crossed the required threshold of Rs. 5 crores on 02.06.2015 and it was required to appoint a company secretary from this date, but it has failed to appoint a company secretary for the period starting from 02.06.2015 to 30.11.2018 and again from 01.12.2019 to 30.06.2022 after the resignation of the incumbent company secretary.
4. As per section 203(1) of the Act, every company belonging to such class or classes of companies as may be prescribed shall have whole-time key managerial personnel including company secretary and as per Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules. 2014, every company other than a company covered under rule 8 which has a paid-up sham capital of Rs. 5 crore or more shall have a whole-time company secretary and this threshold was further increased to Rs. 10 crore or more applicable in respect of financial years commencing on or after 01.04.2020.
5. Further, as per section 203(4) of the Act, if the office of any whole-time key managerial personnel is vacated, the resulting vacancy shall be fills-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.
6. Pursuant to the adjudication application filed by the company, Notice of hearing was sent on 15.05.2023 and physical hearing was held on 24.052023. It was attended by Mr. Shripad G Bhat and Ms. Sangeetha H N, practicing company secretaries and authorised representatives of the company and the directors viz. Mr. Chandra Pratap, Mr. Jayaramachandra Giridhar, Mr. Giuseppe Bucci, Mr. Luca Pozzi and Mr. Prashanth Shanbag. However, no representation from Mr. Michael Peter Wallwork the erstwhile director, was received. The company thereafter made a written submission dated 30.05.2023 providing the details of its capital structure and changes made thereto.
7. The company and its directors have violated the provisions of section 203(4) of the Act mentioned above and the default period is as provided below:
|
S. No. |
Particulars | Default 1 | Default 2 | Total period of default |
| 1. | Company | 02.06.2015 to 30.112018 1278 days | 01.122019 to 30.06.2022 943 days | 2221 days |
| 2. | Chandra Pratap |
02.06.2015 to 30.112018 1278 days | 01.122019 to 3006.2022 943 days | 2221 days |
| 3. | Jayaramachan dran Giridhar | 02.062015 to 30.112018 1278 days | – | 1278 days |
| 4. | Giuseppe Bucci | 06.072015 to 30.112018 1244 days | – | 1244 days |
| 5. | Michael Peter Wallwork | 28.09.2015 to 28.072017 670 days | – | 670 days |
| 6. | Luca Pozzi | 24.102017 to 30.112018 403 days | 01.12.2019 to 3006.2022 943 days | 1346 days |
| 7. | Prasham Sadanand Shanbhag |
– | 01.12.2019 to 30.06.2022 943 days | 943 days |
8. As per section 203(5) of the Act if any company makes any default in complying with the provisions of this section, such company shall be liable to a penalty of five lath rupees and every director and key managerial personnel of the company who Is In default shall be liable to a penalty of fifty thousand rupees and where the default is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such default continues but not exceeding five lakh rupees.
9. It is seen that the company is a subsidiary of a foreign company and does not fall under the definition of a small company as per the provisions of section 2(85) of the Companies Act, 2013. Therefore, the provisions of imposing lesser penalty as per the section 4468 of the Act shall not be applicable in this case.
10. Therefore, having considered the facts and circumstances of the case and the submissions made by the company and present / past directors through their authorised representatives, in view of the above said violations of non-appointment of company secretary under the provisions of section 203 of the Act read with corresponding rules, in exercise of the powers vested under section 454(3)(a) of the Companies Act 2013, I do hereby impose penalty in the following manner on the company and the directors / officers who were in default of the offence committed:
| S. No. | Particulars | Period of default |
Maximum penalty | Penalty imposed | |
| 1 | Company | 2221 days | Rs. 5,00,000 | Rs. 5.00.000 | |
| 2. | Chandra Pratap | 2221 days | Rs. 5.00.000 | Rs. 5,00,000 | |
| 3. | Jayaramachandran Giridhar | 1278 days | Rs. 5,00,000 | Rs. 5,00,000 | |
| 4. | Giuseppe Bucci | 1244 days | Rs. 5,00.000 | Rs. 5.00,000 | |
| 5. | Michael Peter Walhvork | 670 days | Rs. 5,00,000 | Rs. 5,00,000 | |
| 6. | Luca Pozzi | 1346 days | Rs. 5,00,000 | Rs. 5,00,000 | |
| 7. | Prashant Sadanand Shanbhag | 943 days | Rs. 5.00000 | Rs. 5,00,000 | |
11. The company and its directors / key managerial personnel who are in default are hereby directed to pay the penalty amount as tabulated above, within 90 days from the date of receipt of this Order and file Form INC-28 attaching a copy of the Order and payment challans. In case of directors, such penalty amount is required to be paid out of their own funds. The noticee shall pay the said amount of penalty online by using the website vnvw.mca.gov.in (Miscellaneous head) specifying the details of this Order and the name of the noticee who is paying the penalty.
12. Appeal, if any, against this Order may be filed with the Regional Director (South Fart Region). Hyderabad within a period of 60 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.
13. Your attention is also invited to section 454(8) of the Companies Act 2013 in case of non-compliance of this Order wherein necessary penal action will be initiated under section 454(8)60 and 454(8)(0) of the Companies Act. 2013 against the company and directors / key managerial personnel who are in default without further notice in the matter.
14. The company is required to serve a copy of this Order on the director(s)/ officer(s)-in-default mentioned above ‘in terms of provisions of section 20 of the Companies Act, 2013.
(Sanjay Sood)
Registrar of Companies, Karnataka
and Adjudicating Officer
