Ministry of Corporate Affairs (MCA) has penalized Anheuser Busch InBev India Limited for failing to comply with Section 149 of the Companies Act, 2013, regarding independent directors’ meetings. The independent directors did not hold a mandatory separate meeting for FY 2021-22, citing non-availability of directors due to the aftermath of COVID-19. Under Section 172, the company and defaulting officers are fined ₹50,000, with an additional ₹500 per day for 748 days of delay, totaling ₹9,00,000. The adjudication officer considered factors like the company’s size, the nature of the default, and its impact on public interest. The penalty must be paid through the MCA portal within 90 days of the order. Non-compliance may result in further fines or imprisonment for the defaulting officers. An appeal can be filed within 60 days with the Regional Director, Western Region. The company must also submit proof of payment and file Form INC-28 on the MCA portal.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE
AFFAIRS
OFFICE OF THE REGISTRAR OF
COMPANIES
MUMBAI – 400 002
Website : www.mca.gov.in
e-Mail ID: roc. Mumbai@mca.gov.in
Date: 7 JAN 2025
No. ROC/MUM/Adj/2024/Section 149(1)/TPI/RD-13 3331 to 3337
Order for Penalty under Section 454 for violation of Section 149 r/w caluse 11′ of
Sch IV of the Companies Act, 2013
IN THE MATTER OF ANHEUSER BUSCH INBEV INDIA LIMITED
(CIN: U65990MH1988PLC049687)
(I) Adjudicating Officer: B. Mishra, ICLS, ROC, Mumbai
(II) Presenting Officer: Rujuta Bankar, ICLS, AROC, Mumbai
(III) Authorised person on behalf of the Company: – Loveneet Handa, Practicing Company Secretary.
APPOINTMENT OF ADJUDICATING OFFICER:
1. Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-dated 24.03.2015 appointed undersigned 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 for adjudging penalties under the provisions of this Act.
COMPANY:
2 The company viz ANHEUSER BUSCH INBEV INDIA LIMITED (herein after known as ‘The Company’) is a registered company with this office under the provisions of the Companies Act, 2013 having its registered office as per MCA21 Registry at address 7TH FLOOR, CNERGY, APPASAHEB MARATHE MARG, PRABHADEVI, MUMBAI, MAHARASHTRA, MH 400025, INDIA.
3 LAW RELATING TO APPOINTMENT OF INDEPENEDENT DIRECTOR IN COMPANY:
149. Company to have Board of Directors
(1) Every company shall have a Board of Directors consisting of individuals 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 of fifteen 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 woman director.]
(2) Every company existing on or before the date of commencement of this Act shall within one year from such commencement comply with the requirements of the provisions of sub-section (1).
(3) Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days during the financial year:
Provided that in case of a newly incorporated company the requirement under this sub-section shall apply proportionately at the end of the financial year in which it is incorporated.
(4) Every listed public company shall have at least one-third of the total number of Directors as independent Directors and the Central Government may prescribe the minimum number of independent Directors in case of any class or classes of public companies.
Explanation. — For the purposes of this sub-section, any fraction contained in such one-third number shall be rounded off as one.
(5) Every company existing on or before the date of commencement of this Act shall, within one year from such commencement or from the date of notification of the rules in this regard as may be applicable, comply with the requirements of the provisions of sub-section (4).
(6) An independent director in relation to a company, means a director other than a managing director or a whole-time director or a nominee director, —
4 [(a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience;]
(b) (i) who is or was not a promoter of the company or its holding, subsidiary or associate company;
(ii) who is not related to promoters or Directors in the company, its holding, subsidiary or associate company;
(c) who has or had no pecuniary relationship, other than remuneration as such director or having transaction not exceeding ten per cent. of his total income or such amount as may be prescribed, with the company, its holding, subsidiary or associate company, or their promoters, or Directors, during the two immediately preceding financial years or during the current financial year;]
(d)none of whose relatives —
(i) is holding any security of or interest in the company, its holding, subsidiary or associate company during the two immediately preceding financial years or during the current financial year:
Provided that the relative may hold security or interest in the company of face value not exceeding fifty lakh rupees or two per cent. of the paid-up capital of the company, its holding, subsidiary or associate company or such higher sum as may be prescribed;
(ii) is indebted to the company, its holding, subsidiary or associate company or their promoters, or Directors, in excess of such amount as may be prescribed during the two immediately preceding financial years or during the current financial year;
(iii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, its holding, subsidiary or associate company or their promoters, or Directors of such holding company, for such amount as may be prescribed during the two immediately preceding financial years or during the current financial year; or
(iv) has any other pecuniary transaction or relationship with the company, or its subsidiary, or its holding or associate company amounting to two per cent. or more of its gross turnover or total income singly or in combination with the transactions referred to in sub-clause (i), (ii) or (iii);]
(e) who, neither himself nor any of his relatives —
(i) holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed;
Provided that in case of a relative who is an employee, the restriction under this clause shall not apply for his employment during preceding three financial years.
(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of —
(A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; or
(B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten per cent. or more of the gross turnover of such firm;
(iii) holds together with his relatives two per cent. or more of the total voting power of the company; or
(iv) is a Chief Executive or director, by whatever name called, of any nonprofit organisation that receives twenty five per cent. or more of its receipts from the company, any of its promoters, Directors or its holding, subsidiary or associate company or that holds two per cent. or more of the total voting power of the company; or
(f) who possesses such other qualifications as may be prescribed.
(7) Every independent director shall at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the circumstances which may affect his status as an independent director, give a declaration that he meets the criteria of independence as provided in sub-section (6).
Explanation. — For the purposes of this section, “nominee director” means a director nominated by any financial institution in pursuance of the provisions of any law for the time being in force, or of any agreement, or appointed by any Government, or any other person to represent its interests.
(8) The company and independent Directors shall abide by the provisions specified in Schedule IV.
(9) Notwithstanding anything contained in any other provision of this Act, but subject to the provisions of sections 197 and 198, an independent director shall not be entitled to any stock option and may receive remuneration by way of fee provided under sub-section (5) of section 197, reimbursement of expenses for participation in the Board and other meetings and profit related commission as may be approved by the members.
Provided that if a company has no profits or its profits are inadequate, an independent director may receive remuneration, exclusive of any fees payable under subsection (5) of section 197, in accordance with the provisions of Schedule V.
(10) Subject to the provisions of section 152, an independent director shall hold office for a term up to five consecutive years on the Board of a company, but shall be eligible for reappointment on passing of a special resolution by the company and disclosure of such appointment in the Board’s report.
(11) Notwithstanding anything contained in sub-section (10), no independent director shall hold office for more than two consecutive terms, but such independent director shall be eligible for appointment after the expiration of three years of ceasing to become an independent director:
Provided that an independent director shall not, during the said period of three years, be appointed in or be associated with the company in any other capacity, either directly or indirectly.
Explanation. — For the purposes of sub-sections (10) and (11), any tenure of an independent director on the date of commencement of this Act shall not be counted as a term under those sub-sections.]
(12) Notwithstanding anything contained in this Act, —
(i) an independent director;
(ii) a non-executive director not being promoter or key managerial personnel, shall be held liable, only in respect of such acts of omission or commission by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently.
(13) The provisions of sub-sections (6) and (7) of section 152 in respect of retirement of Directors by rotation shall not be applicable to appointment of independent Directors.
Schedule IV Code for Independent Directors
VII. Separate meetings:
(1) The independent Directors of the company shall hold at least one meeting “in a financial year”, without the attendance of non-independent Directors and members of management;
(2) All the independent Directors of the company shall strive to be present at such meeting;
(3) The meeting shall:
(a) review the performance of non-independent Directors and the Board as a whole;
(b) review the performance of the Chairperson of the company, taking into account the views of executive Directors and non-executive Directors;
(c) assess the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their ditties.
FACTS ABOUT THE CASE:
4. The Company in its Adjudication Application dated 31/01/2024 received on 10/04/2024 stated that the Independent Directors of the Applicant Company failed to hold a separate meeting in accordance with Schedule IV of the Companies Act, 2013 for the FY 2021-22.
5. The Company in its Adjudication Application stated that the aforesaid default was caused due to non-availability of Independent Directors in aftermath of Covid-19 pandemic.
PENALTY PROVISION FOR VIOLATION:
6. 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 of fifty thousand, and in case 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.
HEARING AND REPLY OF THE COMPANY:
7. Mr. Loveneet Handa, Practicing Company Secretary being authorized representative of the Company attended the hearing in person on 24.07.2024.
8. Pursuant to the provision of Clause VII of Schedule IV of the Companies Act, 2013, states that “(1) The independent Directors of the company shall hold at least one meeting “in a financial year”, without the attendance of non-independent Directors and members of management;”
9. The Independent Directors of the Applicant Company failed to hold a separate meeting in accordance with Schedule IV of the Companies Act, 2013 for the FY 2021-22 and the aforesaid default was caused due to non-availability of Independent Directors in aftermath of Covid-19 pandemic.
10. It was further submitted by the authorized representative that the offence is not of such nature as to prejudice the interest of members or creditors of or others dealing with the Applicant Company in a significant manner and further declares that the nature of the offence has not affected public interest materially.
FINDINGS:
11.While adjudging quantum of penalty under Section 172 of the Act, the Adjudicating Officer have considered following factors for the reasons mentioned below:
| a. | Size of the Company (at the time of default) | Authorized Share Capital: – Rs 15,00,00,00,000 /- Paid up Capital: – Rs. 9,28,42,28,030/- |
| b. | Nature of business carried on by the company | Manufacturing — Food, beverages, tobacco products. |
| c. | Injury to public interest | Unquantifiable |
| d. | Nature of the default- | Default in compliance of Sec 149 of the Act. |
| e. | Repetition of the default | No |
| f. | The amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default | NA |
| g. | The amount of loss caused to an investor or group of investor or creditor, as a result of the default | NA |
12. The Independent Directors of the Applicant Company failed to hold a separate meeting in accordance with Schedule IV of the Companies Act, 2013 for the FY 2021-22. In view of requirement of 7 days notice and day of conduct of meeting ‘the period of default’ has been considered from 24.03.2022 till 10.04.2024 (i.e. notice period to conduct meeting for FY 2021-2022 till date of application).
13. In view of para 13 supra, the Company and officers in default are liable for penal provision u/s 172 of the Companies Act, 2013. Section 172 of the Companies Act, 2013 is reproduced as under:
172. Penalty
” 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 of fifhy thousand rupees, and in case 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
14. In exercise of the powers conferred on me vide Notification dated 24th March, 2015 and having considered the facts and circumstances of the case besides reply of the company after taking into account the factors mentioned in the relevant Rules followed by amendments in section 454(3) of the Companies Act, 2013, I am of the opinion that penalty shall be imposed for the default related to non-compliance of section 149(11) of the Act.
TOTAL PENALTY PAYABLE – Rs. 9,00,000/-
(R) The period of violation of provisions under Section 149 of the Companies Act, 2013 is from 24th March, 2022 ti1110th April, 2024 and delay is 748 days. As per signatory details available on MCA-21 portal, the above-mentioned individuals were Officers in default during the period of violation.
15. The company and its officers in default are hereby directed to pay the penalty amount as per the table above. In the director’s case such amount is required to be paid out of their own funds.
16. The Noticee shall pay the said amount of penalty through “Ministry of Corporate Affairs” portal and proof of payment be produced for verification within 90 days of receipt of this order.
17. Please note that as per Section 454(8)(i) of the Companies Act, 2013, where company does not pay the penalty imposed by the Adjudicating Officer or the Regional Director within a period of ninety days from the date of 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.
18. Where an officer of a company who is in default does not pay the penalty within a period of ninety days from the date of the receipt of the copy of the order, 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.
19. Therefore, in case of default in payment of penalty, prosecution will be filed under Section 454(8)(i) and (ii) of the Companies Act, 2013 at your own costs without any further notice.
20. Further, the company and its officers are hereby direct that the penalty amount shall be remitted from their own sources through MCA21 portal within 90 days from the date of receipt of order. The company needs to file INC-28 as per the provisions of the Act, attaching the copy of the adjudication order along with payment challans.
21. As per Section 454 of the Companies Act, 2013 read with the Companies (Adjudicating of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, appeal, if any, against this order may be filed in writing with the Regional Director, Western Regional, Ministry of Corporate Affairs, 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 the certified copy of this order.
22. In terms of the provisions of sub-rule (9) of Rule 3 of Companies (Adjudication of Penalties) Rules 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, copy of this order is being sent to the Company and Noticee/s and also to Office of the Regional Director, Western Region, Ministry of Corporate Affairs.
(B. Mishra)
Adjudication Officer and Registrar of Companies,
Maharashtra, Mumbai.
