Issue and Transfer of Share in non-dematerialised form: MCA Imposes Penalty

Issue and Transfer of Share in non-dematerialised form: MCA Imposes Penalty on Vridhi Finserve Home Finance Limited

The Registrar of Companies, Karnataka, has issued an order of adjudication of penalty under Section 454 of the Companies Act, 2013, read with Rule 3 of the Companies (Adjudication of Penalties) Rules. 2014. The penalty is imposed on Vridhi Finserve Home Finance Limited for the violation of provisions of Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Background: Vridhi Finserve Home Finance Limited, a company incorporated on 05.01.2022, filed a suo-motu adjudication application on 09.08.2023, acknowledging a violation. The violation pertains to the issuance of 10,000 equity shares in physical mode on 25.01.2022 and the subsequent approval of the transfer of 4,990 shares in physical mode on 20.06.2022 without prior dematerialization.

Rules Violated: The company violated Rule 9A(1)(a) and Rule 9A(3)(a) of the Companies (Prospectus and Allotment of Securities) Rules, 2014. Rule 9A(1) mandates that every unlisted public company shall issue securities only in dematerialized form. Rule 9A(3) outlines the dematerialization requirements for holders of securities of an unlisted public company, especially concerning transfers.

Adjudication Process: After the adjudication application, a hearing was conducted on 26.09.2023, attended by the Company Secretary and Director and Chief Financial Officer of Vridhi Finserve Home Finance Limited. Further clarifications were sought, and the company submitted the required clarifications on 27.09.2023.

The company informed that it had rectified the default by issuing shares to initial subscribers and transferees in dematerialized mode. Documentary evidence, such as NSDL letters for ISIN activation and crediting equity shares in the demat account, was provided as proof of compliance.

Penalties Imposed: Considering the violation of Rule 9A(1)(a) and Rule 9A(3)(a), penalties were imposed as follows:

1. Vridhi Finserve Home Finance Limited (Company): Rs. 10,000 for each violation, totaling Rs. 20,000.
2. Sunku Sridevi Ram (Director): Rs. 10,000 for each violation, totaling Rs. 26,000.
3. Sunku Badari Sukumar (Director): Rs. 10,000 for each violation, totaling Rs. 20,000.
4. Doleshwar Raj Sunku (Director): Rs. 10,000 for each violation, totaling Rs. 20,000.

Payment and Appeal: The company and its directors are directed to pay the penalty amount within 90 days from the date of receipt of the order. The penalty is to be paid online through the MCA website, and the payment details, along with a copy of the order, are to be filed using Form INC-28.

An appeal against this order can be filed with the Regional Director (South East Region), Hyderabad, within 60 days from the date of receipt of the order.

Non-compliance with the order may result in further penal action, including fines and other legal consequences, as per the provisions of Section 454(8) of the Companies Act, 2013.

The company is also required to serve a copy of this order on the mentioned directors/officers as per the provisions of Section 20 of the Companies Act, 2013.

This order concludes the adjudication proceedings against Vridhi Finserve Home Finance Limited for the specified violation.

***

Registrar of Companies, Karnataka
Kendriya Sadan, 2nd  Floor, ‘E’- Wing,
Koramangala, Bengaluru – 560 034
Phone : 080-25537449/25633105
E-mail ID : [email protected]

File No. ROC(B)/Adj.Ord.454-Rule 9A(1) & 9A(3)(a)/Vridhi/Co.No.156307/2023/

Date: 30.11.2023

ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALITIES) RULES , 2014 FOR VIOLATION OF PROVISIONS OF RULE 9A OF THE COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES ) RULES, 2014 BY VRIDHI FINSERVE HOME FINANCE LIMITED

Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Adll dated 24.03.2015 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, Vridhi Finserve Home Finance Limited (hereinafter referred to as Company) having CIN: U65999KA2022PLC156307 was incorporated on 05.01.2022 and is presently registered under the jurisdiction of Registrar of Companies. Karnataka and the registered office of the company is presently situated at No.38. 1¹¹ floor, GKR Sapthagiri. Vaishtadhama, it Cross, Off C81 Road, Ganganagar R T Nagar, Bangalore – 560032.

3. The company has filed a suo-motu adjudication application on 09.08.2023 stating that the company has issued 10,000 equity shares to the subscribers in physical mode on 25.01.2022. Further, the company’s Board has also approved the transfer of 4990 shares dated 20.06.2022 in physical mode without getting those dematerialized before the transfer. The company has filed this adjudication for the violation of the provisions of Rule 9A(1)(a) and 9A(3)(a) of the Companies (Prospectus and Allotment of Securities) Rules, 2014

4. As per Rule 9A(1) of the Companies (Prospectus and Allotment of Securities) Rules. 2014, every unlisted public company shall issue the securities only in dematerialised form and facilitate dematerialisation of all its existing securities.

5. As per Rule 9A(3) of the Companies (Prospectus and Allotment of Securities) Rules. 2014, every holder of securities of an unlisted public company, (a) who intends to transfer such securities on or after 2nd October, 2018, shall get such securities dematerialised before the transfer or (b) who subscibes to any securities of an unlisted public company (whether byway of private placement or bonus shares or rights offer) on or after 2nd October, 2018 shall ensure that all his existing securities are held in dematerialized form before such subscription

6. Pursuant to the adjudication application filed by the company, Notice of hearing was sent on 18.09.2023 and physical hearing was held oft 26.09.2023 which was attended by Ms. Kalaivani, Company Secretary and Mr Sunil Mehta, Director and Chief Financial officer of the company, who made their submissions before the Adjudicating Officer. They were directed to submit further clarifications in the matter with respect to compliance of Rule 9A(1) of Companies (Prospectus and Allotment of Securities) Rules. 2014 which was submitted on 27.09.2023. As per the clarifications submitted by the company, it was informed that the company has made good the default by issuing the shares for initial subscribers and the transferees in demat mode. NSDL letters for activation of ISIN dated 08.08.2022 and letter dated 17.08.2022 for crediting equity shares in the demat account were also submitted as compliance to this office.

7. It is seen that the company is a public 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 section 4468 of the Act shall not be applicable in this case.

8. As per provisions of section 450 of the Act, 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, 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 be liable to a penalty of ten thousand rupees and in case of continuing contravention, with a further penalty of one thousand for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person.

9. Therefore, having considered the facts and circumstances of the case and the submissions made by the company/ director/ key managerial personnel through their authorised representatives, in view of the above said violation of Rule 9A(1)(a) and Rule 9A(3)(a) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 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:

10. The company and its directors key managerial personnel 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 www.mca.gov.in (Miscellaneous head) specifying the details of this Order and the noticee who is paying the penalty.

11. Appeal, if any, against this Order may be filed with the Regional Director (South East Region), Hyderabad within a period of 60 days from the date of receipt of this Order in Form AD) setting forth the grounds of appeal and shall be accompanies by a certified copy of this Order.

12. 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 454(8)(i) and (ii) of the Companies Act. 2013 against the company and directors / key managerial personnel without further notice in the matter

13. 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