MCA imposes Penalty on Chimsen Tech for SBO Non-Compliance

Registrar of Companies, Uttar Pradesh, issued an adjudication order regarding Chimsen Technology Private Limited’s (CIN: U72900UP2018FTC101025) non-compliance with Section 90 of the Companies Act, 2013, concerning the declaration of significant beneficial ownership (SBO). The company delayed filing e-form BEN-2, which is required to declare SBOs. This violation persisted for 1,253 days from December 21, 2020, to May 27, 2024. The adjudication imposed penalties totaling ₹8,00,000, with ₹5,00,000 on the company and ₹1,00,000 each on three directors: Peng Yin, Pharung Ngamchuiyo Dorinah, and Neha Sayal.

The order detailed that the company failed to issue form BEN-4 and delayed compliance despite notices and hearings. It acknowledged procedural challenges cited by the company but emphasized that the default was established based on evidence. The company filed the required e-form BEN-2 on May 28, 2024, after delays. The penalty must be paid within 90 days, with provisions for appeal to the Regional Director (Northern Region), Ministry of Corporate Affairs, within 60 days. Non-compliance with this order may attract further action under Section 454(8) of the Companies Act, 2013.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF
COMPANIES Uttar Pradesh
37/17, Westcott Building, The Mall,
Kanpur — 208001 (U.P.)
Phone : 0512 — 2310443/2310227

Order No. 03/28/SBO/UP/2024/Chimsen/4989 to 4992 Dated: 21/12/2024

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 FOR VIOLATION OF PROVISONS OF SECTION 90 OF THE COMPANIES ACT, 2013.

IN THE MATTER OF CHIMSEN TECHNOLOGY PRIVATE LIMITED

(CIN: U72900UP2018FTC101025)

Date of hearing: 29.05.2024 and 12.06.2024

Present on behalf of Applicants: Mr. Mohd. Asim, Practicing Company Secretary, on 29.05.2024 and no one appeared on 12.06.2024.

1. The Ministry of Corporate Affairs vide its Gazette notification no A-42011/112/201.4-Ad.11 dated 24.3.2015, has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter known as Act) read with Companies (Adjudication of Penalties) Rules, 2014. for adjudging penalties under the provisions of this Act.

2. The Company CHIMSEN TECHNOLOGY PRIVATE LIMITED (hereinafter as “the reporting company”) has been registered under the provisions of the Companies Act, 2013 on 16.02.2018, and is having its registered office situated at First Floor Muniram Complex, Main Market, Aichher, Greater Noida 201308, Noida, Gautam Buddha Nagar, Uttar Pradesh, 201308, India. The authorized share capital of the Company is Rs. 1,10,000/- .

3. The shareholding details of `the reporting company’ as per list of shareholders attached to c-form MGT-7 for FY 2022-23 is as follows: –

4. That the provisions of the Companies Act, 2013 reads as follows:-

That the provisions of Section 90 of the Companies Act, 2013 reads:-

Section 90:- (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:

Provided that the Central Government may prescribe a class or classes of persons who shall not be required to make declaration under this sub-section.

(2) Every company shall maintain a register of the interest declared by individuals under sub­section (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) The register maintained under sub-section (2) shall be open to inspection by any member of the company on payment of such fees as may be prescribed.

(4) 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.

(6) The information required by the notice under sub-section (5) shall be given by the concerned person within a period not exceeding thirty days of the date of the notice.

(7) The company shall—

(a) where that person fails to give the company the information required by the notice within the time specified therein; or

(b) where the information given is not satisfactory, apply to the Tribunal within a period of fifteen days of the expiry of the period specified in the notice, for an order directing that the shares in question be subject to restrictions with regard to transfer of interest; suspension of all rights attached to the shares and such other matters as may he prescribed.

(8) On any application made under sub-section (7), the Tribunal may, after giving an opportunity of being heard to the parties concerned, make such order restricting the rights attached with the shares within a period of sixty days of receipt of application or such other period as may be prescribed.

(9) The company or the person aggrieved by the order of the Tribunal may make an application to the Tribunal for relaxation or lifting of the restrictions placed under sub-section (8), within a period of one year from the date ofsuch order:

Provided that if no such application has been filed within a period of one year from the date of the order under sub-section (8), such shares shall be transferred, without any restrictions, to the authority constituted under sub-section (5) of section 125, in such manner as may be prescribed; (9A) The Central Government may make rules for the purposes of 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 (44), fails to do so or denies inspection as provided therein, the company shall be liable to a penalty of one latch 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 willfully 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,

5. It is pertinent to mention herein that inquiry report under Section 208 of the Companies Act, 2013 was submitted to the Directorate on 29.04.2022. The shares of reporting company in majority (99.99% shares) are held by Shenzhen Chimsen Technology Co. Ltd, China (“Shenzhen”). On examination of the filings made by ‘the reporting company’ in MCA-21 Registry till 15.02.2024- (i.e. the date of issuance of letter) there was no e-form BEN-2 filed by the reporting company and it was reason to believe that ‘the reporting company’ ought to have made compliance with Section 90 of the Companies Act, 2013 i.e. declaration of beneficial ownership by filing c-form 13EN-2 of The reporting company’ till the time of issuance of notice under Section 206(1) of the Act vide letter dated 15.02.2024. However, the reporting company did not submit any reply to the letter dated 15.02.2024 issued by this office.

6. There existed sufficient reason(s) that ‘the reporting company’ ought to have declared its significant beneficial owner in terms of Section 90 r/w the Companies (Significant Beneficial Owners) Rules, 2018 of the Companies Act, 2013, (herein after referred as SBO Rules). Hence, a Show Cause Notice (SCN) was issued to ‘the reporting company’ and its directors for non­compliance of Section 90 r/w Sl30 rules made thereunder, vide letter dated 26.04.2024 and a date of hearing was fixed for 20.05.2024.

7. Mr. Mohd Asim, Practicing Company Secretary, appeared on behalf of the Company on the date of hearing i.e. 20.05.2024 and did not carry along with himself the duly certified Board Resolution authorizing him to represent and the original Power of Attorney in his name. Further, even in the copy of Power of Attorney, his signatures were not duly attested or witnessed. Hence, the authorized representative requested for next date of hearing and the same was fixed for 29.05.2024.

8. Mr. Mohd Asim, Practicing Company Secretary, appeared on behalf of the Company on the date of hearing i.e. 29.05.2024 and submitted reply dated 17.05.2024, duly signed by director of the Company. In the reply, the Company has admitted that provisions of Section 90 of the Companies Act, 2013 apply to the Company but they could not comply with the same as they were not aware of it earlier. Further, the Company stated that it had started the process of filing form BEN-2 to make declaration of SBO as per Section 90 of the Companies Act, 2013. The Company also mentioned that it needs some time since the significant beneficial owner is a non-resident and there are procedural issues in getting the documents apostilled. The Company also requested for another opportunity to present the matter.

9. Thereafter, further clarifications and information and documents were sought from the reporting company through mail dated 31.05.2024. The clarifications raised by the Registrar basically required the details of the Ultimate Beneficial Owner (U130) disclosed to the Banks in India for ‘the reporting company’ and to furnish the U130 details filed by the holding company in the host country, list of employees, details of BEN-4 issued, etc.

10. The reporting company furnished reply dated 20.06.2024 in which it is stated that the Company has not issued form BEN-4 to the significant beneficial owner. The Company also submitted the list of employees, details of bank accounts etc. However, the reporting company did not submit any clarification on the UBO declaration given to the banks.

11. On examination of the records of the company at MCA21 Registry, it was found that the Company had filed e-form BEN-2 vide SRN 1⁷18 on 28.05.2024 thereby naming Mr. Feng Yin as the Significant Beneficial Owner by virtue of holding 99.99% shares of the company. As mentioned in e-form BEN-2, this beneficial interest was acquired by him on 20.03.2018. As per the attachment to e-form BEN-2, the declaration dated 17.05.2024 in form BEN-1 from Mr. Feng Yin was received by the Company.

12. The reporting company replied vide letter dated 20.06.2024 that form BEN-4- was not issued. However, the holding company’s shareholder filed BEN-1 i.e. declaration on 17.05.2024., which proves that compliance of Section 90 was applicable on reporting company.

On examination of the records and documents of holding and reporting company, it is observed that Mr. Feng Yin is holding relevant shareholding from 20.03.2018, which means that he has to give declaration in form BEN-1 and subsequently the company would have filed e-form BEN-2. At present, the declaration form BEN-1 has been filed and the company has filed BEN-2 on 28.05.2024. vide SRN F95794418. As such, there is delay in compliance of Section 90 of the Companies Act, 2013.

13. Adjudication of Penalty:

Taking in consideration the above facts based on the submissions made by the reporting company and the documentary information and evidences filed by them in response to the SCN issued by the Registrar, it becomes evident that the reporting company has made delay in filing e-form BEN-2.

!laving arrived at this conclusion, the default u/s 90 r/w SBO Rules under the Companies Act, 2013, stands established.

The default period is counted from the date of decriminalization of default w.e.f. 21.12.2020 till the date of issuance of filing of e-form BEN-2 i.e. 27.05.2024 for violation of Section 90 (4A) r/w SBO Rules made thereunder and the default period is for 1253 days.

A. Calculation of Penalty imposed for violation of Section 90 r/w 5130 Rules made there under of the Companies Act, 2013:-

15. The Noticee shall pay the amount of penalty by way of e-payment [available on Ministry website www.mca.gov.in] under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 days of receipt of this order and intimate this office with proof of penalty paid.

16. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodi Road, New Delhi, within a period of sixty 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 [Section 4.54(5) & 4.54(6) of the Act, read with Companies (Adjudication of Penalties) Rules, 2014].

17. Attention is also invited to Section 454(8) of the Companies Act, 2013, in the event of non­compliance of this order. In case appeal is made, O/o the Registrar of Companies, U.P., may be informed along with the penalty imposed and the payments made.

( Seema Rath)
Registrar of Companies & Adjudicating Officer
Uttar Pradesh, Kanpur.

03/28/SBO/UP/2024/Chimsen/4989 to 4992

Dated : 21-12-2024