MCA imposes penalty for non-submission of BEN-1 and BEN-2

The Ministry of Corporate Affairs (MCA) has imposed penalties on M/s. Shivsu Canadian Clear Waters Limited for non-compliance with Section 90 of the Companies Act, 2013, concerning the filing of Form BEN-1 and BEN-2. The company, registered in Tamil Nadu, was found failing to declare its Significant Beneficial Owners (SBOs) as per the Act’s requirements. Following a notice issued on February 7, 2024, the company clarified that its majority shareholder was a non-individual entity, Canadian Clear Waters FZC, based in Dubai. However, the company failed to properly comply with reporting obligations under the Act. The company was also asked to submit declarations related to its shareholders and SBOs but did not meet the deadlines. As per the penal provisions of Section 90, companies must disclose their SBOs, and failure to do so results in penalties, starting from ₹50,000, escalating to ₹2 lakh for continuing violations. Moreover, penalties of up to ₹5 lakh can be imposed for corporate non-compliance. The company’s ongoing violations of these reporting obligations triggered this adjudication under Section 454 of the Companies Act. The penalties imposed are part of MCA’s efforts to enforce transparency in corporate ownership and ensure proper disclosure of significant beneficial ownership.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES, TAMIL NADU, ANDAMAN & NICOBAR ISLANDS, CHENNAI
II FLOOR, C- WING, SHASTRI BHAVAN, 26, HADDOWS ROAD, NUNGAMBAKKAM, CHENNAI- 6

F.NO.ROC/CHN/SHIVSU/ADJ/S.90/2024 DATE: 24 OCT 2024

ADJUDICATION ORDER UNDER SECTION 90 OF THE COMPANIES ACT, 2013

IN THE MATTER OF M/S. SHIVSU CANADIAN CLEAR WATERS LIMITED

1. Appointment of Adjudicating Officer: –

The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 has appointed Registrar of Companies, Chennai as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter referred as Act or Companies Act, 2013) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.

2. Company: –

Whereas the company viz M/s. Sliivsu Canadian Clear Waters Limited with CIN: U29309TN1989PLC017622(herein after referred as ‘ company’ or ‘ subject company’) is a registered company with this office under the Companies Act, 1956 having its registered office as per MCA21 Registry at No.3, Parivakkam Road, Leelavathy Nagar, Senneerkuppam, Poonamallee, Che:mai, Tamil Nadu 600056.

The financial & other details of the subject company as available on MCA-21 portal is stated as under:

3. Directors/KMPs during the period of violation:

• During the hearing, the authorized representative has informed that Mr. Eashwaran Padmanabhan was demised on 01.04.2020.

4. Section and Penal Provision as per Companies Act, 2013

Section 90 of the Companies Act, 2013- Register of significant beneficial owners in a company:

(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-Eve 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 sub-section (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.

(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.

Inserted by the Companies (Amendment)Act,2019 w.e.f 15.08.2019

(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 be prescribed.

(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 (4A), fails to do so or denies inspection as provided therein, the company shall be liable to a penalty of one lakh 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 wilfully 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

2A. of the Companies (Significant Beneficial Owners) Rules,2018: Duty of the reporting company.

(1) Every reporting company shall take necessary steps to find out if there is any individual who is a significant beneficial owner, as defined in clause (h) of rule 2, in relation to that reporting company, and if so, identify him and cause such individual to make a declaration in Form No. BEN-1.

(2) Without prejudice to the generality of the steps stated in sub-rule (1), every reporting company shall in all cases where its member (other than an individual), holds not less than ten per cent of its;-

a. shares, or

b. voting rights, or

c. right to receive or participate in the dividend or any other distribution payable in a financial year,

give notice to such member, seeking information in accordance with subsection (5) of Section 90, in Form No. BEN-4

*Rule 3 of the Companies (Significant Beneficial Owners) Rules,2018 :Declaration of Significant Beneficial Ownership wider Section 90 :

(1) On the date of commencement of the Companies (Significant Beneficial Owners) Amendment Rules, 2019, every individual who is a significant beneficial owner in a reporting company, shall file a declaration in Form No. BEN-1 to the reporting company within ninety days from such commencement.

(2) Every individual, who subsequently becomes a significant beneficial owner, or where his significant beneficial ownership undergoes any change shall file a declaration in Form No. BEN-1 to the reporting company, within thirty days of acquiring such significant beneficial ownership or any change therein.

*Substituted by the Companies (Significant Beneficial Owners) Amendment Rules, 2019, w.e.f 08.02.2019

Rule 4 of the Companies (Significant Beneficial Owners) Rules,2018-Return of significant beneficial owners in shares:

Upon receipt of declaration under rule 3, the reporting company shall file a return in Form No. BEN-2 with the Registrar in respect of such declaration, within a period of thirty days from the date of receipt of such declaration by it, along with the fees as prescribed in Companies (Registration offices and fees) Rules, 2014.

Rule 7 of the Companies (Significant Beneficial Owners) Rules,2018-.Application to the Tribunal:

7 The reporting company shall apply to the Tribunal,

i. where any person fails to give the information required by the notice in Form No. BEN-4, within the time specified therein; or

ii. where the information given is not satisfactory,

in accordance with sub-section (7) of Section 90, for order directing that the shares in question be subject to restrictions, including

a. restrictions on the transfer of interest attached to the shares in question;

b. suspension of the right to receive dividend or any other distribution in relation to the shares in question;

c. suspension of voting rights in relation to the shares in question;

d. any other restriction on all or any of the rights attached with the shares in question

5. Facts of the Case

A notice was issued to the subject company under Section 206(1) of the Companies Act, 2013 on 07.02.2024 to ascertain compliance of Section 90 of the Companies Act,2013 and rules made thereunder.

The Whole -time Director of the company Mr. Eashwaran Shivkumar vide email dated 05.03.2024 submitted that Form BEN-2 is not applicable to the company as majority stake, either directly or indirectly is not being held by an individual person/ ultimate beneficial owner in Canadian Clear Waters FZC, Dubai, the only Non- individual shareholder that his holding more than 10% equity in the company.

List of Equity shareholders of M/s. Shivsu Canadian Clear Waters Limited is as follows:

List of Preferential Shareholders of M/s. Shivsu Canadian Clear Waters Limited is as follows:

The Whole -time Director of the company Mr. Eashwaran Shivkumar vide letter dated 11.03.2024 submitted that M/s. Canadian Clear Waters FZC (the ” Investor Entity”) holds 11.06% of equity shares in the company as on date. After requesting the Investor Entity to declare their SBO, they have declared vide their letter dated 09.03.2024 that Mr. S.Jagadish, residing at Ajman Free Zone, Ajman, United Arab Emirates is the owner of the Investor Entity holding 100% stake in the Investor Entity. None of the individual shareholders from the company is holding any position as Shareholder in the Investor Entity.

Further, the Director of the company Mr. Chorimuthu Sathish Kumar vide letter dated 13.04.2024 submitted the list of shareholders of M/s. Prodeb Brewery Technology Belgum Pvt Ltd, M/s. Canadian Crystalline Water India Limited and M/s. Seppa Solutions Pvt Ltd.

The List of Equity shareholders of M/s.Prodeb Brewery Technology Belgium Pvt ltd is as follows:

The list of Equity shareholders of M/s. Canadian Crystalline Water India Limited is as follows:

List of Preference shareholders of M/s. Canadian Crystalline Water India Limited

List of Equity Shareholders of M/s. Seppa Solutions Pvt Ltd is as follows:

Further, the director Mr. Chorimuthu Sathish Kumar informed that as per Clause V of Memorandum of Association of the Company, the company has two classes of shares namely Equity shares and 3% Cumulative Convertible Preference Shares and Mr. S.Jagadish holds 100% stake in the Foreign entity (M/s. Canadian Clear Waters FZC).

After that ROC Chennai had issued notice U/s. 206(3) of the Companies Act,2013 on 08.07.2024 to the company and directors of the company wherein it was directed to

a. Furnish the relationship between Mr. Shivakumar Eashwaran, Mr.Sushilkumar Eashwaran, Mrs.Eashwaran Vatsala and Mr.Padmanabhan Eashwaran

b. Furnish details of actions taken by the company to identify its Significant Beneficial Owner in terms of Section 90 of the Companies Act,2013

c. Provide details of all the BEN-4 notices issued by the company

d. Provide details of the application moved by the company to the Hon’ble NCLT in terms of Section 90(7) of the Companies Act, 2013 etc

The Whole-time Director of the company M/s. Eashwaran Shivkumar vide letter dated 18.07.2024 requested 10 days’ time to submit the requisite information. After that Mr. Chorimuthu Sathishkumar,director vide letter dated 30.07.2024 submitted that Mr. Padmanabhan Eashwaran is father of Mr. Shivkumar Eashwaran and Mr. Sushilkumar Eashwaran and husband of Mr. Eashwaran Vatsala the mutual relationships to be construed accordingly. Further, submitted that Mr. S.Jagadish is the individual who exercise control or significant influence on the company in terms of the provisions of Section 90 of the Companies Act, 2013 r/w rules made there under. The company has issued Form BEN-4 to Canadian Clear Waters FZC via email on 27th July 2024.

The shareholding of M/s. Canadian Clear Waters FZC as on date is:

6. Issue of Adjudication Notice:

Based on reply of the company and shareholding data submitted by the company, there are Significant Beneficial Owners who are not reported by the company. Hence, there is a violation of Section 90 of the Companies Act,2013. The Adjudicating Authority had issued notice No. Roc.Chn/SHIVSU/S.90/ADJ/2024 dt 20.08.2024 to the company and Officers in default.

7. Reply of Company and Directors for Adjudication Notice issued:

No reply has been received from the company and its directors.

8. Adjudication Hearing:

The Adjudicating Authority had issued notice of hearing on 04.09.2024 by fixing the hearing on 10.09.2024. Pursuant to the notice dt 04.09.2024, Mr.Shanmugam , General Manager of the company appeared before the Adjudicating Authority on 10.09.2024 on behalf of the company and Officers in default. Further, submitted a letter of Mr. Eashwaran Sushilkumar wherein it was stated that Mr. Eashwaran Padmanabhan (DIN: 01929529) resigned as Managing Director of the company w.e.f 31.03.2019, subsequently he expired on 01.04.2020. Mrs. Eashwaran Vatsala (DIN: 02464486) who was a Whole-time Director of the company till 23.03.2019, subsequently she expired on 21.03. 2024.Further, requested to drop the Adjudication proceedings against the said directors under the provisions of Section L)0(4) of the Companies Act,2013.

The Authorized representative made submissions that M/s. Canadian Clear Waters FZC holds more than 10% of Equity shares in the share capital of M/s. Shivsu Canadian Clear Waters Limited. The company tried to contact Mr. Jagadish, who holds 100% of the paid-up share capital of M/s. Canadian Clear Waters FZC. But no response has been received from his end. Due to this the company could not file Form BEN-2 with MCA, despite best efforts in this regard. Hence, consider the matter accordingly.

After that the Whole-time Director of the company vide letter dated 09.10.2024 submitted copy of the BEN-4 notice sent to the company on 24.07.2024 and copies of emails sent to Mr.Jagadish. Finally requested to take lenient view in the matter while passing orders under the provisions of Section 90 of the Companies Act,2013.

9. The Ministry of Corporate Affairs vide notification no. G.S.R.630 (E) dated 10.2024 stated that in the Companies (Adjudication of Penalties) Rules,2014, in sub-rule (1) of rule 3A, the following proviso shall be inserted, namely: –

“Provided that the proceedings pending before the Adjudicating Officer or Regional Director on the date of such commencement shall continue as per provisions of these rules existing prior to such commencement”.

Here, the adjudication proceedings have initiated prior to 16th day of September 2024, effective date of the Companies (Adjudication of Penalties) Amendment Rules, 2014.

10. Analysis of Non- compliance of the Companies Act, 2013

It is noticed that the company has issued BEN-4 notice to its member M/s. Canadian Clear Waters FZC on 27.07.2024. Mr. S.Jagadish who holds Significant Beneficial Ownership in shares has not submitted declaration in BEN-1. The company has not applied 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 as per Section 90(7) of the Companies Act,2013. Further, the company could not filed e-form BEN-2 — return to register in respect of declaration under Section 90 of the Companies Act,2013. Thereby, violated Section 90(4) of the Companies Act,2013 and the company and Officers in default are liable for Penalty under Section 90(11) of the Companies Act,2013.

Further, in this case Mr.S.Jagadish who holds Significant Beneficial Ownership in shares, has not submitted declaration in BEN-1, which led to violation of Section 90(1) of the Companies Act,2013, and he is liable for penalty under Section 90(10) of the Companies Act,2013.

In view of the Companies (Significant Beneficial Owners) Second Amendment Rules,2019 notified on 01.07.2019, filing of Form BEN-2 was extended by the Ministry of Corporate Affairs vide circulars dated 29.07.2019,24.09.2019 & 01.01.2020. Accordingly, filing of BEN-2 was extended up to 31.03.2020 and the date of filing of BEN-1 was construed to extended up to 01.03.2020.

The details of BEN forms related to the company is shown in the below table:

11. Decision

Having considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that, the company has not filed e-form BEN-2, thereby violated Section 90 (4) of the Companies Act, 2013 and the company and its Officers in default are liable for penalty under Section 90(11) of the Companies Act, 2013.

Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013, a penalty of Rs. 5,00,000/- (Rupees Five lakhs) is imposed on the Company and Rs. 1,00,000/- (Rupees one lakh) is imposed on each Officers in default as mentioned above. Totally Rs.8,00,000/-(Rupees Eight lakhs) as penalty amount, for violation of Section 90(4) of the Companies Act, 2013.

Further, the SBO has not submitted declaration in BEN-1 thereby violated Section 90(1) of the Companies Act,2013. Therefore, the SBO is liable for penalty under Section 90(10) of the Companies Act,2013

Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 a penalty of Rs.2,00,000/- (Rupees Two lakhs) is imposed on the SBO for violation of Section 90(1) of the Companies Act, 2013.

12. The said amount of penalty shall be paid through online by using the website mca.gov.in(Misc. head) within 90 days of receipt of this order and intimate this office with proof of penalty paid.

13. Whereas Appeal against this order may be filed with the Regional Director (SR), Ministry of Corporate Affairs, 5th Floor, Shastri Bhavan, 26 Haddows Road, Chennai-600006, Tamil Nadu within a period of sixty days from the date of receipt of this order, in Form ADJ (available on Ministry website mca.gov.in) setting forth the grounds of appeal and shall be accompanied by a certified copy of this order. (Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014

14. Your attention is also invited to Section 454(8) of the Act in the event of non­compliance of this order, “(8)(i) Where company fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be, within a period of ninety days from the date of the 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.

(ii) Where an officer of a company or any other person who is in default fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be 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.”

(B. SRIKUMAR, ICLS)
REGISTRAR OF COMPANIES
TAMILNADU, CHENNAI.
ADJUDICATING OFFICER