What is the solution if directors received a notice from MCA regarding non-compliance of Cost records maintained by Company under Section 148 of Companies Act 2013 and their penal provisions if reply is not submitted by directors within the time limit
If the directors of a company have received a notice from the Ministry of Corporate Affairs (MCA) regarding non-compliance with the cost records maintained under Section 148 of the Companies Act 2013, there are certain steps that they can take to rectify the situation:
1. Review the notice: The directors should carefully review the notice received from the MCA and understand the nature of the non-compliance. This will help them to take the appropriate corrective action.
2. Appoint a Cost Accountant: If the company has not appointed a Cost Accountant, the directors should appoint a qualified and experienced Cost Accountant who is registered with the Institute of Cost Accountants of India.
3. Ensure that cost records are maintained: The directors should ensure that the company maintains proper cost records as per the requirements of Section 148 of the Companies Act 2013. They should review the cost records regularly to ensure that they are accurate and up-to-date.
4. Rectify the non-compliance: The directors should take immediate steps to rectify the non-compliance identified by the MCA. This may involve filing the required forms and documents, or taking any other actions required by the MCA.
5. Seek professional advice: The directors may seek professional advice from a qualified Cost Accountant or legal expert to ensure that they are taking the appropriate corrective action.
6. Communicate with the MCA: The directors should communicate with the MCA and provide any information or documents required to rectify the non-compliance. They should respond to the notice within the stipulated time frame.
It is important for the directors to take prompt and appropriate action to rectify the non-compliance identified by the MCA. Failure to comply with the requirements of Section 148 of the Companies Act 2013 can result in penalties and legal action, which can have serious consequences for the company and its directors.
Penal Provisions if directors not submitted his reply within the stipulated time
If the directors of a company fail to reply to a notice received from the Ministry of Corporate Affairs (MCA) regarding non-maintenance of cost records under Section 148 of the Companies Act 2013, within the stipulated time limit, they may face penalties and legal action.
The penalties for non-compliance with the provisions of Section 148 of the Companies Act 2013 are as follows:
1. Penalty for non-maintenance of cost records: If a company fails to maintain cost records as required under Section 148, it may be liable to pay a penalty of up to Rs. 1 lakh. Additionally, the company and its directors may be prosecuted under the Companies Act, which may result in fines and imprisonment.
2. Penalty for late filing of cost audit report: If a company fails to file the cost audit report within the stipulated time limit, it may be liable to pay a penalty of up to Rs. 25,000. The penalty may increase if the delay is prolonged.
3. Prosecution: In addition to penalties, the MCA may initiate legal action against the company and its directors for non-compliance with the provisions of Section 148. The directors may be held personally liable for the non-compliance and may face fines and imprisonment.
It is, therefore, essential for the directors to reply to the notice received from the MCA within the stipulated time limit and take appropriate action to rectify the non-compliance. Failure to do so can have serious consequences for the company and its directors.