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Non-Maintenance of Proper Register for Directors and Key Managerial Persons (KMPs): MCA Imposes Penalty

The Ministry of Corporate Affairs, through the Registrar of Companies, Chennai, has issued an adjudication order under Section 170 of the Companies Act, 2013, against M/s Shinago International (India) Private Limited for failing to maintain a proper register for directors and key managerial personnel (KMPs).

Background: The order highlights the company’s non-compliance with the statutory requirement of maintaining a register containing particulars of its directors and KMPs, as mandated by Section 170 of the Companies Act, 2013.

Key Findings: Here are the significant findings outlined in the adjudication order:

  1. Appointment of Adjudicating Officer: The Registrar of Companies, Chennai, was designated as the Adjudicating Officer to adjudicate penalties under the Companies Act, 2013.
  2. Company Details: M/s Shinago International (India) Private Limited, a registered company, was found to be non-compliant with the register maintenance requirements under Section 170 of the Companies Act, 2013.
  3. Violation of Section 170: The company was observed to have neglected the obligation of maintaining a proper register for directors and KMPs at its registered office, as stipulated by Section 170 of the Companies Act, 2013.
  4. Adjudication Process: Despite receiving notices, neither the company nor its directors responded to address the violations.
  5. Penalty Imposition: In light of the non-compliance, a penalty totaling Rs. 4,00,000/- was imposed, with the company facing a penalty of Rs. 3,00,000/- and the Managing Director facing a penalty of Rs. 1,00,000/-.

Conclusion: The adjudication order emphasizes the significance of adhering to statutory requirements concerning the maintenance of registers for directors and KMPs. Failure to comply not only attracts financial penalties but also raises concerns about corporate governance practices.

***

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-

F.NO.ROC/CHN/SHINAGO /ADJ/S.170/2024 DATE: 5 APR 2Q24

ADJUDICATION ORDER UNDER SECTION 170 OF THE COMPANIES ACT, 2013 IN THE MATTER OF M/S SHINAGO INTERNATIONAL (INDIA) PRIVATE 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. Shinago International (India) Private Limited with CIN U51900TN2011PTC081421 (herein after referred as ‘ company’ or ‘ subject company’) is a: registered company with this office under the Companies Act, 2013 having its registered office as per MCA21 Registry at Raheja Towers, Unit No.407, 4th Floor, 177,Anna Salai, Chennai, Tamil Nadu 600002. The financial & other details of the subject company as. available on MCA-21 portal is stated as under:

S. No. Particulars Details as on F.Y. 2019-20.
1. Company’s Status Active
2. Paid up Capital as per FY 2019-20 Rs. 33,11,0000/-
3 a. Revenue from Operation NIL
b. Other Income Rs.41,270
c. Profit for the Period (31,03,861/-)
4. Whether it is a Holding Company Yes
5. Whether it is a Subsidiary Company No
6. Whether company registered under Section 8 of the Act? No
7. Whether company is  a small company? No
8. Whether company registered under any other special Act? No

3. Directors during the period of violation

S. No. Name of Director Default Designation Date of Appointment Date of Cessation
1. Shri. Suresh Nathu Patel Managing Director 06.01.2013 ……..
2 Shri.  Nathukhe Thapatel Paresh Additional Director 27.01.2020 ……..

*Shri.Nathukhe Thapatel Paresh is not regularized as Director.

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

Section 170. Register of Directors and key Managerial Personnel and their Shareholding:

(1) Every company shall keep at its registered office a register containing such particulars of its Directors and key managerial personnel as may be prescribed, which shall include the details of securities held by each of them in the company or its holding, subsidiary, subsidiary of company’s holding company or associate companies.

Section 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 fifty thousand rupees, and in case of continuing failure, with a further penalty of five hundred rupees foil. 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.”

5. Issue of Adjudication Notice:

An Inspection of Books and Accounts of the company M/s. Shinago International (India) Private Limited was carried out U/s 206(5) of the Companies Act, 2013 by a Officer authorized by the Central Government wherein the observations of the Inspecting, Officer are as follows:

During the IO’s visit to, the registered Office of the company, it is observed that the company is not maintaining proper register for director and key managerial personnel from incorporation as required under Section 170 of the Companies Act, 2013. Hence, the company and board of directors have violated the provisions of Section 170 of the Companies Act, 2013.

After that the Adjudicating Authority has issued Adjudication Notice to the company and its directors vide Notice: No. ROC/CHN/INSPN.FOLL/081421/P.25/S.170/2023 dated 07.07.2023.

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

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

7. Adjudication Hearing:

i) Since no reply has been received from the company and its directors for the notice dated 07.07.2023, the Adjudicating Authority had issued Adjudication Hearing Notice to the subject company and directors on 13.10.2023 fixing the hearing date as on 19.10.2023 at 12:30 PM. Pursuant to the hearing notice issued on 13.10.2023 fixing the date of hearing on 19.10.2023, Shri. Rajapandian, PCS, authorized representative of the company and its directors has appeared before the Adjudicating Authority on 19.10.2023 and made submissions that “the said violation may be adjudicated as prescribed under Section 170 of the Companies Act, 2013”.

(ii) The company being a Holding company with paid up capital of Rs.33 Crores does not fall under the definition of small company as per provision of section 2(85) of the companies Act, 2013. Therefore, of imposing the provision lesser penalty as per section 446(b) shall not be applicable in this case.

8. Decision

Having considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that the company and its Managing Director are liable for penalty for violation of Section 170 of the Companies Act, 2013.

(i) Accordingly, I am inclined to impose a penalty for continuing default as prescribed under Section 172 of the Companies Act, 2013. The details of the penalty imposed on the company and officers in default are shown in the table below:

S.No Company and Officers in default Penalty
for default (Rs-)
Maximum Penalty (Rs.) Final Penalty Imposed (Rs.)
1. M/s. Shinago International (India) Private Limited, Company Rs. 50,000/- +
Rs.500/- per
day for
continuing
failure
Rs.3,00,000/- Rs.3,00,000/-
2. Shri. Suresh Nathu Patel,
Managing Director
Rs.50,000/- +
Rs.500/- per
day for
continuing
failure
Rs.1,00,000/- Rs.1,00,000/-

Therefore, in view of the about 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.3,00,000/- (Rupees Three lakh) is imposed on the Company and Rs.1,00,000/- (Rupees One lakh) is imposed on Managing Director. Totally Rs. 4,00,000/- (Rupees Four lakhs) as penalty amount for violation of Section 170 of the Companies Act, 2013.

(ii) Further, in exercise of Section 454 (3)(b) of the Companies Act,2013 the subject. company is directed to rectify the default by maintaining the registers as require& U/s. 170 of the Companies Act, 2013 and also to submit the proofs of maintenance of the registers along with necessary documents to this office within 15 days from the date of receipt of this order.

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

10. Whereas Appeal against this order may be filed with the Regional Director (SR), 41) 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 www.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].

11. Your attention is also invited to section 454(8) of the Act in the event of non-compliance of this order, “(8)0 Where company fails to comply with the order made under sub­section (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

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