ROC Delhi imposes penalty on Delhi based Private Limited Company for non-compliance of Section 118 of Companies Act, 2013 i.e. for not conducting 4 board meetings in a year.
Facts:
The Company had filed suo-motu an application for adjudication for violation of Section 118(10) of the Act, r/w Secretarial Standard -1, issued by ICSI, wherein it was mentioned that the Company held only 3 Board Meetings.
Relevant portion of violated section:
Section 118 (Minutes of the proceedings of general meeting, meeting of Board of DirectorsΒ and other meeting and resolutions passed by postal ballot)
Β (10) Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980, and approved as such by the Central Government.
SS-1 (Secretarial Standard on Meeting of the Board of Directors) issued by ICSI:
- Frequency of Meetings
2.1 Meeting of the Board
The Company shall hold at least four meetings of its Board in each Calendar Year with a maximum interval of 120 days between any two consecutive meetings.
Penalty:
On Company: Rs.25,000/-
On Directors: Rs.5000/- each on 4 Directors
π»ππ πππππππ πππππππ ππ πππ ππππππ ππππ ππ πππ πππππππ ππππ πππ πππππππ ππππππ π¬πππ πΌπ² πππππππ , πππππ ππππ π 100% ππ ππππππ ππ πππ πππππππ πππππππ. π»ππππππππ, πππ πππππππ πππππππ π πππ πππ πππ πππππππ πππ ππ πππ πππππππ ππ πΊππππ πͺππππππ ππ π ππππππ π/π 2(85) ππ πππ πͺππππππππ π¨ππ, 2013.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS,
OFFICE OF REGISTRAR OF COMPANIES,
NCT OF DELHI & HARYANA
4TH FLOOR, IFCI TOWER, 61, NEHRU PLACE,
NEW DELHI -110019
Order for Penalty for Violation of Section 118 of the Companies Act, 2013
IN THE MATTER OF
ETSYSTORE PRIVATE LIMITED
(CIN: U74999HR2018FTC073946)
Adjudication in respect of violation of Companies Act, 2013
1. Appointment of Adjudicating Officer: –
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad. II, dated 24.03.2015 appointed Registrar of Companies, NCT of Delhi & Haryana as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter known as Act) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company: –
ETSYSTORE PRIVATE LIMITED (herein after known as ‘company’) is a registered company with this office under the provisions of the Companies Act, 2013 having its registered office as per MCA21 Registry at address Second Floor, Plot No 37, Saraswati Kunj, Sector 54 Golf Course Road, Urban Estate Gurgaon HR 122001. The financial & other details of the subject company for F.Y. 2021-22 as available on MCA-21 portal is stated as under:
| S. No. | Particulars | Details |
| 1.Β | Paid up capital
(As per Master Data) |
Rs. 11000000/- |
| 2.
|
Turnover | |
| a. Revenue from operation | Rs. 29,02,91,000/- | |
| b. Other Income | Rs. 1,28,000/- | |
| 3. | Holding Company | Yes
(Etsy UK limited) |
| 4.Β | Subsidiary Company | No |
| 5.Β | Whether company registered under Section 8 of the Act? | No |
| 6. | Whether company registered under any other special Act? | No |
3. Facts about the Case: –
I. The Company had filed suo-moto an application for adjudication vide e-form GNL SRN T92611755 dated 06.04.2022 u/s 454 of the Companies Act, 2013 for the violation of section 118(10) of the Act, r/w para -2 Secretarial Standard -1 issued by Institute of Company Secretaries, where it was mentioned that the company held only three Board meetings in the calendar year 2020 i.e., dated 10.03.2020, 06.07.2020 and 06.10.2020.
II. In terms of the provisions of section 118 (10) r/w 454 of the Companies Act, 2013, this office had issued Show Cause Notices (SCN) vide No. ROC/D/Adj/2022/Section 173/ETSYSTORE/822-826 dated 20.02.2023 to the Company and officers in default.
III. In response to the SCN, the subject company submitted its reply through e-mail dated 03.03.2023 and has inter alia stated that-
a. That the offence may kindly be adjudicated.
b. That the offences may be jointly adjudicated for the company and applicants.
c. Pass such order as the Hon’ble Registrar of Companies (ROC) may deem fit and proper, in the benefit of the Company, other applicants and stakeholders of the company.
4. The relevant provision of section 118 as on date of default are as under:
Section 118 (Minutes of the proceedings of g eneral meeting. meeting of Board of Directors and other meeting and resolutions passed by postal ballot)
> (10) Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980, and approved as such by the Central Government.
>Β (11) If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.
SS-1 (Secretarial Standard on Meeting of the Board of the Directors) issued by ICSI.
>Β 2. Frequency of Meetings
2.1 Meetings of the Board
The company shall hold at least four Meetings of its Board in each Calendar Year with a maximum interval of one hundred and twentyΒ days between any two consecutive Meetings.
5. Adjudication of penalty: –
a. The subject company held only three Board meetings in the calendar year 2020 i.e., dated 10.03.2020, 06.07.2020 and 06.10.2020. Since company has defaulted the provision of section 118 (10) of the Companies Act, 2013 r/w para -2 of the Secretarial Standard-1 (SS- 1) issued by the Institute of Company Secretaries of India, as it did not conduct 4 board meetings in the year.
b. The subject company is the subsidiary of its foreign holding company namely Etsy UK limited, which holds 100% of shares in the subject company. Therefore, the subject company does not get covered under the purview of Small Company as defined u/s 2(85) of the Companies Act, 2013. Hence, the benefit of section 446B of Companies Act, 2013 would not be applicable on the company.
c. Now in exercise of the powers conferred on the undersigned vide Notification dated 24th March 2015 and having considered the reply submitted by the noticee(s) in response to the notice issued vide No ROC/D/Adj/2022/Section173/ETSYSTORE/822-826 dated 20.02.2023, hereby impose the penalty on the company and its officers in default under section 118 (11) of the Act, for violation of para -2 of Secretarial Standard (SS-1) issued by the ICSI r/w section 118 (10) of the Companies Act, 2013 of the Companies Act, 2013 which are as follows:-
| Violation | Penalty imposed on company/ director(s) |
Period of default # (Calendar Year) |
Calculation for penalty amount (in Rs.) |
Total penalty-imposed u/s 118(11) of the Companies Act, 2013 (in Rs.) |
| A | B | C | D | E |
| Secretarial Standard (SS- | Etsystore Private Limited | 2020 | 25,000 | 25,000 |
| 1) r/w section 118 (10) of the companies Act, 2013 |
Sameer Mittal (Director) |
2020 | 5,000 | 5,000 |
| Ronan Davy (Director) |
2020 | 5,000 | 5,000 | |
| JanetΒ MahonΒ Joan (Director) | 2020 | 5,000 | 5,000 | |
| Dennis Richard Price (Director) | 2020 | 5,000 | 5,000 |
# Period of default- the non-convening of the fourth board meeting in the calendar year 2020 resulted failure to hold minimum number of four meeting in a calendar year.
6. Order:
a. Names of party as mentioned in the table above are hereby directed to pay the penalty amount as per column no. ‘E’ therein. In case of parties other than company, such amount is required to be paid out of their own funds.
b. The said amount of penalty shall be paid through online by using the website mca.gov.in (Misc. head) in favor of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, payable at Delhi, within 90 days of receipt of this order, and intimate this office with proof of penalty paid.
c. Appeal against this order may be filed with the Regional Director (NR), Ministry of Corporate Affairs, B-2 Wing, 2nd Floor, Paryavaran Bhawan, CGO Complex, Lodhi Road, New Delhi-110003 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 the order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014].
d. Your attention is also invited to section 454(8) of the Act in the event of nonΒcompliance of this order.
Place: New Delhi.
(Pranay Chaturvedi, ICLS)
(Adjudicating Officer)
Registrar of Companies,
NCT of Delhi & Haryana
No. ROC/D/Adj/2022/Section 118/ETSYSTORE/ 146-1466Β Date: 05-04-2023
Author Bio
