Penalty for Non-Disclosure of Board Meeting Details in Director’s Report

Introduction: The Ministry of Corporate Affairs, under the Government of India, initiated adjudication proceedings against Lions Co-ordination Committee of India Association for non-compliance with Section 134(3)(b) of the Companies Act, 2013. This article delves into the details of the case, the violations observed, and the penalties imposed.

Detailed Analysis: The adjudication proceedings stemmed from the company’s failure to adhere to the provisions of Section 134(3)(b) of the Companies Act, 2013, which necessitates the disclosure of the number of board meetings conducted and their respective dates in the Director’s Report. The company, in its reports for the financial years 2018-19 and 2019-20, did not disclose the required information, thus violating the Companies Act.

As a consequence of the violations, an adjudication notice was issued to the company and its directors. One of the directors, Shri Vazhappully Padmanabhan Nandakumar, admitted to the violations during the adjudication process. Consequently, penalties were imposed on him for each financial year of the violation, amounting to a total penalty of Rs. 1,00,000.

The penalties imposed align with the provisions of Section 134(8) of the Companies Act, 2013, which stipulates a penalty of three lakh rupees for the company and fifty thousand rupees for every officer in default.

Furthermore, the adjudication order highlighted the provisions for appealing against the decision and the consequences of non-payment of penalties, including potential fines and imprisonment as per Section 454(8) of the Companies Act, 2013.

Conclusion: The adjudication of penalties against Lions Co-ordination Committee of India Association underscores the importance of compliance with regulatory requirements under the Companies Act, 2013. It serves as a reminder to companies and their officers of the repercussions of non-compliance and the necessity of adhering to statutory obligations. Compliance not only ensures transparency and accountability but also upholds the integrity of corporate governance in India.

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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/110455/ADJ/S.134(3)(b)/P.2/2023 Date: 8 FEB 2024

IN THE OF M/S LIONS CO-ORDINATION COMMITTEE OF INDIA ASSOCIATION

ORDER OF ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH RULE 3 OF THE COMPANIES (ADJUDICATION OF PENALITES) RULES 2014 FOR VIOLATION OF SEC.1 ION 134(3)(B) READ WITH SECRETARIAL STANDARD -4 OF THE COMPANIES ACT, 2013

1. In the matter of M/s LIONS CO-ORDINATION COMMITTEE OF INDIA ASSOCIATION with CIN U74999TN2016NPL110455 incorporated on 18.05.2016 under the jurisdiction of Registrar of Companies, Chennai with the registered office situated at 96 Govindan Street, Collectorate Colony, Aminjikarai, Tamil Nadu, 600029, India.

2. Whereas the company was taken up for Inquiry by an Officer authorized by the Central Government and this office had issued Show Cause Notice vide letter dated 08.09.2023 for violation of Section 134(3)(b) read with Secretarial Standard -4 of the Companies Act, 2013.

3. Whereas as per Sub Section 3(b) pursuant to Section 134 of the Companies Act, 2013 which states that , “(3) There shall be attached to statements laid before a company in general meeting, a report by its Board of Directors, which shall include—

(b) number of meetings of the Board;”

4. Whereas the Directors Report for the Financial Year 2018-19, the company has not disclosed number of Board meeting conducted and date of Board Meetings. Hence, the Company has not complied with Section 134(3)(b) read with Secretarial Standard -4 of the Companies Act, 2013 by not disclosing date of board meeting. Therefore, the company and officer in default are liable for penal action under section 134(8) of the Companies Act, 2013. Further, it is observed from Directors Report for the financial year 2019-20, the company has disclosed the maximum interval between any two meetings was well within the maximum period of one hundred and twenty days. However, as per provision of Section 134(3)(b) of the Companies Act, 2013, number of Board meeting conducted should be disclosed and as per Secretarial Standard -4, the company should disclose date of Board meetings conducted by the company. However, the company has not complied with provision of Section 134(3)(b) read with Secretarial Standard -4 of the Companies Act, 2013. Therefore, the company and officer in default are liable for penal action under section 134(8) of the Companies Act, 2013.

5. Whereas Regional Director, (SR), Chennai issued directions to initiate necessary action against the defaulters of the provisions of the Companies Act, 2013 and this office have issued a Adjudication Notice to Company and its directors who liable for violation of Section 134(3)(b) of the Companies Act, 2013.

6. In Pursuant to Adjudication Notice 08.09.2023, Shri Vazhappully Padmanabhan Nandakumar one the director of the subject Company have admitted the violation and also filed GNL-1 vide SRN F83660084 dated 25.11.2023 for adjudicate the offence u/s. 454 of the Companies Act, 2013. Hence the undersigned has reasonable cause to _..believe that the aforesaid provisions of the Act have not been complied with, and accordingly this office had issued Adjudication Hearing Notice to the director Shri Vazhappully Padmanabhan Nandakumar on 17.01.2024 fixing the hearing date as 25.01.2024 .

7. In Pursuant to hearing notice issued on 17.01.2024, Shri. K. Janakiraman -PCS , authorized representative for director Shri Vazhappully Padmanabhan Nandakumar has appeared before the undersigned and made submissions that, “the said violation may be adjudicated and accepted to pay the penalty as prescribed under section 134(8) of the Companies Act, 2013”

8. Whereas as per section 134(8) of the Companies Act, 2013, which read as under:-

“(8) If a company is in default in complying with the provisions of this section, the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.”

10. Shri K. Janakiraman -PCS, Authorized Representative admitted the violation and hence following penalty referred to in Para No.8 is imposed on director Shri Vazhappully Padmanabhan Nandakumar for the violation of Section 134(3)(b) read with Secretarial Standard -4 of the Companies Act, 2013.

Therefore in view of the above said violation, the undersigned in exercise of the powers vested to him under Section 454(1) & (3) of the Companies Act, 2013, hereby impose a penalty Rs. 50,000/- each financial year to the director Shri Vazhappully Padmanabhan Nandakumar (Totaling Rs. 1,00,000/- as penalty amount).

10. Whereas sub-section (5) of section 454 of the Companies Act,2013 provides that any person aggrieved by an order made by the adjudicating officer under sub-section(3) may prefer an appeal to the Regional Director having jurisdiction in the matter and further sub-section(6) provides that every appeal under sub-section(5) shall be filed within sixty days form the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person and shall be in such form, manner and be accompanied by such fees as may be prescribed.

11. Please note that as per Section 454(8) (i) of the Companies Act, 2013, Where company does not pay the penalty imposed by the adjudicating officer or the Regional Director 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 who is in default does not pay the penalty 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.

In case of default in payment of penalty, prosecution will be filed under section 454(8) (i) and (ii) of the Companies Act, 2013 at your own costs without any further notice along with the penalty to be imposed and the same should he submitted.

B. SRIKUMAR, ICLS
REGISTRAR OF COMPANIES
TAMIINADU, CHENNAI.
ADJUDICATING OFFICER