Non Adherence to Secretarial Standards lands Companies in a soup ;ROC imposes penalty

The Companies Act, 2013 has entered into a maturity phase as its inception is over seven years. Secretarial Standards were introduced to plug in the gap that the Act did not provide for as a measure of good Corporate Governance.

Yet, the Corporate and Professionals still act as a novice observer in adhering to the Act and Rules and Standards.

The ROC whilst making an inspection u/s 206(5) of the Act, found major discrepancies in the maintainence of the Minutes of a Public Limited Company thereby imposing penalties in the following manner on the eight Directors ( excluding Independent Directors) and the Company:

25k on the Company, 5k on each Director for first Offence.

50k on the Company, 10k on each Director for a subsequent Offence.

Yet in another inspection another Company has been slapped with a penalty of Rs. 3.25lakh and Rs. 65k on the Directors.

To be specific, Corporates and Professionals should be aware that u/s 118(10), it is mandatory to follow the Secretarial Standards 1 and 2.

ROC orders show that MCA is showing the importance of total Compliance.

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April 2021