MCA Imposes 9 Lakh Penalty for Inadequate Board Meeting
The Registrar of Companies in Rajasthan, Jaipur, has imposed significant penalties on M/s EMBASSY INFRATECH INDIA LIMITED and its directors for failing to comply with Section 173 of the Companies Act, 2013. The violations involve not conducting the required minimum of four board meetings annually and the non-maintenance of statutory registers at the registered office address. This article provides details of the case, the reasons for the penalties, and their financial implications.
Detailed Analysis: The case centers around a serious breach of Section 173 of the Companies Act, 2013. During an inspection conducted by the office of the Registrar of Companies in Rajasthan, it was discovered that M/s EMBASSY INFRATECH INDIA LIMITED did not maintain books of accounts or statutory registers at its recorded registered office address. Additionally, the company failed to hold the minimum required four board meetings every year. Section 173 of the Companies Act, 2013, mandates that every company must hold the first board meeting within thirty days of its incorporation. Subsequently, a minimum of four board meetings should be held annually, with no more than one hundred and twenty days intervening between consecutive meetings. The violation of these crucial provisions was addressed through an adjudication notice dated 28.03.2022. The notice provided the company with an opportunity to rectify the defaults and was scheduled for a hearing on 11th April 2022 at the Registrar of Companies’ office in Jaipur. During the hearing, neither the company nor any of its directors appeared on behalf of the company. Furthermore, the defaults remained unrectified as of the hearing date. Consequently, it was concluded that every director of the company was in default.
To penalize the company and its directors for the violations of Section 173 of the Companies Act, 2013, the Registrar of Companies imposed significant penalties. The company was penalized with 3,00,000/- rupees, and each of the eight directors in default faced penalties of 75,000/- rupees. This led to a cumulative penalty of 3,00,000/- rupees for the company and a total of 6,00,000/- rupees for its directors. The penalties were calculated for each financial year as follows: For the financial year 2015-16, the company faced a penalty of 2,00,000/- rupees, and each director was penalized with 50,000/- rupees. For the financial years 2016-17 and 2017-18, the same penalties were imposed on the company and its directors. The case was subsequently disposed of with this order.
Conclusion: The case involving M/s EMBASSY INFRATECH INDIA LIMITED highlights the importance of adhering to the statutory requirements outlined in the Companies Act, 2013. Compliance with these requirements, including holding the minimum number of board meetings annually, is crucial to fulfill legal obligations. The violations of Section 173 of the Companies Act, 2013, led to significant financial penalties. The company and its directors are obligated to pay these penalties in accordance with the order. Failure to do so may result in further legal consequences. Companies and their directors should exercise diligence in ensuring compliance with all relevant provisions of the Companies Act, 2013, to avoid financial penalties and legal complications. Conducting board meetings within the prescribed timeframes and maintaining accurate records are fundamental aspects of corporate governance and legal compliance.
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