RoC’s increasing scrutiny on compliances

Background and Order

By way of its order dated May 28, 2024, the Registrar of Companies (“RoC”) has imposed a penalty on India Containers Limited (“ICL”) and its directors for a total amount of approximately INR 3,00,000 on account of non-filing of annual return under Section 92 of the Companies Act, 2013 (“Act”).

Under Section 92 of the Act, every company is required to file an annual return in prescribed form with the RoC containing the prescribed particulars, within 60 days from the date on which the annual general meeting of such company is held. Together with the annual financial statements, which are required to be filed under Section 137 of the Act, the annual return provides key information and insight about companies and are heavily relied upon by investors while conducting legal due diligences of target companies.

In the instant case, ICL had failed to file its annual return within the period prescribed under the Act. Further, upon being issued a show-cause notice in this regard, ICL also failed to provide any response to the same. Consequently, the RoC found ICL guilty of violating Section 92 of the Act, which resulted in the imposition of a fine of INR 60,400 on the Company and a further fine on each of the directors of ICL, in the capacity of being an ‘officer who is in default’, for an amount of INR 60,400 each.

Under Section 2(60) of the Act, the term ‘officer who is in default’ is defined to include inter alia the following persons: (a) whole time directors; (b) key managerial personnel (“KMP”); (c) where there is no identified director or KMP, each of the directors; and (d) any person who is under the immediate authority of the board of directors is charged with any responsibility including maintenance, filing or distribution of accounts or records, etc.

Key Takeaways

Through a series of recent posts, we have been highlighting an increasing trend of the RoC becoming more vigilant and penalizing companies for violating both substantive and procedural requirements of the Act. However, founders should keep in mind that it is not just the company, but even themselves as individuals, in the capacity of being an ‘officer who is in default’, who can also be made personally liable for these violations, which further underscores the importance of investing in timely and proper compliance.

Author: Ankit Bhasin


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