ROC levies Penalty for Extending Right Issue offer Beyond Allowed Time Limit of 30 Days

In the matter of Beezaasan Explotech Limited. The Registrar of Company Impose penalty for noncompliance with provision relating to right issue under the company’s act 2013. The company and its director Admitted the default End Penalties We are levied Accordingly.

Fact of the Case

The Company issued equity shares on a right basis in 2018 and extended the offer period beyond the legally permitted 30 days under Section 62(1)(a) of the Companies Act, 2013. This extension was granted at the request of major shareholders. The Company later filed an application admitting the default and requested adjudication of the penalty by the Registrar of the Companies.

Issue

Whether extending the right issue offer period beyond the prescribed 30 days amount to violation of the Companies Act, 2013, and whether a penalty should be imposed under the Section 450 of the Companies Act?

Observation

The Registrar observed that the company clearly violated the statutory provision by keeping the rights issue for more than the allowed period. Since the company and its officers admitted the default, the violation was established without dispute.

Judgement

The Registrar of the Companies imposed a penalty of Rs 44,000 each on the company and its two directors. The parties were directed to pay the penalty within the 90 days and were given the right to appeal before the Regional Director within 60 days.