Company penalised for using Equity Funds before filing PAS-03

The Ministry of Corporate Affairs (MCA) in the matter of Covalense Digital Solutions Private Limited has penalised the Company for using Equity Funds before filing PAS-03.

The company, Covalense Digital Solutions Private Limited (hereinafter referred to as Company) having CIN: U72900KA2018PTC170059 was incorporated on 12.03.2018 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka and the registered office of the company is situated at Venus Building, Ground Floor, No. 1/2 Kalyanamantapa Road, 3rd Main, Jakkasandra Koramangala, 1st Block, Bangalore – 560034.

The company has filed a suo-motu adjudication application on 07.09.2023 for violation of Section 42(4) of the Act wherein it was submitted that the company had issued equity shares and compulsorily convertible preference shares to M/s SIDBI Trustee company limited A/c Ubharte Sitaare Fund through private placement and company was in receipt of the first tranche of funds amounting to Rs.19,99,99,903.70 from the investor on 28.07.2022. Further, the company has utilised the said amount on 28.07.2022 and 29. 07.2022 before filing of e-form PAS-3 under the provision of the Act. The company has filed PAS -3 0n 02.08.2022 vide SRN F18317180. Hence the company has violated the provisions of section 42(4) of the Act for the period from 28.07.2022 to 01.08.2022.

Pursuant to the adjudication application filed by the company, a Notice of hearing was sent on 15.11.2023 and a physical hearing was scheduled on 05.12.2023. Thereafter, as per the applicant’s request, the hearing date has been rescheduled to 06.12.2023. It was attended by Mr. IB Harikrishna, practicing company secretary and authorised representative who appeared on behalf of the company and directors and made his submissions as mentioned in the adjudication application. He was directed to produce additional documents related to the copy of the board resolution and shareholding resolutions, E-form filed alongwith attachment, bank account statement, the details of directors and promoters of the company during the default period and chronology events related to the compliance of section 42/62 of the Act. and their reply which were submitted on 19.12.2023.

It is seen that the company is a holding company and does not fall under the definition of a small company as per the provisions of section 2(85) of the Companies Act, 2013. Therefore, the provisions of imposing lesser penalty as per the section 446B of the Act shall not be applicable in this case.

Therefore, having considered the facts and circumstances of the case and the submissions made by the company/director/key managerial personnel through their authorized representative, in view of the above said violation of non-appointment of a company secretary under the provisions of section 42(4) of the Act, in exercise of the powers vested under Section 454(3) of the Companies Act 2013, hereby a penalty of Rs.42000 impose on the company and the directors/ officers who were in default of the offence committed.

The company and its directors/ key managerial personnel are hereby directed to pay the penalty amount as tabulated above within 90 days from the date of receipt of this Order and file Form INC-28 attaching a copy of the Order and payment challans. In the case of directors, such a penalty amount is required to be paid out of their own funds. The noticee shall pay the said amount of penalty online by using the mca website (Miscellaneous head) specifying the details of this Order and the noticee who is paying the penalty.

Appeal, if any, against this Order may be filed with the Regional Director (South East Region), Hyderabad within a period of 60 days from the date of receipt of this Order in Form ADJ setting forth the grounds of appeal and shall be accompanies by a certified copy of this Order.

Attention is also invited to section 454(8) of the Companies Act, 2013 in case of non-compliance of this Order wherein necessary penal action will be initiated under 454(8)(i) and (ii) of the Companies Act, 2013 against the company and directors/ key managerial personnel without further notice in the matter.

For Official Order Download PDF Given Below: