ROC Chennai Imposes Penalty for Issuing PAS-4 Before Filing Special Resolution

The Registrar of Companies (ROC), Chennai, imposed a penalty on the company named M/s Sweet Karam Coffee India Private Limited and its officers in default for violating Rule 14(8) of the Companies Rules, 2014, by issuing the private placement offer letter (Form PAS-4) before filing the special resolution with the ROC.

Background of the case

The company M/s Sweet Karam Coffee India Private Limited and its directors filed Form GNL-1 and also submitted a suo motu adjudication application under Section 454 of the Companies Act, 2013. This was done because they violated Rule 14(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, related to private placement of shares.

The rule states that a company can issue a private placement offer-cum-application letter (Form PAS-4) only after the relevant Board Resolution or Special Resolution has been filed with the Registrar of Companies (ROC).

In the financial year 2024-25, the shareholders of the company passed a special resolution on March 04, 2025, to issue 1,266 equity shares to investors on a preferential basis. On the same day, the company circulated the letter of offer in Form PAS-4 to the investors. However, the company filed the special resolution with the ROC in Form MGT-14 only on March 20, 2025 (SRN: AB3025267). Since the offer letter was sent to investors before filing the resolution with the ROC, the company violated Rule 14(8). Therefore, the company and its officers in default became liable for action under Section 450 of the Companies Act, 2013.

Later, the Adjudicating Authority issued a notice for the default. In reply, the company submitted a letter, explaining that the mistake happened inadvertently and without any intentional or malicious intent and requesting the authority to take a lenient view.

During the e-hearing, M/s M. Alagar & Associates, Practising Company Secretary, Chennai, represented the company and requested that the violation be adjudicated with a lower penalty.

Apart from this, the company submitted Form GNL-3 designating Ms Nalini Parthiban (SRN: AA7784505 dated May 03, 2024) and Mr T. P. Anand Bharadwaj (SRN: AA7799309 dated May 04, 2024) as the officers in default of the company.

However, as a result, ROC imposed a penalty of Rs 10,000 on the company and Rs 10,000 each on its officers in default.