ROC Chennai Imposes Penalty on Company for Non-Filing of Form SH-7

The Registrar of Companies (ROC), Chennai, has passed a penalty order against a company for not filing Form SH-7, a mandatory requirement for a company whenever it changes or increases its authorised capital.

The company KNS Nidhi Ltd had increased its authorised share capital but did not file Form SH-7 with the ROC as required under Section 64 of the Companies Act, 2013, read with Rule 15 of the Companies (Share Capital and Debenture) Rules, 2014.

The default was uncovered when the MCA rejected the Form NDH-4 filed by the company to declare and update its status to Nidhi Company. The said form was rejected after observing that the company’s financial statement showed authorised capital of Rs 20,00,000, but the MCA master data showed Rs 15,00,000. It was concluded that the company had increased its capital but did not file Form SH-7.

As per the provisions of Section 64(1) of the Companies Act, 2013, it is mandated that if the company alters or increases its share capital, or redeems any redeemable preference shares, or increases the number of its members, then it must file Form No. SH-7 with the ROC within 30 days.

Since the company failed to file Form No. SH-7, despite an increase in its authorised capital, the ROC imposed a penalty of Rs 2,80,500 on the company and Rs 1,00,000 on its director under Section 64(2) of the Companies Act, 2013. The penalty imposed on the directors is required to be paid from their personal income.

The ROC has directed the company to correct its default and pay the penalty amount within 90 days through the ‘e-Adjudication’ facility on the MCA.