The ROC imposed a penalty on the company and its director for issuing a private placement offer before filing the shareholders’ resolution with the ROC, in violation of the procedural requirements.
Saloni Kumari | Mar 9, 2026 |
ROC Chennai Penalises Company and Its Director for Breach of Securities Allotment Rules
The Registrar of Companies (ROC) Chennai has levied a penalty amounting to Rs. 20,000 on Sweet Karam Coffee India Private Limited and one of its directors under Section 454 of the Companies Act, 2013, for contravention of Section 450 of the Act. The decision has been announced through an order of adjudication (PO/ADJ/03-2026/CN/01709), dated March 5, 2026.
The disputed company had furnished the GNL-1 e-form, along with a physical adjudication application under 454 of the Companies Act, 2013, to voluntarily inform the concerned authority about the violation of Rule 14(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, committed by it.
The said section mandates a company registered under the Companies Law to first file the board or shareholders’ resolution with the Registrar of Companies (ROC) before sending a private placement offer letter to investors.
During the financial year 2023-24, the shareholders of the company passed a special resolution on April 13, 2023, to issue 24,706 equity shares to an investor named Rajagopalan Raghavan through private placement. On the same day, the company also circulated the first letter of offer in Form PAS-4 for 2,058 shares to the investor. However, the company filed the required special resolution with the ROC through Form MGT-14 only on May 02, 2023. As per the companies’ law, the resolution should have been filed first and only then should the offer letter have been sent. The company sent the offer letter before filing the resolution, which is an explicit violation of Rule 14(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014.
Considering the aforesaid violation of Rule 14(8), the office held the company liable for penal action under Section 450 of the Companies Act, 2013 and imposed a penalty amounting to Rs. 10,000 on the company, Sweet Karam Coffee India Private Limited and Rs. 10,000 on its director, Parthiban Nalini. They are required to pay the imposed penalty amount and rectify the default within 90 days of receiving the order.
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