ROC Fines Company and Director for Not Holding Minimum Number of Board Meetings in Year

The Registrar of Companies (ROC) Mumbai imposed a penalty on a company along with its director for failure to hold the required number of board meetings in a year, as required under Section 173 (1) of the Companies Act.

The company, Solairedirect Projects India Private Limited, conducted three board meetings on 22.02.2024, 20.06.2024 and 13.09.2024 during the year 2024. But the 4th meeting was not held by the company, violating Section 173(1) of the Companies Act.

Section 173 (1) of the Companies Act mandates that every company hold its first Board Meeting within 30 days of incorporation, with a minimum of four meetings annually. As per this section, the number of gaps between consecutive meetings cannot be more than 120 days. The rule is not applicable to Small Companies, One Person Companies (OPCs), Dormant Companies, or companies notified by the Central Government.

The company was informed of this violation through the Suo motu Adjudication Application, after which it was issued a show cause notice (SCN). In its reply, the company accepted the default. Accordingly, the ROC issued an order for adjudication or penalty under section 454 of the Companies Act for the violation of Section 450 of the Act, which deals with the punishments where no specific penalty is mentioned in the Companies Act. Section 450 imposes a fine of up to Rs 10,000, and a further Rs 1,000 per day is imposed for continuing the default (limited at Rs 2 Lakh for the company and Rs 50,000 for the officer).

Accordingly, the ROC has levied a penalty of Rs 10,000 on Solairedirect Projects India and Rs 10,000 on its Director for violating Section 173(1). The correction and the payment must be made within 90 days through the ‘e-Adjudication’ facility available on the MCA Portal.