ROC Imposes Penalty on Company for Not Disclosing Director Regularisation in Annual Return:

ROC Imposes Penalty on Company for Not Disclosing Director Regularisation in Annual Return The Registrar of Companies (ROC), Delhi, has imposed a penalty against a company and its directors for not making a mandatory disclosure regarding the change of the designation of the director, which is required under the Companies Act, 2013. The company, Panacea Life Sciences, filed its annual return in Form MGT-7 for the Financial Year 2022-23. However, it failed to disclose the regularisation of one of its directors, who was initially appointed as an Additional Director but later regularised as a Director. This was the violation of Section 92(1)(e) of the Companies Act.

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Section 92(1)(e) of the Companies Act requires the companies to disclose the change in details of their promoters, directors and Key Managerial Personnel (KMP) since the close of the previous financial year, including the disclosure of any changes in their annual return, i.e., Form MGT-7. If the company does not comply with this disclosure, such as not updating the director change in the present case, the same results in penalties under section 450 of the Companies Act. However, the company was initially penalised under Section 92(5), which covers the penalty for the failure to file the return. The company itself informed this non-compliance by filing a suo moto application for adjudication through e-form GNL-2. The company submitted that it should not be penalised under Section 92(5) of the Companies Act, 2013, as there is no violation of the said provisions. The company further stated that there has been a clerical error in filing its annual return, and the same must be covered under section 450 of the Companies Act. After examining the facts, the ROC agreed that in the present case, Section 92(5) is not applicable. The ROC also noted that the company qualifies as a small company, therefore, and gave the benefit of reduced penalty under Section 446B of the Act. Therefore, the company was penalised under section 450 read with section 446B of the Act.

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Accordingly, the ROC imposed a penalty of Rs 5,000 on Panacea Life Sciences and Rs 5,000 each on seven directors. The company was directed to correct the default and pay the penalty amount within 90 days through the MCA Portal.