ROC Imposes Penalty on Company’s Directors Over Non-Disclosure of Mandatory Details in Board’s Report

The Registrar of Companies (ROC), Chennai has recently levied a penalty on the company’s director for not furnishing the mandatory required as required under section 134 of the Companies Act, 2013.

The company Arvind Remedies Limited is a listed company with its registered office in Tamil Nadu. An inquiry was conducted under Section 206(4) of the Companies Act on the company. According to the inquiry report, the company had failed to submit several mandatory disclosures in its Board’s Report for the financial year 2016-17. This included details about the number of meetings held, conversion of energy, details of risk management, particulars of contacts and arrangements, director’s responsibility statement, details of loans, guarantees, and investments. These disclosures are required under Section 134(3) of the Companies Act, 2013.

Since the company did not disclose these mandatory requirements, it was a violation of Section 134(3) of the Companies Act, 2013. However, since the company was under liquidation, the ROC held that the directors were liable to pay the penalty under Section 134(8) of the Companies Act.

Section 134(8) of the Companies Act, 2013, requires the Companies Act to cover a penalty for not complying with the requirement under Section 134, which mandates the detailed disclosure in the Board’s Report and proper signing or attachment to financial statements.

Therefore, for the violation of Section 134, the ROC has levied a penalty of Rs 50,000 each on its two directors. The company has been directed to correct the default and pay the penalty amount within 90 days via the ‘e-Adjudication’ facility on the Ministry of Corporate Affairs (MCA) portal.