ROC Slaps penalty of Rs. 4.85 Lakhs on Non-Appointment of Women Director

The Registrar of Companies (ROC) in the matter of SHANKAR PACKAGING LIMITED has imposed a monetary penalty of Rs. 4.85 Lakhs for Non-Appointment of Women Director.

The company viz SHANKAR PACKAGINGS LIMITED (herein after known as ‘company’) is a registered company with this office under the provisions of the Companies Act, 1956 having its registered office as per MCA21 Registry at address 303 TURF ESTATE, DR. E. MOSES. ROAD, SHAKTI MILLS LANE, MUMBAI MH 400011 IN.

As per the Financial Statements filed by the company its Paid up share capital is Rs. 2,80,49,530.00 and turnover is Rs. 398,14,29,906.00.

Facts about the case:

The company is required to appoint a Woman Director based on the thresholds stated above, but it failed to do so. This office had issued show cause notice dated 28.03.2023 to the Company and its directors. Reply dated 21.04.2023 received from the Company wherein the Company replied that they were unable to find a Woman Director having appropriate skill, experience, knowledge of the business of the Company.

They further stated that the Board of Directors have already informed the Nomination and Remuneration Committee to select and recommend for appointment of Woman Director.

The authorized representative submitted that in the board meeting held on 13.05.2023, the board of directors has appointed four directors on the board out of which one is a Woman Independent Director, and another is a Woman Non-Executive Director.

It is further stated that the Company has been trying to induct the said Directors since past 36 months but owing to COVID-19 pandemic followed by personal issues faced by the new appointees, coupled with personal issues of the Company Secretary, there was a delay in the appointment of said Women Directors.

It is further stated that there was no deliberate intention for non-compliance of above- stated provisions of the Companies Act, 2013, it was kindly requested that proceedings should not be initiated for violation of Section 149 (1) of the Companies Act, 2013.

The presenting officer submitted that the Company has admitted the delay in appointment of Woman Director.

The 2nd Proviso to Rule 3 states that ‘any intermittent vacancy of a woman director shall be filled-up by the Board at the earliest but not later than immediate next Board meeting or 3 months from the date of such vacancy whichever is later’. In the present case, the Company meets the criteria for appointment of a woman director based on the last date of the latest audited financial statements i.e. 31.03.2022.

Order:

The issue to be determined is whether the period of default begins from 01.04.2022 or the Company may be provided with a certain time frame to find a suitable candidate. The proviso to Rule 3 provides a period of six months to newly incorporated companies to appoint a woman director while the second proviso to Rule 3 states that any intermittent vacancy of a woman director shall be filled up by the Board at the earliest but no later than immediate next Board meeting or three months from the date of such vacancy, whichever is later.

The present case does not fall under either of these categories. However, in the interest of justice and through a harmonious reading of these provisions, a period of three months from the beginning of the Financial Year may be considered in order to provide time to the Company to find a suitable candidate and comply with the provisions of the law. Hence, the period of default in the present case is being considered from 1st July of the Financial Year of default.

In exercise of the powers conferred on vide Notification dated 24.03.2015 and having considered the facts and circumstances of the case besides reply of the company after taking into account the factors mentioned in the relevant Rules followed by amendments in section 454(3) of the Companies Act, 2013, the opinion that penalty shall be imposed for the default related to non-compliance of section 149 of the Act.

Having considered the facts and circumstances of the case and after taking into accounts the above factors, Hereby impose a penalty of Rs. 4,85,500 (Rupees Four lakh eighty-five thousand and five hundred only) on the company for violations of provisions of section 149(1) of the Companies act, 2013.

The period of violation of provisions under Section 149 of the Companies Act, 2013 is from 01.07.2022 till 28.03.2023 and delay is 270 days. As per signatory details available on MCA-21 portal, the above-mentioned individuals were Officers in default during the period of violation.

For Official Order Download the PDF Given Below: