Zerodha along with its founder penalized by ROC for delay in appointing CFO

The Ministry of Corporate Affairs (MCA) has imposed a penalty on Zerodha along with its founder for the delay in appointing a CFO.

The company, Zerodha Asset Management Private Limited (hereinafter referred to as Company) having CIN: U67190KA2021PTC155726 was incorporated on 20.12.2021 and is presently registered under the jurisdiction of Registrar of Companies, Karnataka with its registered office situated at Indiqube Penta, New No. 51, (Old No. 14), Richmond Road, Bangalore – 560025, Karnataka.

The company filed a suo-motu application on 09.01.2024 regarding the non-­appointment of Chief Financial Officer i.e. violation of section 203 of the Companies Act, 2013. The company has submitted that, as the company is a Deemed Public Company and the paid­up share capital of the company since its incorporation was more than the limit prescribed under section 203 of the Act r/w Rule 8 of Companies (Appointment and Remuneration) Rules, 2014 i.e. 10 Crores. The Company did not have Chief Financial Officer till the appointment of Mr. Chintan Vasantlal Bhatt on 24.03.2023, thereby violating the relevant provisions of the Act from 20.12.2021 to 23.03.2023 i.e. 459 days.

Pursuant to the adjudication application filed by the company, a Notice of hearing was sent on 25.01.2024 and a physical hearing was held on 07.02.2024. It was attended by Mr. Thirupal Gorige, practising company secretary and an authorised representative of the company and all the officers in default. He made his submissions before the adjudication officer and as directed during the hearing, additional information/ submissions were made on 13.02.2024.

According to records, the company does not meet the criteria of a small company under Section 2(85) of the Companies Act, 2013. As a result, the provisions for imposing a reduced penalty under Section 4468 of the Act will not be applicable in this case.

Therefore, having considered the facts and circumstances of the case and the submissions made by the company and present/past directors through their authorised representatives, in view of the above-said violation, in the exercise of the powers vested under section 454(3)(a) of the Companies Act 2013, hereby a penalty of Rs.2398000 has been imposed on the company and the directors/officers who were in default of the offence committed.

The company and its directors / key managerial staff are hereby required to pay the penalty sum listed above within 90 days of receiving this Order and to file Form INC-28 with a copy of the Order and payment challans. Directors are expected to pay such penalties from their own finances. The noticee shall pay the aforementioned penalty electronically via the MCA website (Miscellaneous head), specifying the specifics of this Order and the noticee who is paying the penalty.

Appeal, if any, against this Order may be filed with the Regional Director (South East Region), Hyderabad within a period of 60 days from the date of receipt of this Order in Form ADJ setting forth the grounds of appeal and shall be accompanied by a certified copy of this Order.

For Official Order Download PDF Given Below: