Reply of E-Adjudication Notice - Series 514

Reply of E-Adjudication Notice
06TH DECEMBER, 2019
Non Holding of AGM within due date..
Ministry of Corporate Affairs has issued notice to approximately 3000 companies
due to non compliance of provision of Section 96(1) for not holding of AGM
within Due date.
As per notice companies have to reply the notice within 15 days of
receipt of notice. In case of non reply of notice within 15 days it shall be presumed
that company has nothing to say and penal action shall be initiate against the
company.
In this editorial author will discuss the followings:
v Reply of Notice of MCA
v Penal Provisions for non holding of AGM within Due
Date
v Process of Compounding of such non compliance
IMPORTANT
NOTE
ü This is non compliance of Section 96.
ü Penal provisions for same are mentioned under Section 99.
ü Compounding u/s 441.
ü Adjudication power u/s 454.
Step - I: Reply of Notice to MCA
As per provision of
Section 96 Company have to held AGM within 6 month from the end of Financial
Year or within 15 month from the last AGM of Company, Whichever is earlier.
Therefore, this is
responsibility of company to reply the notice of MCA with following points:
a.
Actual reasons for not
holding of AGM within Due date.
b.
As non compliance occur in
previous years therefore mention in reply that Company will file application
for Compounding with appropriate authority. If possible file the compounding
application and attached receiving of same with Notice.
Penal Provision – Non Compliance of 96
As per Section 99 If any default is made in holding a meeting of
the company in accordance with section 96 or section 97 or section 98 or in
complying with any directions of the Tribunal,
The company and every officer of the company who
is in default shall be punishable with Fine
which may extend to one lakh rupees
and in the case of a continuing default,
with a further fine which may extend to five
thousand rupees for every day during which such default continues.
Officer who is in
default: means
any of the following officers of a company, namely
(i)
whole-time director;
(ii) key managerial personnel;
(iii) where there is no key managerial
personnel, such director or directors as specified by the Board in this behalf
and who has or have given his or their consent in writing to the Board to such
specification, or all the directors, if no director is so specified;
Note:
Therefore, separate fine shall be impose on Company and
Office in default both.
COMPOUNDING:
As mention above in
section 96 fine is less than 25 Lakh therefore power of compounding vested with
Regional Director.
Step - II: Process of Compounding with RD:
As the power of
compounding in above mentioned matter vested with Regional Director of the
Region. Therefore Company have to file application with Regional Director by
following process:
i.
Preparation of
Application:
There is no
specific format of Compounding application with RD under Companies Act.
Therefore, Company have to prepare a normal application mentioning the
following: (these are some examples:
·
Name
·
Registered Office
·
Capital Structure
·
Jurisdiction of RD
·
Facts of the Case
·
Relief to be sought
Application should annex with proper attachments Like:
·
Affidavit verifying the application
·
Financial Statements of Company
·
Proof of holding of Annual General Meeting,
etc.
ii.
Filing of Application
with Registrar of Companies:
Company
has to file a copy of such application with Registrar of Company in e-form
GNL-2. After receipt of GNL-2 ROC shall prepare its report and submit the same
with Regional Director.
iii.
Filing of Application
with Regional Director:
Company
has to file a copy of such application with Regional Director in e-form RD-1
and submit hard copy of application with all annexure to Regional Director.
iv.
Hearing by Regional
Director:
There
will be a personal hearing before the Regional Director, which shall decide the
amount to be paid for compounding.
v.
Passing of Order Regional
Director:
Get the order passed by the RD and pay the amount stipulated
within the time fixed.
vi.
Filing of Order with
ROC:
File Order of RD with ROC
in e-form INC-28 and Roc will take note of the same.
CONCLUSION:
If company done non compliance of Section 96 there is no way out then
compounding for making default good. As per Act RD can’t impose penalty more
than mentioned in the concerned section.
Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES
Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).
Disclaimer: The entire contents of this
document have been prepared on the basis of relevant provisions and as per the
information existing at the time of the preparation. Although care has been
taken to ensure the accuracy, completeness and reliability of the information
provided, I assume no responsibility therefore. Users of this information are
expected to refer to the relevant existing provisions of applicable Laws. The
user of the information agrees that the information is not a professional
advice and is subject to change without notice. I assume no responsibility for
the consequences of use of such information. IN NO EVENT SHALL I SHALL BE
LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM,
ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION
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