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Violation of Section 136 of Companies Act, 2013 l Corporate Law l ROC Order l Indian Company Law l CorpDaily

                                                              Case Study

Case: Failure to furnish the proof of sending the notice of AGM and Balance Sheet to the Members by hand delivery/ordinary post.

Governing Section: Section 136(1) of the Companies Act, 2013  

As per the provisions of Section 136(1), a copy of the financial statements, auditor’s report, and other relevant documents which are required by law to be annexed or attached to the financial statements are required to be sent to every member of the company, to every trustee for the debenture-holder of any debentures issued by the company, and to all persons other than such member or trustee, being the person so entitled, at least 21 (“Twenty One”) days before the date of the Annual General Meeting.

Penal Section: Section 136(3) of the Companies Act, 2013.

Penalty Imposed by the Adjudicating Officer: INR 17,500/- per financial year for which the default was committed.

Abstract of the matter: In the given case, it was observed from the Form MGT-7 filed with the Office of the Registrar of Companies that the Company had committed a default in complying with the provisions of the Companies Act, 2013, as it was unable to furnish the proof of dispatch of the Notice of the AGM and the Balance Sheet to the Members of the Company.

During the hearing of the case, it was submitted before the Office of the Registrar of Companies that the Company was unable to furnish the Proof of Delivery due to some administrative error and the Company had issued the Notice of the AGM and Balance Sheet to the Members within the prescribed time. Further, confirmations from the members were also taken in this regard. However, the above submissions were not taken into consideration as the Company had Suo-Moto admitted the default in Column No. 11 of the e-form MGT-7 which relates to Certification of Compliances and Disclosures.

After hearing the matter and taking into consideration the fact that the concerned Company was a small company, the RoC levied a penalty of INR 12,500/- on the Company and INR 2500/- on each of its Directors.

The above case law highlights the importance of the declarations made in forms filed by the Company. Further, it also highlights that the essence of law must be kept in mind while complying with the provisions of the law.

 Kind Attention: The above information is for educational purposes only.

 

 

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