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MCA Slaps Rs. 7 Lakh Penalty for Non-Filing of E-Form BEN-2 || The Legal Time



  1. Introduction:

In recent years, regulatory compliance in the corporate sector has become increasingly stringent, aiming to promote transparency and accountability. One such instance arises from the Ministry of Corporate Affairs (MCA) penalizing Gandhar Marketing Private Limited, along with its directors, for non-compliance with the Companies Act, 2013. This article delves into the specifics of the case, outlining the facts, penalties imposed, avenues for appeal, and key takeaways.

 

2. Simple Understanding (Summary):

Gandhar Marketing Private Limited, a company registered under the Companies Act, 1956, found itself in hot water due to its failure to adhere to the provisions outlined in the Companies Act, 2013. Specifically, the company neglected to file Form BEN-2, which pertains to significant beneficial owners (SBOs), within the prescribed timeframe. Despite reminders and notices from the regulatory authorities, the company failed to rectify its non-compliance, resulting in penalties being levied. The penalty amounts, totalling Rs. 7,99,000 for the company and Rs. 3,04,800 each for its directors, was imposed based on the duration of default. The article further explores the appeal process available to the respondents and highlights the potential consequences of non-payment of penalties.

 

3. Fact and Highlight of the case

Company Profile:

Gandhar Marketing Private Limited, registered under the Companies Act, 1956, operates from its registered office located at 178, Ashwani Marg, Humad House, Delhi Gate, Udaipur, Rajasthan-313001.


The company falls under the jurisdiction of the Registrar of Companies cum Official Liquidator, Rajasthan, Jaipur.

 

Legal Framework:

The case pertains to non-compliance with Section 90(4) of the Companies Act, 2013, and Rule 4 of the Companies (Significant Beneficial Owner) Rules, 2018.

Section 90(4) mandates companies to file returns of significant beneficial owners (SBOs) with the Registrar within the prescribed timeframe and format.

 

Procedural Scrutiny:

During procedural scrutiny of the e-Form MGT-7 filed by Gandhar Marketing Private Limited, it was revealed that the company had not submitted e-Form BEN-2 with the Registrar.


The list of shareholders indicated Mr Yashwant Khurdia and Mr Shanit Lal Khurdia as SBOs, with declarations submitted to the company on 06.05.2019 in Form BEN-1.


These declarations were required to be filed with the Registrar by 31.03.2020, as per the relaxation provided by the Ministry of Corporate Affairs.

 

Regulatory Notices:

The Registrar of Companies issued a Show Cause Notice dated 28.11.2023 to Gandhar Marketing Private Limited, seeking clarification on the non-filing of Form BEN-2.

Despite the issuance of notices, the company failed to respond, prompting the initiation of adjudication proceedings.

 

Adjudication Proceedings:

An Adjudication Notice was issued to the respondents, including the company and its directors, Mr. Yashwant Khurdia and Mr. Pritesh Khurdia, on 24.01.2024.


The company requested an adjournment of the hearing date via email dated 19.02.2024, which was granted, rescheduling the hearing for 20.03.2024.


During the hearing, Mr. Himanshu Sharma, Advocate and authorized representative of the respondents, presented submissions stating that the company had filed e-Form BEN-2 with the Registrar on 31.01.2024.

 

Penalty Imposition:

Despite the submission of e-Form BEN-2 post the stipulated deadline, penalties were imposed on Gandhar Marketing Private Limited and its directors based on the duration of default.


The penalty amounts were calculated from 01.04.2020 to 29.01.2024, with the company facing a total penalty of Rs. 7,99,000 and each director being penalized Rs. 3,04,800.


Nature of Default

Relevant Section and Rules

Name of Persons

Defaulting Days

Penalty Per Day (INR)

Total Default Amount (INR)

Maximum Limit for Penalty (INR)

Final Penalty Imposed (INR)

Non-filing of e-Form BEN-2 within prescribed time limit

Section 90(4) of the Companies Act, 2013 read with Rule 4 of the Companies (Significant Beneficial Owners) Rules, 2018

Blueton Paper Products Private Limited

1399

1,00,000 + (1399 * 500)

7,99,000

5,00,000

5,00,000



Yashwant Khurdia

1399

25,000 + (1399 * 200)

3,04,800

1,00,000

1,00,000



Pritesh Khurdia

1399

25,000 + (1399 * 200)

3,04,800

1,00,000

1,00,000

Grand Total





7,99,600

7,00,000

7,00,000


Payment and Appeal:

The penalties were directed to be paid through the Ministry of Corporate Affairs portal as per Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019.


Respondents have the option to appeal the adjudication order within sixty days from receipt, as per the provisions of Section 454(5) and 454(6) of the Companies Act, 2013.

 

Consequences of Non-Compliance:

Non-payment of penalties within the stipulated timeframe may lead to further fines or even imprisonment for the company and its officers, as per Section 454(8)(i) and 454(8)(ii) of the Companies Act, 2013.

 

4. Key Highlight

*Regulatory compliance underscores transparency and accountability.

*Companies must disclose significant beneficial owners as per Section 90(4) of the

Companies Act, 2013.

*Authorities identified non-compliance through procedural scrutiny.

*The company was given opportunities to rectify non-compliance following notice

issuance.

*Penalties were imposed following adjudication proceedings against the company and

its directors.

*Penalties were calculated based on the duration of default and statutory provisions.

*Penalties must be paid through the Ministry of Corporate Affairs portal, with a

provision for appeal.

*Non-compliance may result in financial penalties and legal sanctions, emphasizing regulatory adherence.

 

5. Conclusion:

The penalization of Gandhar Marketing Private Limited and its directors serves as a cautionary tale for companies regarding the consequences of regulatory non-compliance. It underscores the imperative of adhering to statutory obligations under the Companies Act, 2013, to uphold transparency and accountability in corporate governance. Going forward, stakeholders must prioritize compliance efforts to avoid similar repercussions and uphold the integrity of the corporate ecosystem.

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