ARTICLE
12 March 2025

Corporate Compliance: Non-compliance With Secretarial Standards May Attract Penalty From Registrar Of Companies

C
Clasis Law

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Clasis law, with offices in Delhi and Mumbai, is a full service Indian law firm that is truly international in vision, scope, experience and capability. Being solutions oriented, the firm offers efficient, cost effective services of the highest quality and prides at providing practical and commercially relevant legal advice, combining specialist legal skills and industry experience, specific to the needs of the client. The firm advises domestic as well as international clients, ranging from Fortune 500 companies to individuals, across industry sectors on all aspects of Indian law.
The Registrar of Companies, Ministry of Corporate Affairs (‘ROC') recently imposed a penalty of INR 25,000/- on Triveni Nidhi Limited (‘Company') and INR 5,000/- each on its 3 directors for non-compliance of Section 118(10) of the Companies Act, 2013 (‘the Act').
India Corporate/Commercial Law

The Registrar of Companies, Ministry of Corporate Affairs ('ROC') recently imposed a penalty of INR 25,000/- on Triveni Nidhi Limited ('Company') and INR 5,000/- each on its 3 directors for non-compliance of Section 118(10) of the Companies Act, 2013 ('the Act').

Section 118(10) of the Companies Act, 2013 provides that every company shall observe secretarial standards with respect to general and board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980, and approved as such by the Central Government.

Any non-compliance of the aforesaid provisions can attract a penalty of INR 25,000 on the company which is in default and INR 5,000 on every officer of the company who is in default.

Facts of the case

During the course of inquiry into the affairs of the Company, various non-compliance in relation to section 118(10) of the Act were observed. The minutes books were not consecutively numbered, time of commencement and conclusion of meeting were not mentioned in the minutes, minutes did not mention the date and place of signatures. Hence, it was a violation of section 118(10) of the Act read with Secretarial Standards on board and general meetings as issued by the Institute of Company Secretaries of India. Accordingly, a show cause notice was issued to the Company and its officer in default under section 118(10) of the Act, however, the Company and its directors did not furnish any reply to the said show cause notice and no hearing was fixed for the matter.

After consideration of relevant facts and circumstances, it was concluded that the Company and its directors failed to comply with the provisions of section 118 (10) of the Act and ROC imposed a penalty of INR 25,000/- on the Company and INR 5,000/- each on its 3 directors.

Conclusion

Section 118(10) of the Act has made it mandatory for every company to observe and comply with the secretarial standards with respect to general and board meetings. The purpose behind this is to standardise and have uniformity in different practices being followed by the companies from a long time. Compliance with the secretarial standards ensures transparency and adherence to corporate governance. Non-compliance with the provisions of mandatory secretarial standards may lead to ROC intervention including penalty on the company and its officers in defaults and can be detrimental for the reputation of companies and its directors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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