Directors Penalized for Failure to Update their Address with MCA

Key Takeaways:

1. MCA imposed a penalty of Rs. 2.21 Lakh on Somen Venture Private Limited and its directors for failing to intimate the change of address with the MCA in the prescribed form DIR-6.

2. The penalty underscores the importance of adhering to regulatory requirements and timely submission of necessary documentation.

3. Directors have a legal obligation to ensure timely submission of necessary documents and updates to the authorities, failing which they may face punitive action.

In a recent adjudication order, the Registrar of Companies, Bihar-Cum-Official Liquidator, High Court, Patna, has taken strict action against Somen Venture Private Limited and its directors for failing to comply with the statutory requirements outlined in Rule 12 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

The case came to light when a complaint was filed by Mr. Kiriti Azad, alleging the unauthorized use of premises by the company. Upon investigation, it was revealed that the directors, Mohammad Neyaz Ahmad and Kahkashan Zar, had not intimated the MCA about their change of address within the prescribed 30-day period, as mandated by Rule 12.

Rule 12 of the Companies (Appointment and Qualification of Directors) Rules, 2014, explicitly states that every individual who has been allotted a Director Identification Number (DIN) must intimate the Central Government about any change in their particulars within 30 days of such change, using Form DIR-6. The failure to comply with this requirement constitutes a violation of the Companies Act, 2013.

Consequently, the adjudicating officer, appointed under Section 454 of the Companies Act, 2013, and the Companies (Adjudication of Penalties) Rules, 2014, initiated adjudication proceedings against the company and its directors.

After considering the facts and circumstances of the case, the adjudicating officer imposed a penalty of Rs. 2.21 lakh on the company and its directors, Mohammad Neyaz Ahmad and Kahkashan Zar, under Section 450 of the Companies Act, 2013. This penalty was calculated based on the number of days of default, which amounted to 211 days from August 1, 2023, until the date of the order on February 27, 2024.

The adjudication order emphasizes the importance of adhering to statutory requirements and maintaining transparency in corporate governance.

The company and its directors have been directed to pay the penalty amount individually within 90 days of the order. They also have the option to appeal against the adjudication order within 60 days of receipt, as per the provisions outlined in Sections 454(5) and 454(6) of the Companies Act, 2013.

FAQs:

Q1. What is the significance of intimating the MCA about a change of address?

A1.Intimating the MCA about a change of address is a statutory requirement under Rule 12 of the Companies (Appointment and Qualification of Directors) Rules, 2014. It ensures that the MCA's records are up-to-date and facilitates effective communication with directors regarding important matters related to their roles and responsibilities.

Q2.What are the consequences of non-compliance with Rule 12?

A2.Non-compliance with Rule 12 constitutes a violation of the Companies Act, 2013, and can result in the imposition of penalties under Section 450 of the Act. In this case, the penalty amounted to Rs. 2.21 lakh, calculated based on the number of days of default.

Q3. Can the penalty imposed by the MCA be appealed?

A3.Yes, the company and its directors have the option to appeal against the adjudication order within 60 days of receipt, as per the provisions outlined in Sections 454(5) and 454(6) of the Companies Act, 2013.

Q4. What is the significance of the adjudication order?

A4.The adjudication order serves as a reminder of the MCA's commitment to enforcing compliance with statutory requirements and maintaining transparency in corporate governance. It underscores the legal consequences of non-compliance and emphasizes the importance of directors fulfilling their obligations diligently.

Q5.What steps should directors take to ensure compliance with statutory requirements?

A5.Directors should stay vigilant and promptly intimate the MCA about any changes in their particulars, such as address, within the prescribed timeline. They should also ensure that they are familiar with the relevant provisions of the Companies Act, 2013, and the associated rules and regulations to avoid inadvertent non-compliance.