MCA Fines Private Company for Late INC-20A Filing within 180 Days

MCA Fines Private Company for Late INC-20A Filing within 180 Days. In this article we will take you through the Adjudication order in the matter of Algum Media Productions Private Limited, incorporated under the jurisdiction of the Southern Region (Chennai) which mandates to file a declaration under Section 10A of the Companies Act, 2013. This section mandates to file a declaration in Form INC-20A within 180 days of its incorporation. It refers that every company with share capital must declare that subscribers to the memorandum have paid the value of shares agreed upon. Failure to comply these requirements can attract penalties under the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.
Applicable Provision – Section 10A of the Companies Act, 2013
The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties for defaulting in filling of its declaration in the E form INC-20A as per section 10A of the companies Act 2013. The matter was brought before the concerned Regional Director, Chennai, for consideration
Section 10A states that a company incorporated after the commencement of the Companies (Amendment) Act, 2019, shall not commence business or exercise any borrowing powers unless:

A declaration is filed by a director within 180 days of incorporation, confirming that every subscriber to the memorandum has paid the value of shares agreed upon.

The company has filed verification of its registered office with the ROC.

Non-compliance with this provision results in penalties imposed on the company and its officers in default.
Facts of the Case
Algum Media Productions Private Limited, incorporated under the jurisdiction of the Southern Region (Chennai), was incorporated on 01.01.2019 failed to comply with the provisions of Section 10A. The company did not file the required declaration within 180 days of incorporation and had filed said belatedly with a delay of 106 days on 14.10.2019
ROC Kerla & Lakshadweep examined the said default and passed the adjudication order under section 454 (3) & (4) of the Act for the delay of 106 days delay in filling the Form INC-20A under section 10A (2) of the Act.
Aggrieved by the order, company has filled the appeal within the prescribed time period of 60 days in term of section 454 (6) of the Act. The Appellants have contended that Director was not able to concentrate on this compliance matter as he underwent through various health issues and had to undergo treatment during the period from April to August, 2019 and was able to file e-Form INC-20A after his recovery only and thus delay of 106 days has taken place and hence sought condonation.
Penalty Imposed by the Registrar of Companies
Upon identifying the non-compliance, the ROC imposed penalties as per the prescribed legal framework:

Company Penalty: Rs.50,000 for failure to comply with Section 10A.

Officers in Default: Rs.50,000

Reduction in Penalty on Appeal (If Any)
An opportunity of being heard was given to the Appellants on 30.12.2020. After the considering the fact and circumstances of the appeal reduced the imposed penalty by 30% for both. Thus, the revised penalty for both company and director are as follows:

Company: Rs 15,000

Officer in default: Rs 30,000

The appellants shall pay the penalty in 30 days.
Exemption to Startups, Small Companies, and OPCs Under Section 446B
Section 446B provides relief to startups, small companies, and One Person Companies (OPCs) by reducing the penalty amount levied under various provisions of the Companies Act. However, Section 10A is not explicitly covered under Section 446B, and hence, no exemption is available in such cases. The full penalty amount applies unless reduced through appeal
Conclusion
The adjudication order in the case of Algum Media Productions Private Limited underscores the importance of timely compliance with Section 10A of the Companies Act, 2013. While the company’s appeal led to a partial reduction in penalties, the case reaffirms that delays in statutory filings, even if due to unforeseen circumstances, can attract financial consequences. This serves as a reminder for companies and their officers to ensure strict adherence to compliance timelines to avoid penalties.
Download MCA Adjudication Order

In this article we will take you through the Adjudication order in the matter of Algum Media Productions Private Limited, incorporated under the jurisdiction of the Southern Region (Chennai) which mandates to file a declaration under Section 10A of the Companies Act, 2013. This section mandates to file a declaration in Form INC-20A within 180 days of its incorporation. It refers that every company with share capital must declare that subscribers to the memorandum have paid the value of shares agreed upon. Failure to comply these requirements can attract penalties under the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.

Applicable Provision – Section 10A of the Companies Act, 2013

The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties for defaulting in filling of its declaration in the E form INC-20A as per section 10A of the companies Act 2013. The matter was brought before the concerned Regional Director, Chennai, for consideration

Section 10A states that a company incorporated after the commencement of the Companies (Amendment) Act, 2019, shall not commence business or exercise any borrowing powers unless:

A declaration is filed by a director within 180 days of incorporation, confirming that every subscriber to the memorandum has paid the value of shares agreed upon.
The company has filed verification of its registered office with the ROC.

Non-compliance with this provision results in penalties imposed on the company and its officers in default.

Facts of the Case

Algum Media Productions Private Limited, incorporated under the jurisdiction of the Southern Region (Chennai), was incorporated on 01.01.2019 failed to comply with the provisions of Section 10A. The company did not file the required declaration within 180 days of incorporation and had filed said belatedly with a delay of 106 days on 14.10.2019

ROC Kerla & Lakshadweep examined the said default and passed the adjudication order under section 454 (3) & (4) of the Act for the delay of 106 days delay in filling the Form INC-20A under section 10A (2) of the Act.

Aggrieved by the order, company has filled the appeal within the prescribed time period of 60 days in term of section 454 (6) of the Act. The Appellants have contended that Director was not able to concentrate on this compliance matter as he underwent through various health issues and had to undergo treatment during the period from April to August, 2019 and was able to file e-Form INC-20A after his recovery only and thus delay of 106 days has taken place and hence sought condonation.

Penalty Imposed by the Registrar of Companies

Upon identifying the non-compliance, the ROC imposed penalties as per the prescribed legal framework:

Company Penalty: Rs.50,000 for failure to comply with Section 10A.
Officers in Default: Rs.50,000

Reduction in Penalty on Appeal (If Any)

An opportunity of being heard was given to the Appellants on 30.12.2020. After the considering the fact and circumstances of the appeal reduced the imposed penalty by 30% for both. Thus, the revised penalty for both company and director are as follows:

Company: Rs 15,000
Officer in default: Rs 30,000

The appellants shall pay the penalty in 30 days.

Exemption to Startups, Small Companies, and OPCs Under Section 446B

Section 446B provides relief to startups, small companies, and One Person Companies (OPCs) by reducing the penalty amount levied under various provisions of the Companies Act. However, Section 10A is not explicitly covered under Section 446B, and hence, no exemption is available in such cases. The full penalty amount applies unless reduced through appeal

Conclusion

The adjudication order in the case of Algum Media Productions Private Limited underscores the importance of timely compliance with Section 10A of the Companies Act, 2013. While the company’s appeal led to a partial reduction in penalties, the case reaffirms that delays in statutory filings, even if due to unforeseen circumstances, can attract financial consequences. This serves as a reminder for companies and their officers to ensure strict adherence to compliance timelines to avoid penalties.