Non inclusion of PAN & email IDs of allottees in Form PAS leads to penalty

Non inclusion of PAN & email IDs of allottees in Form PAS leads to penalty. In this MCA Adjudication order, the company has not mentioned PAN and Email ID of the allotee in the list of allotee as an attachment while filling PAS-3.
Rule 14(6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014:
A return of allotment of securities under section 42 shall be filed with the Registrar within fifteen days of allotment in Form PAS-3 and with the fee as provided in the Companies (Registration offices and Fees) Rules, 2014 along with a complete list of all the allottees containing-
(i)  The full name, address, permanent Account Number and E-mail ID of such security holder.
(ii) The class of security held.
(iii) The date of allotment of security.
(iv)The number of securities held, nominal value and amount paid on such securities; and particulars of consideration received if tire securities were issued for consideration other than cash.
To know more about the above mentioned compliance along with e-filling with MCA you can refer this article relate to private placement as per section 42 of the companies Act 2013.
Facts About of the case:
It Nagappattinam Nidhi Limited Ministry vide letter dated 13.02.2024 rejected the form NDH-4 (Form for filing application for declaration as Nidhi and for updation of Status by Nidhi) filed by the company M/S. Nagappattinam Nidhi Limited (vide SRN: AA6542500 dt 05.01.2024) wherein it was mentioned that "details of PAN of 96 members have not been mentioned in the list of members furnished by the company in its reply dated 10.02.2024. Also, a copy   of PAN of 96 members have not been furnished by the company with its reply dated10.02.2024. Further, Email ids of 200 members have not been mentioned in the list of members furnished by the company in its reply dated 10.02.2024.
 Pursuant to the above, the Registrar of Companies, Chennai had issued Show Cause Notice 05.03.2024. The applicants submitted that the offences were committed due to unavoidable circumstances and unintentional. Further, submitted that the offences were committed do not affect the Public Interest, in any way and no harm is caused to the Public Interest. Hence, the violation may be adjudicated under Section 454 of the Companies Act,2013.
Adjudication of Penalty
As per the NDH-4 rejection letter of the Ministry, the company has failed to furnish the details of PAN, copy of PAN and Email id of members in their reply. The company has admitted the same in the adjudication application although stating that the violation was unintentional. This is in violation of Rule 14(6) of the Companies (Prospectus and Allotment of Securities), Rules, 2014 and the company and its directors are liable under Section 450 of the Companies Act,2013.
After considering facts, circumstances and submissions made by the authorised representative on the behalf of the company, the concerned ROC imposed the penalty as prescribed under Section 450 of the Companies Act, 2013. The details of the penalty imposed on the Company and Officer in default are shown in the table given below:

To whom penalty imposed

Period of default

Penalty for default

Maximum Limit for Penalty

Final Penalty Impose

On Company

One time

10,000 + 1000 Per day in case of continuing Contravention

2,00,000

10,000

On 1st director

95 days

10,000 + 1000 Per day in case of continuing Contravention

2,00,000

10,000

Any Benefit of Section 446B of Companies Act
Section 446B of the Companies Act, 2013 provides a significant relief mechanism for small companies and start-ups by reducing the penalty burden for certain non-compliances. Under this provision, if a small company or a start-up commits a default for which a penalty is prescribed under the Act, the penalty imposed shall not be more than half of the specified penalty, subject to a maximum limit.
In this MCA adjudication order of Nagappattinam Nidhi Limited being a Nidhi company does not attract provision of lesser penalty as under Section 446(B) of the Companies Act,2013.
Takeaways: -
In the present case of Nagappattinam Nidhi Limited, the company has been penalized under Section 450 of the Companies Act, 2013 for non-compliance with Rule 14(6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, due to failure to furnish PAN and Email ID details of the allottees in Form PAS-3. While the provision under Section 446B of the Companies Act, 2013 provides for a reduced penalty for small companies and start-ups, this benefit does not extend to a Nidhi company. Since Nagappattinam Nidhi Limited is classified as a Nidhi company, it is not eligible for the reduced penalty framework under Section 446B. Consequently, the penalty has been imposed in accordance with the standard provisions applicable to companies that do not fall under the purview of Section 446B.
Download ROC Order

In this MCA Adjudication order, the company has not mentioned PAN and Email ID of the allotee in the list of allotee as an attachment while filling PAS-3.

Rule 14(6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014:

A return of allotment of securities under section 42 shall be filed with the Registrar within fifteen days of allotment in Form PAS-3 and with the fee as provided in the Companies (Registration offices and Fees) Rules, 2014 along with a complete list of all the allottees containing-

(i) The full name, address, permanent Account Number and E-mail ID of such security holder.

(ii) The class of security held.

(iii) The date of allotment of security.

(iv)The number of securities held, nominal value and amount paid on such securities; and particulars of consideration received if tire securities were issued for consideration other than cash.

To know more about the above mentioned compliance along with e-filling with MCA you can refer this article relate to private placement as per section 42 of the companies Act 2013.

Facts About of the case:

It Nagappattinam Nidhi Limited Ministry vide letter dated 13.02.2024 rejected the form NDH-4 (Form for filing application for declaration as Nidhi and for updation of Status by Nidhi) filed by the company M/S. Nagappattinam Nidhi Limited (vide SRN: AA6542500 dt 05.01.2024) wherein it was mentioned that "details of PAN of 96 members have not been mentioned in the list of members furnished by the company in its reply dated 10.02.2024. Also, a copy of PAN of 96 members have not been furnished by the company with its reply dated10.02.2024. Further, Email ids of 200 members have not been mentioned in the list of members furnished by the company in its reply dated 10.02.2024.

Pursuant to the above, the Registrar of Companies, Chennai had issued Show Cause Notice 05.03.2024. The applicants submitted that the offences were committed due to unavoidable circumstances and unintentional. Further, submitted that the offences were committed do not affect the Public Interest, in any way and no harm is caused to the Public Interest. Hence, the violation may be adjudicated under Section 454 of the Companies Act,2013.

Adjudication of Penalty

As per the NDH-4 rejection letter of the Ministry, the company has failed to furnish the details of PAN, copy of PAN and Email id of members in their reply. The company has admitted the same in the adjudication application although stating that the violation was unintentional. This is in violation of Rule 14(6) of the Companies (Prospectus and Allotment of Securities), Rules, 2014 and the company and its directors are liable under Section 450 of the Companies Act,2013.

After considering facts, circumstances and submissions made by the authorised representative on the behalf of the company, the concerned ROC imposed the penalty as prescribed under Section 450 of the Companies Act, 2013. The details of the penalty imposed on the Company and Officer in default are shown in the table given below:

To whom penalty imposed

Period of default

Penalty for default

Maximum Limit for Penalty

Final Penalty Impose

On Company

One time

10,000 + 1000 Per day in case of continuing Contravention

2,00,000

10,000

On 1st director

95 days

10,000 + 1000 Per day in case of continuing Contravention

2,00,000

10,000

Any Benefit of Section 446B of Companies Act

Section 446B of the Companies Act, 2013 provides a significant relief mechanism for small companies and start-ups by reducing the penalty burden for certain non-compliances. Under this provision, if a small company or a start-up commits a default for which a penalty is prescribed under the Act, the penalty imposed shall not be more than half of the specified penalty, subject to a maximum limit.

In this MCA adjudication order of Nagappattinam Nidhi Limited being a Nidhi company does not attract provision of lesser penalty as under Section 446(B) of the Companies Act,2013.

Takeaways: -

In the present case of Nagappattinam Nidhi Limited, the company has been penalized under Section 450 of the Companies Act, 2013 for non-compliance with Rule 14(6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, due to failure to furnish PAN and Email ID details of the allottees in Form PAS-3. While the provision under Section 446B of the Companies Act, 2013 provides for a reduced penalty for small companies and start-ups, this benefit does not extend to a Nidhi company. Since Nagappattinam Nidhi Limited is classified as a Nidhi company, it is not eligible for the reduced penalty framework under Section 446B. Consequently, the penalty has been imposed in accordance with the standard provisions applicable to companies that do not fall under the purview of Section 446B.