ROC-Puducherry Adjudication Order u/s 454 for Sec. 29 Violation: Biogenomics Ltd

ROC-Puducherry Adjudication Order u/s 454 for Sec. 29 Violation: Biogenomics Ltd. In this article, we will take you through the mandatory provisions under Section 29 of the Companies Act, 2013.
(1) Notwithstanding anything contained in any other provisions of this Act,— 
(a) Every company making public offer; and 
(b) Such other class or classes of public companies as may be prescribed, shall issue the securities only in dematerialised form by complying with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder. 
As per section 29(2) of the Companies Act, 2013, Any company, other than a company mentioned in sub-section (1), may convert its securities into dematerialised form or issue its securities in physical form in accordance with the provisions of this Act or in dematerialised form in accordance with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder. 
Applicable Provisions:- 
As per section 29(1) of the Companies Act, 2013, Notwithstanding anything contained in any other provisions of this Act,— 
(a) Every company making public offer; and 
(b) Such other class or classes of public companies as may be prescribed, shall issue the securities only in dematerialised form by complying with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder. 
As per section 29(2) of the Companies Act, 2013, Any company, other than a company mentioned in sub-section (1), may convert its securities into dematerialised form or issue its securities in physical form in accordance with the provisions of this Act or in dematerialised form in accordance with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder. 
Facts of the case: 
Biogenomics Limited, incorporated on February 24, 2002, under the jurisdiction of the Registrar of Companies, Puducherry, had a paid-up capital of ?3,16,50,48,800 but no revenue from operations. The company is neither registered under Section 8 of the Act nor classified as a small company. 
The company had issued equity shares of Rs. 100/- each on private placement, although company acquired ISIN the shares held by company's promoters, directors, MD key managerial personnel could not be dematerialized before the allotment of shares. That the shares allotted  in physical mode, thereby violating Section 29 of the Companies Act, 2013, Rule 9 of the Companies (Prospectus and Allotment of Securities) Rules, 2014. 
Penalty Imposed by Registrar of Companies on Company and Officers in Default 
The penalty imposed were: 
 Biogenomics Limited: ?6,64,000  
 Rajmal Parakh (Managing Director): ?2,29,000 
 Sanjay Madhukar Sonar (Manager): ?2,29,000 
 Archana Rajesh Krishnan (Whole Time Director): ?2,29,000 
 Sulaiman Mohamed Hamed Al Harthy (Director): ?2,29,000 
 Mohamed Ali Mohamed Al Barwani (Director): ?2,29,000 
 Vijayand Ramchandra Bhate (Director): ?2,29,000  
 Ranjan Mohan Morge (Director): ?2,29,000 
 Pooja Somani (Company Secretary): ?2,29,000  
 Abhishek Deshpande (CFO): ?2,29,000 
 Usma Ali Mohamed Barwani (Director): ?2,29,000 
 Sushil Kumar Srivastava (Director): ?2,29,000 
Reduction of penalty- 
The grounds for reduction of penalty are as follows:           
That physical issuance of shares were dematerialized in later date with delay. However due to existing COVID situation which makes harder for the foreign shareholders to get notarized apostilled at time of issuance of shares. Accordingly, the delay has been occurred for dematerialization. Hence, "the said violation may be adjudicated and accepted to pay the penalty as per the provisions of the Companies Act,2013.                                                                        
Exemption to Startup/ Small Company/OPC under section 446B: 
As per sec. 446B of the Companies Act, 2013, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be.  
In this case, Section 446 will not appy as the company does not meet the criteria. 
Conclusion 
In conclusion, This case shows how the MCA (Ministry of Corporate Affairs) handles penalties. They understand that some rule violations happen by mistake. The big cut in penalties for Biogenomics Limited highlights the MCA’s aim to support business growth by reducing the financial impact of unintentional compliance issues. 
Download MCA adjudication order:

In this article, we will take you through the mandatory provisions under Section 29 of the Companies Act, 2013.

(1) Notwithstanding anything contained in any other provisions of this Act,—

(a) Every company making public offer; and

(b) Such other class or classes of public companies as may be prescribed, shall issue the securities only in dematerialised form by complying with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder.

As per section 29(2) of the Companies Act, 2013, Any company, other than a company mentioned in sub-section (1), may convert its securities into dematerialised form or issue its securities in physical form in accordance with the provisions of this Act or in dematerialised form in accordance with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder.

Applicable Provisions:-

As per section 29(1) of the Companies Act, 2013, Notwithstanding anything contained in any other provisions of this Act,—

(a) Every company making public offer; and

Facts of the case:

Biogenomics Limited, incorporated on February 24, 2002, under the jurisdiction of the Registrar of Companies, Puducherry, had a paid-up capital of ?3,16,50,48,800 but no revenue from operations. The company is neither registered under Section 8 of the Act nor classified as a small company.

The company had issued equity shares of Rs. 100/- each on private placement, although company acquired ISIN the shares held by company's promoters, directors, MD key managerial personnel could not be dematerialized before the allotment of shares. That the shares allotted in physical mode, thereby violating Section 29 of the Companies Act, 2013, Rule 9 of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Penalty Imposed by Registrar of Companies on Company and Officers in Default

The penalty imposed were:

Biogenomics Limited: ?6,64,000

Rajmal Parakh (Managing Director): ?2,29,000

Sanjay Madhukar Sonar (Manager): ?2,29,000

Archana Rajesh Krishnan (Whole Time Director): ?2,29,000

Sulaiman Mohamed Hamed Al Harthy (Director): ?2,29,000

Mohamed Ali Mohamed Al Barwani (Director): ?2,29,000

Vijayand Ramchandra Bhate (Director): ?2,29,000

Ranjan Mohan Morge (Director): ?2,29,000

Pooja Somani (Company Secretary): ?2,29,000

Abhishek Deshpande (CFO): ?2,29,000

Usma Ali Mohamed Barwani (Director): ?2,29,000

Sushil Kumar Srivastava (Director): ?2,29,000

Reduction of penalty-

The grounds for reduction of penalty are as follows:

That physical issuance of shares were dematerialized in later date with delay. However due to existing COVID situation which makes harder for the foreign shareholders to get notarized apostilled at time of issuance of shares. Accordingly, the delay has been occurred for dematerialization. Hence, "the said violation may be adjudicated and accepted to pay the penalty as per the provisions of the Companies Act,2013.

Exemption to Startup/ Small Company/OPC under section 446B:

As per sec. 446B of the Companies Act, 2013, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be.

In this case, Section 446 will not appy as the company does not meet the criteria.

Conclusion

In conclusion, This case shows how the MCA (Ministry of Corporate Affairs) handles penalties. They understand that some rule violations happen by mistake. The big cut in penalties for Biogenomics Limited highlights the MCA’s aim to support business growth by reducing the financial impact of unintentional compliance issues.