What is the penalty for not maintaining register of KMP?

What is the penalty for not maintaining register of KMP?. Section 170 of the Companies Act, 2013 mandates that every company maintain a register containing details of its directors and key managerial personnel (KMP), including their personal particulars such as name, address, and other prescribed details. This register must be kept at the company’s registered office and be available for inspection by members. Additionally, the company is required to file returns with the Registrar of Companies (ROC) regarding any changes in the particulars of directors and KMP. Failure to maintain with this provision will lead to penalty on both company and every officer in default being liable to a penalty of Rs.50,000. In the case of a continuing default, a further fine of Rs.500 per day may be imposed until compliance is achieved.
Applicable Provisions
The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties imposed by ROC Karnataka dated 24.05.2024 for violation of section 170 of the Companies Act 2013. The matter was brought before the Regional Director (WR), Hyderabad, for consideration.
Facts of the Case with ROC and RD
Jai Shree Krishna Steel works Private Limited, a company, was found to be in default of Section 170 of the Companies Act 2013. During the course of inspection under section 206 (5) of the Act, no such register found/maintained by the company.
When the matter was taken up ny the company, the company replied that the office and factory premises have taken in possession by Assets Reconstruction Company under SARFAESI Act. Moreover, the records of the company are in no way concerned with the possession of plan and machinery taken by the Asset Reconstruction Company. However, the company has not produced any evidence in the matter. 
The Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD). The hearing was attended by the company's representative, a Practicing Company Secretary and contended that the:
• Appellant is a closely held company with two promoters and directors who are father and son and that south Indian Bank has sanctioned term loan to the company for setting up mini steel plant and further additional loan to purchase machinery and fixed assets and due to default in repayment of loan the said bank was assigned to an asset’s reconstruction company. Since the company is under the possession of the ARC Company. During the course of inspection, no register was found.
• Violation is neither wilful nor wonton and no injury has been caused to the public interest and the company has faced financial losses in the previous year.
• In support of their claim the appellants have filled the possession notice dated 19.06.2018 issued by the ARC company.
Imposed Penalty
The ROC after considering the fact and circumstances of the case levied penalties. The penalty amount was determined based on the company's failure to comply with the relevant legal requirements. The details of the penalty, are as follows
• On Company:  Rs, 3,00,000
• On 2 Director: Rs. 1,00,000 each
Reduction in Penalty
Upon hearing the appeal, the RD Adjudication Order reviewed the circumstances surrounding the non-compliance. The company’s arguments, including mitigating factors and potential rectifications, were considered. Consequently, the RD exercised its discretion to reduce the penalty amount as follows:
For non-appointment of Company Secretary:
• On Company: Rs, 60,000
• On 2 Directors: Rs. 60,000 each
Any Benefit of Section 446B of Companies Act
Section 446B of the Companies Act, 2013, provides for lesser penalties in cases involving small companies and startups. However, in Tethys Properties Private Limited, concerned RD has already reduce the amount of penalties after considering all the facts and circumstances up to a great extent.
Our observations:
In conclusion, the case of Jai Shree Krishna Steel Works Private Limited highlights the importance of maintaining statutory registers and complying with the provisions of the Companies Act, 2013. While the company faced financial distress and operational challenges due to the possession of its premises by an Asset Reconstruction Company, the lack of documentary evidence to support its claims led to the imposition of penalties by the ROC. The Regional Director, after considering the mitigating factors and the financial condition of the company, exercised discretion to reduce the penalty amount. This case underscores the need for companies to ensure strict compliance with statutory requirements, regardless of financial or operational difficulties, to avoid regulatory penalties.
Download MCA Adjudication Order:

Section 170 of the Companies Act, 2013 mandates that every company maintain a register containing details of its directors and key managerial personnel (KMP), including their personal particulars such as name, address, and other prescribed details. This register must be kept at the company’s registered office and be available for inspection by members. Additionally, the company is required to file returns with the Registrar of Companies (ROC) regarding any changes in the particulars of directors and KMP. Failure to maintain with this provision will lead to penalty on both company and every officer in default being liable to a penalty of Rs.50,000. In the case of a continuing default, a further fine of Rs.500 per day may be imposed until compliance is achieved.

Applicable Provisions

The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties imposed by ROC Karnataka dated 24.05.2024 for violation of section 170 of the Companies Act 2013. The matter was brought before the Regional Director (WR), Hyderabad, for consideration.

Facts of the Case with ROC and RD

Jai Shree Krishna Steel works Private Limited, a company, was found to be in default of Section 170 of the Companies Act 2013. During the course of inspection under section 206 (5) of the Act, no such register found/maintained by the company.

When the matter was taken up ny the company, the company replied that the office and factory premises have taken in possession by Assets Reconstruction Company under SARFAESI Act. Moreover, the records of the company are in no way concerned with the possession of plan and machinery taken by the Asset Reconstruction Company. However, the company has not produced any evidence in the matter.

The Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD). The hearing was attended by the company's representative, a Practicing Company Secretary and contended that the:

• Appellant is a closely held company with two promoters and directors who are father and son and that south Indian Bank has sanctioned term loan to the company for setting up mini steel plant and further additional loan to purchase machinery and fixed assets and due to default in repayment of loan the said bank was assigned to an asset’s reconstruction company. Since the company is under the possession of the ARC Company. During the course of inspection, no register was found.

• Violation is neither wilful nor wonton and no injury has been caused to the public interest and the company has faced financial losses in the previous year.

• In support of their claim the appellants have filled the possession notice dated 19.06.2018 issued by the ARC company.

Imposed Penalty

The ROC after considering the fact and circumstances of the case levied penalties. The penalty amount was determined based on the company's failure to comply with the relevant legal requirements. The details of the penalty, are as follows

• On Company: Rs, 3,00,000

• On 2 Director: Rs. 1,00,000 each

Reduction in Penalty

Upon hearing the appeal, the RD Adjudication Order reviewed the circumstances surrounding the non-compliance. The company’s arguments, including mitigating factors and potential rectifications, were considered. Consequently, the RD exercised its discretion to reduce the penalty amount as follows:

For non-appointment of Company Secretary:

• On Company: Rs, 60,000

• On 2 Directors: Rs. 60,000 each

Any Benefit of Section 446B of Companies Act

Section 446B of the Companies Act, 2013, provides for lesser penalties in cases involving small companies and startups. However, in Tethys Properties Private Limited, concerned RD has already reduce the amount of penalties after considering all the facts and circumstances up to a great extent.

Our observations:

In conclusion, the case of Jai Shree Krishna Steel Works Private Limited highlights the importance of maintaining statutory registers and complying with the provisions of the Companies Act, 2013. While the company faced financial distress and operational challenges due to the possession of its premises by an Asset Reconstruction Company, the lack of documentary evidence to support its claims led to the imposition of penalties by the ROC. The Regional Director, after considering the mitigating factors and the financial condition of the company, exercised discretion to reduce the penalty amount. This case underscores the need for companies to ensure strict compliance with statutory requirements, regardless of financial or operational difficulties, to avoid regulatory penalties.