[Opinion] ROC Imposes Rs 5 Lakh Penalty on Co. and Its Directors for Filing Unsigned Annexures Along With Board’s Report

Prof R Balakrishnan – [2024] 159 taxmann.com 702 (Article)

1. A brief about this case

This is a case where M/s Kudos Finance and Investments Private Limited had filed its annual financial statements along with its board report and the required annexures. The board report is a comprehensive document circumscribing both financial and non-financial information, serving to inform the stakeholders about the overall financial position of the company and its operation & business scope. As per the framework of the Companies Act 2013, the board report and any annexures thereto are required to be duly signed by the chairperson of the company if he is so authorised by the board and where the chairperson is not so authorised, then the board report along with its annexures are required to be signed by at least two directors, one of whom shall be a managing director, or by the director where there is one director. In this particular case, the annexures filed along with the board report by the company was found to be unsigned. The Adjudication officer passed the adjudication order on this matter by levying penalty to the company and its directors for the default committed by them i.e. filing the unsigned annexures to the board report. Let us go through this case in details in order to understand the provisions of the Companies Act 2013 read with the relevant rules and consequences of default/non-compliance.

2. Relevant provisions of the Companies Act 2013 relating to this case

Section 134(6) of the Act provides that the board’s report and any annexures thereto under sub-section (3) shall be signed by its chairperson of the company if he is authorised by the board and where he is not so authorised, shall be signed by at least two directors, one of whom shall be a managing director, or by the director where there is one director.

3. Penal provisions for default/non-compliance

Section 134(8) of the Act provides that if a company is in default in complying with the provisions of this section, the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.

4. Consequences of default/violation – action from the Regulator

To understand the consequences of any default/non-compliances relating to section 134 (6) of the of the Companies Act 2013 relating to signing of the board report let us go through the decided case law on this matter decided by the Registrar of Companies of Pune on 9th February 2024 in respect of M/s. Kudos Finance and Investments Private Limited.

5. The relevant case law on this matter

We shall go through the adjudication order passed by the Registrar of Companies, Pune bearing no. RoCP/ADJ/134/2023-24/KUDOS/8(v)/B/2859 to 2864 passed by the Registrar of Companies, Pune on 9th February 2024 in the matter of M/s. Kudos Finance and Investments Private Limited. – adjudication of penalties under Section 454(3) read with section 134 of the Companies Act 2013.

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