COMPANY PENALIZED BY MCS FOR ANNUAL RETURN & ANNUAL RETURN AND CSR REPORT VIOLATIONS

The company failed to submit an extract of its annual return to the ROC and failed to disclose further information about CSR in the directors’ report: MCA imposes a penalty.

In a recent incident, the Ministry of Corporate Affairs (MCA) of India slapped penalties on LA-FIN FINANCIAL SERVICES PRIVATE LIMITED for violating Section 136 of the Companies Act of 2013. The penalties are the result of the company’s failure to submit an extract of its annual return to the Registrar of Companies (ROC) and its failure to include additional information about Corporate Social Responsibility (CSR) in its Directors’ Report. Let’s get into the specifics of this case and consider the consequences.

• APPOINTMENT OF ADJUDICATING OFFICER

The MCA nominated Benudhar Mishra as the Adjudicating Officer under Section 454 of the Companies Act of 2013. This allows him to impose fines for infractions of the Act.

• ABOUT THE COMPANY

LA-FIN FINANCIAL SERVICES PRIVATE LIMITED is a company formed under the Companies Act of 1956 and headquartered in Mumbai, Maharashtra, India.

• FACTS ABOUT THE COMPANY

• The company failed to submit an extract of its annual return for the fiscal year that ended March 31, 2015, to the ROC, as required by Section 136 of the Companies Act, 2013. 
• Furthermore, the corporation should have given additional information about CSR in its Directors’ Report. 
• The corporation then refilled the incomplete/erroneous attachments filed previously, but the error had already resulted in noncompliance.

• SECTION 136 OF THE COMPANIES ACT, 2013

Section 136 specifies members’ entitlement to receive copies of audited financial statements. It outlines the timelines for distributing these materials to members, as well as the repercussions of noncompliance.

• FACTORS CONSIDERED BY THE ADJUDICATING OFFICER

• When assessing the penalty, the Adjudicating Officer must take into account variables such as the disproportionate gain or loss experienced by investors.
•  In this scenario, there is no record of such gains or losses, making it difficult to determine the impact of the default.

• HEARING

The company and its officers were given the opportunity to be heard, and they agreed to the adjudication process under Section 454 of the Companies Act of 2013.

• NATURE OF DEFAULT

The default was failing to file the annual return extract and furnish CSR data, which fell within the authority of the ROC in Mumbai.