Adjudication order for violation of Section 137 of the Companies Act, 2013, i.e., non-filing of Financial Statement with the Registrar.

In accordance with Section 137(1) of the Companies Act 2013 (Act), every company is required to file a copy of the Financial Statements, including consolidated Financial Statements (i.e. Financial Statements of the Subsidiary, Holding, Associate companies, and subsidiary of such Holding company, if applicable), along with all accompanying documents, with the Registrar of Companies (ROC) within 30 (Thirty) days from the date of the Annual General Meeting (AGM). The Financial Statements shall be filed by the Company in Form AOC-4/AOC-4 CFS(Consolidated Financial Statements)/Form AOC-4 XBRL/Form AOC-4 NBFC/ Form AOC-4 CFS NBFC, as may be applicable. ?

Form AOC-4 – Form for filing Standalone financial statement and other documents with the Registrar

AOC–4 CFS. Form for filing consolidated financial statements and other documents with the Registrar

AOC– 4 XBRL– Form for filing XBRL document in respect of financial statement and other documents with the Registrar

Form AOC-4 NBFC – Form for filing Standalone financial statement and other documents with the Registrar for NBFCs

Form AOC-4 CFS NBFC (Ind AS) – Form for filing consolidated financial statements and other documents with the Registrar for NBFCs

Penalty as per Section 137(3) – If a company fails to file the copy of the Financial Statements it shall be liable for a penalty of Rs.10,000 and in case of continuing failure, with a further penalty of 100 per day during which such failure continues, subject to a maximum of Rs.2,00,000/-

The officer in default shall be liable for a penalty of Rs.10,000 and in case of continuing failure, with a further penalty of 100 per day during which such failure continues, subject to a maximum of Rs. 50,000/-

Facts of the case:

1. The ROC of Punjab & Chandigarh identified that the company had not filed its Balance Sheet for the Financial Years 2019-20 to 2021-22 2. A Show Cause Notice was issued for violating section 137(1) of the Companies Act, 2013 and Companies (Adjudication of Penalties) Rules, 2014.

However, there was no response from the company regarding this notice, implying that they have not provided any explanation for their non-compliance. Therefore, it was concluded that the company and its officers were in default and are liable for penalty as prescribed under Section 137(3) of the Act for non-filing of Financial Statements.

3. After the Adjudicating Authority’s verdict, the company was imposed with a fine of Rs.10,000, with a maximum of Rs.2,00,000 at the rate of Rs.100 per day. 4. Additionally, each director was imposed with a fine of Rs.10,000, with a maximum of Rs.50,000 at the rate of Rs.100 per day.

Conclusion:

The above case law depicts importance of timely submission of a company’s Financial Statements, and failure to do so can result in significant consequences. Companies must confirm adherence to the Companies Act, and a lack of compliance can lead to severe legal repercussions for both the company and its directors. It is strongly advised that companies and directors take all necessary measures to ensure compliance with the applicable regulations to mitigate any potential legal risks.

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