ROC Penalty for Failure to Hold Minimum Board Meetings under Section 173
The Registrar of Companies, Himachal Pradesh, has recently passed an adjudication order highlighting the consequences of not complying with the minimum Board Meeting requirements prescribed under the Companies Act 2013. The case revolves around a company that failed to convene the requisite four Board Meetings during the calendar year 2023, resulting in penalties on the responsible officers under Section 173(4) read with Section 454.
This order is a practical reminder for companies and their officers to strictly adhere to the statutory framework governing Board governance and meeting frequency.
Legal Framework and Authority of Adjudication
Appointment of Adjudicating Officer under Section 454
The Ministry of Corporate Affairs, via Gazette notification number S.O. 831(E) dated 24/03/2015, empowered the Registrar of Companies, Himachal Pradesh, as the Adjudicating Officer under Section 454 of the Companies Act 2013.
- This appointment is made in exercise of powers conferred under
Section 454, - Read with the
Companies (Adjudication of Penalties) Rules, 2014, - For determining and imposing penalties in respect of violations under the Companies Act.
Accordingly, the ROC is legally competent to examine defaults and levy penalties, including in relation to non-compliance with Section 173.
Background of the Company and Parties Involved
Company Details
The matter relates to:
- Company Name: TIDONG POWER GENERATION PRIVATE LIMITED
- CIN: U40108HP2008PTC030877
- Registered Office Address:
GROVER COTTAGE, SECOND FLOOR, ABOVE HDFC HOME LOAN
CHOTA SHIMLA-KASUMPTI ROAD NA SHIMLA
SHIMLA HIMACHAL PRADESH INDIA 171002
The company is registered under the provisions of the Companies Act 2013/1956 with the office of the Registrar of Companies, Himachal Pradesh.
Individuals Held Liable
The adjudication order specifically concerns the following officers of the company:
- DEEPAK KAKKAR
- SANJEEV MEHRA
- RAHUL VARSHNEY
- TIMA IYER UTNE
These individuals were treated as "officers in default" for the purposes of Section 173(4) in respect of the lapse relating to Board Meetings.
Statutory Requirements under Section 173
Minimum Number and Frequency of Board Meetings
Section 173(1) of the Companies Act 2013 lays down clear obligations on companies regarding Board Meetings. The key requirements are:
- Every company must conduct its first Board Meeting within 30 days from the date of incorporation.
- Thereafter, a minimum of four Board Meetings must be held every year.
- The gap between two consecutive Board Meetings must not exceed one hundred twenty days.
These conditions ensure regular oversight and decision-making by the Board and form a core pillar of corporate governance under the Act.
Penalty Provision under Section 173(4)
Under Section 173(4), the legislative focus is on the officer responsible for issuing notice of Board Meetings. The provision states:
Every officer of the company whose duty is to give notice under this section and who fails to do so shall be liable to a penalty of twenty-five thousand rupees.
Thus, the liability is personal to the officer concerned and is not imposed on the company in this specific context.