ROC Ahmedabad Imposes Penalty for Non-Compliant NRC Composition: Adjudication Under Section 178(8) of the Companies Act, 2013
Background and Overview
The Registrar of Companies, Ahmedabad, has passed an adjudication order penalising a company and its officer in default for failing to maintain a properly constituted Nomination and Remuneration Committee (NRC) in accordance with Section 178 of the Companies Act, 2013. The adjudication was initiated on a suo motu basis by the company itself, and the order was formally issued on 07th July 2026 bearing Order ID PO/ADJ/07-2026/AD/02513.
This case serves as a significant reminder for listed public companies regarding the mandatory structural requirements governing the composition of board-level committees, particularly the Nomination and Remuneration Committee.
Appointment of Adjudicating Officer
The Ministry of Corporate Affairs, through Gazette Notification No. S.O. 698(E) dated 10/02/2026, appointed the undersigned as the Adjudicating Officer under Section 454 of the Companies Act, 2013, read with the Companies (Adjudication of Penalties) Rules, 2014. The Adjudicating Officer is empowered to adjudge penalties for violations of provisions falling within the scope of the Act.
Details of the Company and Officer in Default
Company Involved:
- Name: Shreeyam Power and Steel Industries Limited
- CIN: U45200GJ1995PLC127887
- Registered Office: Plot No. 332, New GIDC Industrial Estate, Phase II, Village: Mithirohar, NA Gandhidham, Kachchh, Gujarat – 370201
Officer in Default:
- Name: Vishesh Shahra
- Designation: Whole-Time Director
- DIN: 00203546
Relevant Statutory Provisions
Section 178(8) – Penalty for Contravention
The penal provision directly applicable to this matter reads as follows:
"In case of any contravention of the provisions of section 177 and this section, the company shall be liable to a penalty of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of one lakh rupees."
Composition Requirements Under Section 178
Section 178 of the Companies Act, 2013, read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules, 2014 and Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014, mandates that:
- Every listed public company and such other class or classes of companies as may be prescribed must constitute a Nomination and Remuneration Committee.
- The NRC must consist of three or more non-executive directors.
- Out of such non-executive directors, not less than one-half must be independent directors.
Failure to comply with this composition requirement constitutes a violation attracting penal consequences under Section 178(8).