ROC Kanpur Imposes Maximum Penalty on Nidhi Company and Directors for Failure to File Form MGT-14

In a significant regulatory development emphasizing the importance of corporate compliance, the Registrar of Companies (ROC), Kanpur, has adjudicated a penalty order against a Nidhi company for failing to file mandatory resolutions. The adjudication, carried out under Section 454 of the Companies Act, 2013, highlights the strict consequences of neglecting procedural filings, specifically Form MGT-14, regarding the approval of financial statements.

To understand the gravity of the default, it is essential to analyze the relevant provisions of the Companies Act, 2013 that govern the filing of resolutions and agreements.

Mandate under Section 117 and Section 179

The core of this adjudication revolves around Section 117(1) read with Section 179(3)(g) of the Act.

  • Section 179(3)(g) empowers the Board of Directors to approve financial statements and the Board's report.
  • Section 117(1) stipulates that a copy of every resolution or any agreement, specifically those listed in sub-section (3), must be filed with the Registrar within thirty days of its passing.

Consequently, when a Board of Directors passes a resolution to approve annual accounts, this resolution falls within the ambit of mandatory filings. The designated e-form for this purpose is Form MGT-14.

Penal Provisions under Section 117(2)

The legislation provides stringent penalties for non-compliance. Under Section 117(2), if a company fails to file the resolution within the specified period:

  • The company is liable for a penalty of ₹10,000, plus ₹100 for each day the failure continues, subject to a cap of ₹2,00,000.
  • Every officer of the company who is in default is liable for a penalty of ₹10,000, plus ₹100 for each day the failure continues, subject to a cap of ₹50,000.