ROC Penalty on Nidhi Company for Breach of Board Meeting Requirements

The Registrar of Companies, Patna has recently passed an adjudication order under Section 454 of the Companies Act, 2013, imposing monetary penalties on a Nidhi company and its managing director for failure to comply with mandatory Board Meeting requirements prescribed under Section 173(1) of the Act. The matter also involved non-filing of the Annual Return in Form MGT-7 and inability of the company to demonstrate, through statutory records, that Board Meetings were convened during the relevant financial year.

This order highlights the enforcement stance of the Ministry of Corporate Affairs in relation to routine corporate compliances and demonstrates how general penalty under Section 450 operates where no specific penalty is otherwise provided.

Background of the Adjudication

Appointment of Adjudicating Officer

The Ministry of Corporate Affairs, through Gazette Notification No. S.O. 698(E) dated 10/02/2026, appointed the Registrar of Companies, Patna as the Adjudicating Officer under Section 454 of the Companies Act, 2013.

By virtue of this notification and in terms of the Companies (Adjudication of Penalties) Rules, 2014, the Adjudicating Officer is empowered to:

• Examine instances of non-compliance under the Companies Act, 2013
• Determine whether a contravention has occurred
• Levy penalties as per the applicable provisions, including Section 450 where no specific penalty is provided elsewhere in the Act

Company and Officer Involved

The adjudication proceedings were initiated in respect of:

• Company: SHG MUTUAL BENEFITS NIDHI LIMITED

  • CIN: U74999BR2016PLC032131
  • Type: Nidhi company registered under the Companies Act, 2013/1956
  • Registered office: C/O SATISH KUMAR, YADAV MARKET, BITHAN ROAD, NA HASANPUR BAZAR, SAMASTIPUR, BIHAR, INDIA 848205

• Individual officer: SATISH KUMAR (Managing Director)

The company, being a Nidhi entity, is required to follow all applicable provisions of the Companies Act, 2013, including governance norms specified in Section 173(1) relating to Board Meetings.

Legal Framework Applicable

Requirement of Board Meetings – Section 173(1)

Section 173(1) of the Companies Act, 2013 mandates that:

“Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board.”

Key implications for companies:

• At least four Board Meetings are mandatory in each financial year
• The gap between two successive meetings cannot exceed 120 days
• The company must maintain proper records (minutes, attendance registers, notices, agenda, etc.) to demonstrate that such meetings were actually held

Failure to convene these meetings or to substantiate their conduct through statutory records amounts to a violation of Section 173(1).

General Penalty – Section 450

Section 450 of the Companies Act, 2013 provides a residual penalty mechanism. It applies when:

• There is a contravention of any provision of the Act or rules
• Or a breach of any condition, limitation, or restriction attached to approvals, consents, recognitions, etc.
• And no specific penalty is provided elsewhere in the Act for such contravention

The provision stipulates: