ROC Order on Non-Compliance with Secretarial Standard-1: Key Findings and Practical Implications
The Registrar of Companies, Kanpur, has passed an adjudication order under Section 454 of the Companies Act 2013 imposing penalties for violations arising out of improper maintenance of minutes, constituting non-compliance with Secretarial Standard-1 (SS-1). The order deals with defaults under Section 118(10) and Section 118(11) concerning the manner of maintaining minutes of meetings, and serves as an important reminder for all companies to adhere rigorously to prescribed secretarial standards.
This piece summarises the key aspects of the adjudication, identifies the nature of the lapses, outlines the penalties levied, and explains the compliance expectations going forward.
Background of the Adjudication Proceedings
Appointment of Adjudicating Officer
The Ministry of Corporate Affairs, through Gazette notification number S.O. 831(E) dated 24/03/2015, authorised the Registrar of Companies, Kanpur as the Adjudicating Officer under Section 454 of the Companies Act 2013. This empowerment is in line with the Companies (Adjudication of Penalties) Rules, 2014, allowing the ROC to impose penalties for contraventions of specific provisions of the Act, including those related to maintenance of minutes.
Company and Officers Covered by the Order
The adjudication pertains to:
Company: CHARTERED MERCANTILE MUTUAL BENEFITS LIMITED
- CIN: U24231UP1988PLC009997
- Registered office: AIFALAH MUTUAL BENEFITS LTD126/24 SULTAN MANZIL B N ROAD LALBAGH LUCKNOW NA UTTAR PRADESH UTTAR PRADESH INDIA 0
Officers in default (as identified under
Section 2(60)of theCompanies Act 2013):- SYED RAZA HAIDER
- SIRAJ MEHDI
- MOHAMMAD NAIMULLAH FAIZI
- INTEZAR ABIDI
These individuals were treated as “officers in default” and made personally liable for penalty in addition to the company.
Statutory Provisions Involved
Core Provision: Section 118 – Minutes of Proceedings
The non-compliance in this case is linked to Section 118 of the Companies Act 2013, which governs the preparation, signing and maintenance of minutes of meetings of the Board and general meetings.
Section 118(10) mandates that every company shall observe secretarial standards with respect to general and Board meetings as specified by the Institute of Company Secretaries of India and approved by the Central Government. Secretarial Standard-1 is one such binding standard applicable to Board meetings.
Section 118(11) provides for penalties where a company defaults in complying with provisions relating to minutes of any meeting:
“If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.”
Thus, any failure to follow SS-1 in matters connected to minutes becomes punishable under Section 118(11).
Inspection Under Section 206(5) and Findings
Direction for Inspection
The Ministry of Corporate Affairs, by letter dated 15.01.2021 bearing no. 4CL-II-03/2/2021-O/o DGCoA-MCA, and the Directorate through letter No. MISC/Guard/JDI/I/2021/u/s-206(5)/1304 dated 17.06.2021, instructed that an inspection be carried out under Section 206(5) of the Companies Act 2013 in respect of CHARTERED MERCANTILE MUTUAL BENEFITS LIMITED.
Pursuant to these directions, an Inspecting Officer (IO) examined the company’s records, including the minutes book, and documented various instances of non-compliance with Secretarial Standard-1.
Specific Non-Compliance with Secretarial Standard-1
The inspection revealed that the company failed to comply with the following precise clauses of Secretarial Standard-1 relating to minutes:
- Consecutive numbering of pages – Point 7.1.4 of SS-1
- Requirement: The pages of the Minutes Book must be serially and consecutively numbered.
- Finding: The company’s minutes book did not carry consecutively numbered pages, which compromises the integrity and continuity of the record.