Penalty imposed by ROC for non-compliance of Section 89 of Companies Act,2013

Provisions Involved:

• Section 89 (Declaration in Respect of Beneficial Interest in any Share) of the Companies Act, 2013 deals with the concept of beneficial interest in a share which obligates every person acquiring/ holding beneficial interest in a share as well as the legal owner to make a declaration to the company in respect of such beneficial interest.
• Section 89(6) of the Companies Act, 2013, Where any declaration under this section is made to a
  company, the company shall make a note of such declaration in the register concerned and shall file,
  within thirty days from the date of receipt of declaration by it, a return in the prescribed form MGT-6 as specified under Rule 9 with the Registrar in respect of such declaration with such fees as may be
  prescribed.
• Section 89(7) of the Companies Act, 2013, if a company, required to file a return under sub-section (6), fails to do so before the expiry of the time specified therein, the company and every officer of the company who is in default shall be liable to a penalty of one thousand rupees for each day during which such failure continues, subject to a maximum of five lakh rupees in the case of a company and two lakh rupees in case of an officer who is in default.

Facts of the Case –

• A Company named Mynd Fintech Private Limited incorporated on 14th January,2021 as a wholly owned subsidiary Company of Mynd Solutions Private Limited (“Holding Company”).
• It was observed by the Adjudication Authority from the record that the Company had filed its Annual
  Return, wherein it has mentioned that 100% of the shares in the Company is held by holding Company. Whereas, to fulfil the requirements of the Act 99.99% of the shares were held in the name of the holding Company & rest 0.1% of the shares were held through its Authorized Representative.
• Whereas, in response to the SCN, the Company had submitted a copy of form MGT-4 & MGT-5 received from holding Company & Authorized Representative dated January 28, 2021.
• Further, it is to be noted that in the meantime, the company had filed the e-form MGT-6 with the delay of 975 days on October 28, 2023.
• As 99.99% of shares were held by holding Company since incorporation and remaining 0.1% shares held through their Authorized Representative, to fulfil the statutory requirement, the Company was under an obligation to file the said E-form MGT-6 within 30 days from the date of receipt of declarations under Section 89 of the Act.

Decision on Violation –

• The Noticees are hereby imposed with monetary penalties under The Companies Act, 2013 of Rs.
  5,00,000 on the company and Rs. 2,00,000 on each of its directors.