(MENAFN- Live Mint) "New Delhi: Registrars of Companies (RoCs) are maintaining momentum in enforcement action with 284 companies facing adjudication orders since January for alleged offences under the Companies Act, showed orders made public by the ministry of corporate affairs number of orders issued so far this calendar year is in line with the tempo seen in 2023 in which 926 adjudication orders were issued for various alleged lapses by companies, the highest since 2019, the period for which data is readily available. In 2019, there were only 157 adjudication orders.
In 2020, 476 orders were issued, followed by 248 in 2021 and 369 in 2022.
Multiple lapsesThe alleged lapses include not filing financial statements and annual returns, not maintaining registered office, not reporting board resolutions to RoCs within the time specified in law, issue of shares in physical format, giving loans and guarantees without board resolutions, offering private placement to more than 200 persons in a year and advertising for private placement. Crowd sourcing of equity, and violations in related party transactions are also among the offences for which penalty orders were issued.
Also read: How RoCs raised the game after company law decriminalizationMaking online pitches to investors is one of the offences that RoCs have cracked down on. Using technology platforms to reach out to a large number of potential investors is regarded as unauthorised public offer rather than private placements coming under the definition of small companies-with paid up capital and sales not exceeding ₹four crore and ₹40 crore respectively, are eligible for penalty at half the rate applicable for the others, under a concessional provision meant for small businesses. However, not filing annual financial statements would mean the authorities will not be in a position to offer this concession, showed the orders.
Compliance checkD Nagendra Rao, former president of The Institute of Company Secretaries of India (ICSI) said that in many cases, companies approach the RoCs on their own for compounding of offences where they see a gap in compliance. When companies voluntarily apply for adjudication orders in such cases, the penalty levied may not go up to the maximum level specified in the law, said Rao. It is a good idea for small companies that are not mandated to have a full time company secretary, to have an annual compliance 'health check' in secretarial matters by an external professional, explained Rao read: MCA to roll out e-adjudication before March-endThe steady rise in adjudication orders coincides with the increased automation and the adoption of 'file and forget' or straight through process adopted in corporate filings as part of the ongoing upgrade of the MCA21 statutory filing system. For most of the corporate reporting, now an online acknowledgement from the system is enough. With this, RoCs are now able to focus more on substantive inspections and investigations.
A person informed about the ongoing technology upgrade of the MCA21 system said that after the national polls, the next phase of upgrade will be executed. That would include adjudication on cases entirely electronically. The ministry has in February rolled out a centralised and faceless processing of a dozen statutory forms by companies including conversion from public limited company to private and vice versa and changes to name and capital of companies with more forms to be added to this system in coming weeks. This is expected to make compliance oversight even more data and technology driven.
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