GANGA CARE HOSPITAL LIMITED , ITS DIRECTORS, ITS CFO AND COMPANY SECRETARY WAS FINED FOR FAILURE TO CONSTITUTE THE NOMINATION AND REMUNERATION COMMITTEE (NRC)

 GANGA CARE HOSPITAL LIMITED , ITS DIRECTORS, ITS CFO AND COMPANY SECRETARY WAS FINED FOR FAILURE TO CONSTITUTE THE NOMINATION AND REMUNERATION COMMITTEE (NRC) 

GANGA CARE HOSPITAL LIMITED VS ROC,MUMBAI  

SECTION 178(1) OF THE COMPANIES ACT, 2013 –  

Every listed public company and certain prescribed public companies (with paid-up share capital ≥ ₹10 crore, turnover ≥ ₹100 crore, or outstanding loans/borrowings ≥ ₹50 crore) must constitute a Nomination & Remuneration Committee of the Board. 

BEING A PUBLIC COMPANY 

M/s Ganga Care Hospital Limited, being a public company falling under the prescribed class, was required to constitute a Nomination and Remuneration Committee (NRC) 

FAILURE TO RECONSTITUTE NRC DUE TO THE COVID-19 PANDEMIC 

Board formed NRC on 12.04.2019 consisting of three members, including two Independent Directors. However, both Independent Directors resigned on the same day, i.e., 12.04.2019, and Company failed to reconstitute the NRC until 23.03.2021. The delay was due to the COVID-19 pandemic. 

COMPANY SECRETARY AND CFO WERE PENALIZED  

ROC Mumbai imposed a penalty of ₹10 lakh on Company, its Directors, Company Secretary ‘(‘Company Secretary’’ was penalized ₹1 Lakh ) , and CFO for violation of Section 178 of the Companies Act, 2013. 

CONCLUDING REMARKS  

• Constitution of NRC is mandatory for all listed public companies and other prescribed classes of public companies. 

• Failure attracts monetary penalties under Section 178(8).f the Companies Act, 2013 

• Directors should ensure proper Board-level committees (Audit Committee, NRC, CSR Committee, etc.) are constituted as per statutory thresholds to avoid penal consequences. 

R V SECKAR FCS,LLB 79047 19295