PRIVATE PLACEMENT VIOLATION: MCA IMPOSED ₹4.73 CRORE PENALTY ON COMPANY & DIRECTORS FOR FAILURE TO MAINTAIN A SEPARATE BANK ACCOUNT FOR PRIVATE PLACEMENT PROCEEDS OF ₹73,44,000 AND INCOMPLETE DISCLOSURES IN FILINGS. ROC HYDERABAD Vs DIGILOGIC SYSTEMS LIMITED

 PRIVATE PLACEMENT VIOLATION: MCA IMPOSED ₹4.73 CRORE  PENALTY ON COMPANY & DIRECTORS FOR FAILURE TO MAINTAIN A SEPARATE BANK ACCOUNT FOR PRIVATE PLACEMENT PROCEEDS OF  ₹73,44,000 AND INCOMPLETE DISCLOSURES IN FILINGS.

ROC HYDERABAD Vs DIGILOGIC SYSTEMS LIMITED

FACTS OF THE CASE

ROC Hyderabad has imposed penalties totaling ₹4.73 crore on DigiLogic Systems Limited and its directors for violations in private placement compliance under Section 42 of the Companies Act, 2013 .

The penalties include ₹2 crore each in two separate orders and ₹73.44 lakh in a third, with identical amounts levied on the company and its officers. DigiLogic Systems has announced plans to appeal before the Regional Director.

NON-COMPLIANCE

Non-compliance with Section 42(6) & Section 42(10) of the Companies Act, 2013.

Failure to maintain a separate bank account for private placement proceeds and incomplete disclosures in filings.

ARGUMENT BY COMPANY

The company argued that it had designated an existing account and substantially complied with the law, the adjudicating authority rejected this contention, holding that the statutory requirement of maintaining a separate bank account was not fulfilled.

It also noted procedural lapses, including incomplete disclosures in filings. While the show cause notice initially considered a higher penalty of ₹2 crore, the authority correctly restricted the penalty to the amount raised, i.e., ₹73,44,000.

CORPORATE GOVERNANCE IMPACT:

·      Such violations highlight the importance of strict compliance with private placement rules, especially regarding separate bank accounts and accurate disclosures.

·      Regulatory penalties can affect investor confidence and future fundraising activities.

KEY TAKEAWAYS

PRIVATE PLACEMENT RULES ARE STRICT:

Companies must maintain a dedicated bank account for application money.

PROCEDURAL LAPSES ATTRACT HEAVY PENALTIES:

 Even minor deviations can result in multi-crore fines.

DIRECTORS ARE PERSONALLY LIABLE:

 Identical penalties were imposed on both the company and its officers.

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

DELAY IN CHARGE FILING WITH ROC - HEAVY PENALTY UPTO Rs 5,00,000 OR Up TO 0.05% OF LOAN AMOUNT UNDER NEW RULES

 DELAY IN CHARGE FILING  WITH ROC - HEAVY PENALTY UPTO Rs 5,00,000 OR Up TO 0.05% OF LOAN AMOUNT UNDER NEW RULES

WHAT IS NEW ?

·      Delay in filing charge with ROC is no longer a minor compliance lapse —

·      It can trigger significant additional fees and penalties under the rules.

HEAVY FINE FOR NOT FILING CHARGES WITH ROC

Recent amendments under the Companies (Registration Offices and Fees) Rules have made non-compliance extremely costly for filing charges with ROC beyond 60 days.

WHAT HAPPENS IF CHARGE IS NOT FILED WITHIN 60 DAYS

FILING  CHARGES WITH ROC AFTER 60 DAYS

·      Ad valorem fee applies

Up to 0.05% of loan amount or (Max ₹5 lakhs)

·      Higher the loan = Higher the penalty

FILING BETWEEN 90–120 DAYS

·      Higher additional fee + Ad valorem continues

FILING BEYOND 120 DAYS

·      Filing not allowed

·       You have to go for condonation under Section 87 of CA 2013

CONCLUDING REMARKS

Even a small delay can lead to:

• Escalating additional fees

• Compliance risk exposure

• Issues in enforcement of security

·      Timely filing is not optional — it’s critical for protecting lender rights and avoiding regulatory consequences.

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

NON APPOINTMENT OF A COMPANY SECRETARY-₹15 LAKH PENALTY --- DIRECTORS HELD PERSONALLY LIABLE DESPITE COMPANY DISSOLVED VIA NCLT ORDER SUBSEQUENTLY

 NON APPOINTMENT OF A COMPANY SECRETARY-₹15 LAKH PENALTY --- DIRECTORS HELD PERSONALLY LIABLE DESPITE COMPANY DISSOLVED VIA NCLT ORDER SUBSEQUENTLY

ROC CUTTACK Vs SAV INDUSTRIES PRIVATE LIMITED

FACTS OF THE CASE

The company failed to appoint a Whole-Time Company Secretary as mandated under Section 203(1)(ii) read with Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, despite meeting the applicable paid-up capital threshold Rs 10 Crores.

DISSOLUTION

The company was subsequently dissolved via NCLT order.

OBSERVATION OF ROC

1. Default was established based on MCA records.

2. Non-response to SCN indicated acceptance of default .

3. DISSOLUTION OF COMPANY DOES NOT ABSOLVE  DIRECTORS OF LIABILITY FOR DEFAULTS DURING TENURE PER SECTION 203(5).

DECISION BY CUTTACK ROC

Penalty of ₹5,00,000 imposed on each of the 3 directors. Total penalty: ₹15,00,000. Amount payable from personal funds within 90 days from order date.

KEY TAKEAWAYS FOR BUSINESSES & DIRECTORS

1. KMP COMPLIANCE IS NON-NEGOTIABLE:

 Paid-up capital ≥ ₹10 crore triggers mandatory Whole-Time CS appointment

2. LIABILITY SURVIVES DISSOLUTION:

DIRECTORS REMAIN PERSONALLY LIABLE FOR PAST

 DEFAULTS .

3. RESPOND TO SCN:

Ignoring notices leads to maximum penalty under

 adjudication

4. PROACTIVE COMPLIANCE SAVES LAKHS:

 Regular secretarial audits prevent such orders and heavy fines.

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

ASSETS NOT HELD IN COMPANY’S NAME – COSTLY COMPLIANCE FAILURE ROC GOA vs MEGA STRUCTURES REALESTATE LIMITED

 ASSETS NOT HELD IN COMPANY’S NAME – COSTLY COMPLIANCE FAILURE

ROC GOA vs MEGA STRUCTURES REALESTATE LIMITED

FACTS OF THE CASE

• The company acquired a proprietary business (M/s Reliance Construction) by issuing shares worth ₹2.02 crore to its Managing Director.
• However, even after acquisition:
• Properties remained in the name of the Managing Director, not the company.
• This non-compliance continued for multiple years (FY 2017–18 to FY 2021–22).

LEGAL PROVISION INVOLVED

Section 187 of the Companies Act, 2013

·      Mandates that all investments and assets of a company must be held in its own name

·      Section 187(4)provides for penalty in case of default

CONTINUOUS DEFAULT UNDER SECTION 187

·      The company failed to transfer ownership of acquired assets into its own name

·      This is a continuous default under Section 187

·      Auditor’s reports repeatedly flagged the issue

PENALTY IMPOSED

ROC Goa imposed penalties under Section 454 read with Section 187(4):

·      Company: ₹5,00,000

·      Managing Director (Officer in default): ₹50,000

KEY LEGAL PRINCIPLE

This case reinforces a critical compliance rule:

A company cannot “beneficially own” assets while legal ownership remains with directors or others.

Even if:

·      Consideration is paid (e.g., shares issued), and

·      Assets are reflected in books

·      Legal title must be in the company’s name

·      Auditor qualifications can trigger ROC action

KEY TAKEAWAYS

·      Post-acquisition compliance is critical

·      Continuous default increases exposure

·      Weak governance can lead to avoidable penalties

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

SODECIA INDIA PRIVATE LIMITED WAS PENALISED FOR NOT APPOINTING COMPANY SECRETARY Rs 10 LACS FOR MORE THAN 5 YEARS

 SODECIA INDIA PRIVATE LIMITED WAS PENALISED FOR NOT APPOINTING COMPANY SECRETARY Rs 10 LACS FOR MORE THAN 5 YEARS

ROC CHENNAI VS SODECIA INDIA PRIVATE LIMITED

LEGAL REQUIREMENTS

Section 203(1) of the Companies Act, 2013

·      Mandates appointment of Key Managerial Personnel (including a Whole-Time Company Secretary) for certain classes of companies.

·      Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

·      Requires every company with paid-up share capital ≥ ₹10 crore to appoint a Whole-Time CS.

·      Section 203(5)--Provides penalty for non-compliance.

FACTS OF THE CASE

·      The company’s paid-up share capital exceeded ₹10 crore, triggering mandatory CS appointment.

·      Despite this, the company failed to appoint a Whole-Time CS for a prolonged period:

·      Default period: 1,837 days / 2,045 days (approx. 5+ years)

·      The company later regularized the default by appointing a CS, but only after a long delay.

ROC CHENNAI FINDINGS

The Registrar held that:

·      The requirement under Section 203 is mandatory, not procedural.

·      Subsequent compliance does NOT wipe out past default.

·      Financial hardship or operational issues are not valid defenses.

PENALTY IMPOSED

·      ₹5,00,000 on the Company

·      ₹5,00,000 on the Officer in Default (Director/KMP)

·      Total penalty: ₹10,00,000

·      Penalty to be paid:

·      By officers from personal funds (not company funds).

KEY TAKEAWAYS

·      Maintain a KMP compliance tracker (CS, CFO, CEO).

·      Do not rely on:

·      Financial constraints

·      Administrative delays

These are not acceptable defenses before ROC.

CONCLUDING REMARKS

·      Non-appointment of a Company Secretary is treated as a serious governance failure, not a minor procedural lapse.

·      It is a clear reminder that Section 203 compliance is non-negotiable and time-sensitive.

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

CAN A COMPANY BE PENALIZED BY FOR THE VIOLATION OF NON CONDUCTING BOARD MEETINGS DUE TO DIRECTOR IMPRISONMENT AND SEALING OF OFFICE AND ASSETS?

 CAN A COMPANY BE PENALIZED BY FOR THE VIOLATION OF NON CONDUCTING BOARD MEETINGS DUE TO DIRECTOR IMPRISONMENT AND SEALING OF OFFICE AND ASSETS?

ROC CHHATTISGARH VS YALSCO REAL ESTATE & AGRO FARMING LIMITED

CORE LEGAL ISSUE

The company failed to conduct Board Meetings as mandated under Section 173 of the Companies Act, 2013.

The defense cited:

·      Imprisonment of key directors

·      Sealing of registered office and assets by authorities

STATUTORY REQUIREMENT UNDER SECTION 173:

·      Minimum 4 Board Meetings every year

·      Gap between two meetings should not exceed 120 days

Non-compliance attracts penalties under Section 450 (general penalty provision where no specific penalty is prescribed).

PENALTY IMPOSED UNDER SECTION 450 (GENERAL PENALTY FOR NON-COMPLIANCE)

PENALTY IMPOSED:

Company: ₹2,00,000

Directors: ₹50,000 each

IF ALL THE DIRECTORS OF THE COMPANY ARE UNDERGOING IMPRISONMENT , HOW THE DIRECTORS OF A COMPANY WILL CONDUCT A BOARD MEETING?

IF ALL DIRECTORS ARE IMPRISONED, PRACTICAL ISSUES ARISE:

·      No physical presence possible

·      Access to VC facilities inside prison is highly unlikely and subject to prison regulations

So, quorum itself fails, making the meeting invalid.

DOCTRINE OF IMPOSSIBILITY (KEY LEGAL PRINCIPLE)

Courts and tribunals often recognize that:

·      Law does not compel a person to do what he cannot possibly perform.

·      If directors are imprisoned and:

·      Office is sealed

·      Records are inaccessible

Then non-compliance (e.g., not holding Board Meetings) may be excused, depending on facts.

Hence, it is suggested that Yalsco Real Estate & Agro Farming Limited should appeal to RD and then to NCLT to condone such non-compliance.

                                       KEY TAKEAWAY

·      Compliance must continue even during adverse situations

·      Proper documentation & proactive steps are crucial

·      Statutory compliance is mandatory—operational challenges don’t excuse governance failures.

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

POSH FAILURES AT TCS NASHIK

 POSH FAILURES AT TCS NASHIK

POSH FAILURES AT TCS NASHIK

COMPLETE FAILURE” OF INTERNAL SYSTEMS

The TCS Nashik BPO unit is facing a major crisis after multiple women employees alleged sexual harassment and coercion, with investigations revealing serious failures in implementing the POSH (Prevention of Sexual Harassment) Act.

 Nine FIRs have been filed, senior HR officials have been arrested, and experts are calling it a “complete failure” of internal systems.

 

KEY FACTS ABOUT THE POSH FAILURES AT TCS NASHIK

LOCATION:	TCS BPO unit in Nashik, Maharashtra.
COMPLAINTS:	At least eight women employees reported sexual harassment and coercion.
INVESTIGATION:	A Special Investigation Team (SIT) is probing the case, reviewing 78 emails and chat records.
LEGAL ACTION:	Nine FIRs have been registered; multiple arrests include a senior HR AGM who was part of the POSH Internal Committee.
SYSTEMIC FAILURE:	Experts highlight delayed responses, lack of escalation channels, and failure to act on repeated complaints.
PUBLIC BACKLASH:	TCS is facing severe criticism on social media and within the IT industry for allegedly violating the POSH Act, 2013.

 

WHY THIS IS CONSIDERED A POSH FAILURE?

IGNORED COMPLAINTS:	HR officials allegedly dismissed or failed to act on multiple grievances.
INTERNAL COMMITTEE BREAKDOWN:	The very HR official responsible for POSH compliance was arrested for negligence.
DELAYED ACTION:	Suspension of accused employees came only after police intervention.
LACK OF SAFE CHANNELS:	Employees had no independent, high-level reporting mechanism beyond their managers

 

FAILED TO TAKE COGNISANCE

Despite being a member of the POSH (Prevention of Sexual Harassment) Committee, the Operations Head failed to take cognizance of the victim's complaint and instead extended support to the accused.

INACTION (2022–2026)

The Nashik incident represents a serious breakdown of POSH governance, not merely individual misconduct. Allegations indicate multi-year inaction (2022–2026) despite formal complaints, compromised neutrality within the POSH Committee, and potential HR complicity.

TAKEAWAY

The TCS Nashik case is a textbook example of how POSH compliance can fail when internal systems are weak and HR oversight is compromised. For organizations, the lesson is clear:

POSH policies must be enforced rigorously, with independent mechanisms and accountability at the highest levels.

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,