CAN A WHOLE-TIME KEY MANAGERIAL PERSONNEL HOLD OFFICE IN MORE THAN ONE COMPANY EXCEPT IN ITS SUBSIDIARY COMPANY AT THE SAME TIME?

 CAN A WHOLE-TIME KEY MANAGERIAL PERSONNEL  HOLD OFFICE IN MORE THAN ONE COMPANY EXCEPT IN ITS SUBSIDIARY COMPANY AT THE SAME TIME? 

SHANTI INORGANICS LIMITED Vs ROC, AHAMADABAD 

 

FACTS OF THE CASE 

 The company has changed its name from SHANTI INORGO CHEM (GUJ) LIMITED to SHANTI INORGANICS LIMITED w.e.f. 06.05.2025.  

In this case, for F.Y. 2024-25, the company had appointed Mr. Avanishkumar Patel as Chief Financial Officer (CFO) of the company w.e.f. 19.12.2024. 

 However, Mr. Avanishkumar Patel was already appointed as a Managing Director of Jagjanani Textiles Limited a BSE listed company.  

After the appointment as a CFO immediately, he has given his resignation from the Post of CFO w.e.f. 25.01.2025 and then after Mr. Avanishkumar Patel was appointed as a Whole Time Director of the company.  

Mr. Avanishkumar Patel was a whole-time director of the company w.e.f. 25.01.2025. However, Mr. Avanishkumar Patel was already appointed as the Managing Director of Jagjanani Textiles Limited, a BSE listed company. Immediately. 

 On the knowledge of Section 203 (3) of the Companies Act, 2013, the designation of Mr. Avanishkumar Patel has been changed to Joint Managing Director of the company w.e.f. 28.01.2015.  

The company has filed suo moto adjudication application for non-compliance of section 203(3) of the C.A. 2013. 

 

SECTION 203(3) OF THE C.A. 2013 

Section 203(3) of the Companies Act, 2013: 

• Every whole-time key managerial personnel (KMP) of a company shall not hold office in more than one company except in its subsidiary company at the same time. 

• However, a company may appoint or employ a person as its Managing Director, if he is the Managing Director or Manager of one, and not more than one, other company, provided the Board approves by resolution. 

The company has violated under Section 203(3) of the C.A. 2013 for the period from 19.12.2024 to 28.01.2025. 

Nature of Violation 

In this case, Shanti Inorganics Limited was found guilty of violation of Section 203(3) because: 

• The appointed CFO / director / other KMP was holding office in more than one company simultaneously, without adhering to the statutory exceptions. 

Thus, the company and its officers were in default. 

PENALTY 

ROC, Ahamadabad levied a penalty of Rs 8,60,000 on the company and directors of the company for the violation of section 203(3) of the C.A. 2013. 

KEY TAKEAWAY 

• A KMP cannot hold office in more than one company simultaneously (except subsidiary) unless specifically permitted under law. 

 

ROLE OF COMPLIANCE OFFICERS 

 

• Companies’ compliance officers  must carefully ensure compliance to avoid monetary penalties. 

R V SECKAR, FCS,LLB 79047 19295 

 

FILING OF BEN-2 BELATEDLY WHICH IS A VIOLATION OF SECTION 90 (11) OF THE COMPANIES ACT, 2013.- -COMPANIES (SIGNIFICANT BENEFICIAL OWNERS) RULES, 2018

 FILING OF BEN-2 BELATEDLY WHICH IS A VIOLATION OF SECTION 90 (11) OF THE COMPANIES ACT, 2013.-  -COMPANIES (SIGNIFICANT BENEFICIAL OWNERS) RULES, 2018 

VERMES MICRODISPENSING INDIA PRIVATE LIMITED VS ROC, BENGALURE  

 

FACTS ABOUT THE CASE:  

. The company has filed a suo-motu adjudication application on 30.12.2024 for violation of section 90(4) of the Act . 

 

• The company has filed a suo-motu adjudication application on 30.12.2024 for violation of section 90(4) of the Act wherein it was submitted that the company has received on 05.10.2023 SBO declaration in Form BEN 1 dated 26.09.2023 from Mr. Wanzhen Zhang as significate beneficial owner. 

• 
  

•  The company filed the return in e-form No. BEN 2 with Registrar of Companies, Karnataka vide SRN AB1674690 on 28.10.2024.  

• 
  

• The Eform BEN-2 ought to have been filed by 04.11.2023 i.e. within 30 days from the aforesaid date as per Rule (4) of the Companies (Significant Beneficial Owners) Rules, 2018.  

• However, the company filed on 28.10.2024, with a delay of 359 days from 04.11.2023 to 27.10.2024. 

 

ROC, BENGALURE Levied a fine  of Rs 3,75,600 on company and its officers for this violation. 

 

OTHER CASES UNDER BELATED FILING OF BEN-2 

 

• INDUS BIOTECH LTD. was fined ₹21.46 lakh by ROC, Pune, in connection with BEN-2 filing delay. 

 

• ATOMY ENTERPRISE INDIA PRIVATE LIMITED Vs  ROC, New Delhi – SBO owner and company and its directors were fined by ROC. 

 

• Deer Smart India Private Limited VS ROC,Kanpur- The Company and its officers were fined for a delay of 1,158 days from 21 December 2020 to 22 February 2024, with a penalty of ₹6,54,000 under Section 90(11). 

 

• FOR THE ATTENTION OF COMPLIANCE OFFICERS 

• 
  

It is the duty of the compliance officers of the company to see that BEN-2 is filed within 30 days once BEN-1 is received. Otherwise, company and directors will be fined for the lapse under the Companies Act ,2013 

 

R V SECKAR , FCS, LLB 79047 19295