COMPANY CANNOT CLAIM EXCUSE FOR NON FUNCTIONING OF MCA SITE FOR FILING FORM PAS-3 AND FORM SH-7

 COMPANY CANNOT CLAIM EXCUSE FOR NON FUNCTIONING OF MCA SITE FOR FILING FORM PAS-3 AND FORM SH-7

ROC –CHENNAI VS JAYAPRIYA GRAMA VALARCHI NIDHI LIMITED

FORM PAS-3 AND FORM SH-7

The ROC (Registrar of Companies), Chennai, ruled that Jayapriya Grama Valarchi Nidhi Limited cannot claim the non-functioning of the MCA portal as an excuse for failing to file Form PAS-3 and Form SH-7.

TECHNICAL GLITCHES

The company and its Managing Director were penalized heavily, reinforcing that statutory compliance deadlines must be met regardless of technical glitches. 

PENALTIES IMPOSED

FORM	VIOLATION	PENALTY ON COMPANY	PENALTY ON MANAGING DIRECTOR
PAS-3	Non-filing after increase in paid-up capital	₹1,00,000	₹1,00,000
SH-7	Non-filing after increase in authorized share capital	₹2,57,000	₹1,00,000

KEY LEGAL TAKEAWAYS

SECTION 454, COMPANIES ACT, 2013	Adjudicating authority can impose penalties for non-compliance.
SECTION 64(1), COMPANIES ACT, 2013	Requires filing SH-7 for changes in authorized share capital.
NO EXCUSE PRINCIPLE	Technical glitches or portal downtime do not absolve companies of responsibility.

 

ACTIONABLE GUIDANCE FOR COMPANIES

•     File Early: Avoid last-minute filings to reduce risk of portal downtime

·      Seek Professional Help: Engage company secretaries or compliance experts for timely filings.

APPEAL

Appeal against this order may be filed in writing with the Regional Director, RD Chennai within a period of sixty days from the date of receipt of this order, in Form ADJ setting for the grounds of appeal.

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

MANDATORY ROTATION OF DIRECTORS- NON-COMPLIANCE WITH SECTION 152(6)- ROC PENALISED FUSION FINANCE LTD RS 4 LACS

 MANDATORY ROTATION OF DIRECTORS- NON-COMPLIANCE WITH SECTION 152(6)- ROC PENALISED FUSION FINANCE LTD RS 4 LACS

ROC , NEW DELHI VS FUSION FINANCE LIMITED

SECTION 152(6) OF THE COMPANIES ACT, 2013 MANDATES:

·      At least 2/3rd of total directors of a public company shall be liable to retire by rotation

·      Such rotational directors must be non-independent directors

·      Ensures periodic shareholder control over board composition

VIOLATION DETAILS

PERIOD OF DEFAULT	20 July 2021 – 08 July 2023
REQUIREMENT	Minimum 3 non-independent directors liable to retire by rotation
ACTUAL	Only 1 rotational director was designated
RESULT	Non-compliance with Section 152(6) for 2 years

PENALTY IMPOSED

Person	Penalty
Company	₹3,00,000
Total	₹4,00,000

KEY OBSERVATIONS BY ROC

STRICT LIABILITY NATURE	Non-maintenance of board composition = direct violation
INDEPENDENT DIRECTORS	NOT held liable Only those in charge of compliance treated as “officer in default”
NATURE OF PENALTY	Continuous default aggravates penalty exposure
OFFICER IN DEFAULT LIABILITY	·      Managing Director held personally liable ·      Reinforces Section 2(60) accountability

KEY TAKEAWAYS

This case reinforces that:

·      Board structure compliance is a substantive obligation, not a formality.

·      Increased scrutiny of governance lapses.

·      No leniency even if default is later rectified.

YOUR COMPLIANCE PARTNER – R V - SECKAR , FCS, LLB 79047 19295

COMPANIES AMENDMENT ACT 2026 PROPOSED KEY CHANGES UNDER COMPANIES ACT, 2013

 

COMPANIES AMENDMENT ACT 2026

PROPOSED KEY CHANGES UNDER

 COMPANIES ACT, 2013

EXISTING PROVISIONS	PROPOSED AMENDMENT
SECTION 7 OF THE COMPANIES ACT, 2013, GOVERNS COMPANY INCORPORATION, REQUIRING A DECLARATION FROM AN ADVOCATE, CHARTERED ACCOUNTANT, COST ACCOUNTANT, OR COMPANY SECRETARY IN PRACTICE.	Now Certification by professionals is optional
AGM/EGM	Hybrid & Virtual Meetings Legalized • AGM/EGM can be held: Physical/ Virtual/ Hybrid. • Mandatory: At least 1 physical AGM in 3 years.
REDUCED COMPLIANCE FOR SMALL / OPC / DORMANT COMPANIES	Minimum Board Meetings: Reduced to 1 per year.
INDEPENDENT DIRECTOR NORMS TIGHTENED	DISQUALIFICATION extended to: Current financial year (not just past 3 years) w.r.t. employment or professional association. • if associated with a legal or consulting firm where transactions with the company is 10% or more of the firm's gross turnover (this limit of 10% may be reduced).
CONFIRMATION OF  ADDITIONAL DIRECTORS	In the Next AGM or 3 months (whichever earlier).
NEW GROUNDS FOR DIRECTOR DISQUALIFICATION:	who have acted as an auditor, secretarial auditor, cost auditor, registered valuer, or insolvency professional of the company (or its holding, subsidiary, or associate) in the preceding three financial years or the current financial year and person must be assessed by the Board as a "fit and proper person" in accordance with prescribed criteria.
PENALTY UNDER SECTION 166:BREACH OF DUTY OF A DIRECTOR	Listed companies Rupees 5 lakh fine; and for Other companies Rupees 2 lakh fine.
SIMPLIFIED KMP RESIGNATION	KMP can directly inform ROC if company fails to inform ROC about the resignation.
MANDATORY DORMANT STATUS	Eligible inactive companies must (not may) apply for dormant status.
REVIVAL OF COMPANIES	Regional Director to handle revival matter (currently, power with Tribunal/NCLT)
COMPANIES NOT REQUIRING AUDITORS	Prescribed classes of companies which fulfil such conditions, as may be provided by rules, shall not be required to appoint auditors.
DECRIMINALIZATION OF OFFENCES	Minor & procedural defaults → civil penalties Reduced criminal liability for companies
SHARE BUYBACK FLEXIBILITY	2 buybacks allowed in a year (with gap conditions) Efficient capital distribution tool
FAST-TRACK MERGERS SIMPLIFIED	Approval threshold: 75% shareholders Covers startups, small companies, holding-subsidiary mergers
ENHANCED POWERS TO NFRA	Wider definition of professional misconduct Stricter penalties, debarment & enforcement
RECOGNITION OF NEW COMPENSATION TOOLS	Introduction of innovative executive compensation structures
FLEXIBILITY FOR LLP & AIF STRUCTURES	AIFs may operate via LLP structure Better governance clarity

 

YOUR COMPLIANCE PARTNER – R V - SECKAR , FCS, LLB 79047 19295

HOW M. DAMODARAN, FORMER SEBI CHAIRMAN AND INDEPENDENT DIRECTOR OF YES BANK SAVED YES BANK'S GOVERNANCE FRAMEWORK

 HOW M. DAMODARAN, FORMER SEBI CHAIRMAN AND INDEPENDENT DIRECTOR OF YES BANK SAVED YES BANK'S GOVERNANCE FRAMEWORK

TO END RANA KAPOOR’S TENURE AS MD & CEO

M. Damodaran, former SEBI chairman and Independent Director of Yes Bank, played a crucial role in safeguarding the bank’s governance by refusing to extend promoter Rana Kapoor’s tenure as MD & CEO and ensuring a professional successor, Ravneet Gill, was appointed. This move aligned with RBI’s directive and helped restore regulatory confidence in the bank.

RBI’s DIRECTIVE

The Reserve Bank of India (RBI) had directed that Kapoor’s tenure should not be extended beyond this date, citing governance concerns.

•     The board, including Independent Directors such as M. Damodaran, supported RBI’s stance and facilitated succession planning.

DISCREPANCIES IN THE REPORTING OF NON-PERFORMING ASSETS (NPAS)

The RBI’s communication revealed serious discrepancies in the reporting of non-performing assets (NPAs) by the promoter turned MD-CEO Rana Kapoor. This exposed not merely a financial misstatement but a systemic governance failure. Damodaran immediately recognized that the crisis was not just about correcting disclosures—it demanded urgent leadership change and restoration of institutional credibility.

STRATEGIC IMPLICATIONS

•     The refusal to extend Kapoor’s tenure marked a shift in governance culture, emphasizing regulatory compliance over promoter influence.

•     Gill’s appointment was seen as a move to professionalize leadership and reassure investors and regulators.

•     However, Yes Bank continued to face financial stress in subsequent years, eventually requiring restructuring and capital infusion.

INDEPENDENT DIRECTOR ROLE FROM PASSIVE GOVERNANCE TO ACTIVE STEWARDSHIP

The YES Bank’s Board strengthened oversight mechanisms in line with statutory obligations under the Companies Act, 2013 (notably Sections 134, 166, and 177) and SEBI’s LODR Regulation 18, ensuring accurate financial reporting, transparency, and fiduciary accountability. This marked a decisive shift from passive governance to active stewardship. They facilitated RBI bailout plan with capital infusion from banks led by State Bank of India and ensured continuity of banking operations.

INDEPENDENT DIRECTOR’S INTERVENTION

M. Damodaran’s decisive intervention did more than contain the Yes Bank crisis—it prevented a systemic collapse by enforcing discipline at the highest level of governance. Yet, despite averting a deeper financial disaster, his role remains one of the most under-recognized acts of leadership in Corporate Governance Administration.

YOUR COMPLIANCE PARTNER – R V - SECKAR , FCS, LLB 79047 19295

CORPORATE LAWS (AMENDMENT) BILL, 2026 PROPOSES TO CHANGE THE COMPANIES ACT, 2013 AND THE LLP ACT, 2008 SEPARATELY---COMPANIES ACT, 2013 – OFFENCES DECRIMINALISED

 CORPORATE LAWS (AMENDMENT) BILL, 2026 PROPOSES TO CHANGE THE COMPANIES ACT, 2013 AND THE LLP ACT, 2008 SEPARATELY---COMPANIES ACT, 2013 – OFFENCES DECRIMINALISED

CSR NORMS

•     Threshold for mandatory CSR spending raised to ₹10 crore net profit.

•     Non-compliance below this threshold will no longer attract criminal liability.

PROCEDURAL DEFAULTS

•     Delays in filing annual returns, financial statements, or other routine forms will be treated as civil lapses.

SHARE BUYBACKS

•     Multiple buybacks permitted with relaxed rules. Minor violations in procedure decriminalised.

AGMS & M&A

•     Companies allowed to hold hybrid Annual General Meetings (AGMs).

•     Simplified mergers & acquisitions procedures; procedural lapses decriminalised.

REGIONAL DIRECTORS’ POWERS

•     More authority given to regional directors to handle civil penalties instead of courts.

LLP ACT, 2008 – OFFENCES DECRIMINALISED

ANNUAL RETURN & FILING DELAYS

•     Late filing of annual returns or statements of accounts will attract civil penalties only.

SMALL LLPS

•     Relaxed compliance norms; minor defaults decriminalised to encourage startups and professional firms.

PARTNERSHIP FLEXIBILITY

•     Constitution of multi-disciplinary partnership firms allowed; procedural lapses in formation treated as civil offences.

COMPARISON TABLE

AREA	EARLIER POSITION	AMENDMENT (2026 BILL)
CSR COMPLIANCE	Criminal liability for non-compliance	Civil penalty; net profit threshold raised to ₹10 crore
FILING DELAYS	Criminal offence	Civil penalty only
SHARE BUYBACKS	Strict limits, criminal liability for violations	Multiple buybacks allowed; minor lapses decriminalised
AGMS	Physical only	Hybrid AGMs permitted
LLP FILING	Criminal liability for delays	Civil penalties only
LLP PARTNERSHIPS	Limited scope	Multi-disciplinary partnerships allowed

WHY THIS MATTERS?

•     For startups: Lower regulatory burden, faster incorporation, and reduced risk of criminal liability for minor lapses.

•     For SMEs: Encourages entrepreneurship by cutting red tape.

•     For IFSC entities: Provides clarity for global financial operations in India.

•     For corporate governance: While easing compliance, it raises debates about whether decriminalisation could weaken accountability.

 

YOUR COMPLIANCE PARTNER – R V - SECKAR , FCS, LLB 79047 19295