CENTRE ACCORDS ROCs MORE POWERS TO REDUCE THE WORKLOAD OF NCLTs

 CENTRE ACCORDS ROCs MORE POWERS TO REDUCE THE WORKLOAD OF NCLTs

EFFECTIVE FROM FEBRUARY 16, 2026

The Ministry of Corporate Affairs (MCA) has officially empowered Registrars of Companies (RoCs) with adjudication powers. This move, effective from February 16, 2026, designates RoCs as Adjudicating Officers under Section 454 of the Companies Act, 2013 and Section 76A of the LLP Act.

KEY HIGHLIGHTS

ADJUDICATION POWERS:	RoCs can now conduct inquiries and impose monetary penalties on companies and LLPs for statutory non-compliances.
REDUCED BURDEN ON NCLT:	The step is aimed at easing the heavy caseload of the National Company Law Tribunal (NCLT).
DECRIMINALIZATION OF DEFAULTS	By shifting adjudication to RoCs, minor defaults are expected to be handled more efficiently without escalating to tribunals.
REVISED FRAMEWORK:	The new notification supersedes earlier ones (2015 and 2019), creating a more structured jurisdictional framework for adjudication.

WHY THIS MATTERS

FOR BUSINESSES:

Faster resolution of compliance issues, fewer delays, and reduced litigation costs.

FOR REGULATORS:

 Streamlined enforcement and better access through expanded regional directorates.

FOR GOVERNANCE:

Strengthens corporate accountability while promoting ease of doing business.

NOT APPLICABLE  SERIOUS FRAUD OR CRIMINAL MATTERS

The new MCA notification has clarified the scope of violations that Registrars of Companies (RoCs) can now adjudicate under Section 454 of the Companies Act, 2013. These are generally procedural and compliance-related defaults, not serious fraud or criminal matters.

CATEGORY	EXAMPLES OF VIOLATIONS	REMARKS
FILING & DISCLOSURE LAPSES	Delay in filing annual returns (MGT-7), financial statements (AOC-4), or other statutory forms	These are among the most frequent defaults handled by RoCs
REGISTERED OFFICE COMPLIANCE	Not maintaining a registered office or failing to notify change of address	Penalties have already been imposed in past adjudication orders
BENEFICIAL OWNERSHIP	Non-disclosure of Significant Beneficial Ownership (SBO	RoCs have issued penalty orders for lapses in SBO filings
CORPORATE SOCIAL RESPONSIBILITY (CSR)	Failure to spend or disclose CSR contributions properly	Treated as a compliance lapse, not a criminal offence
Board & Governance Defaults	Non-appointment of key managerial personnel (KMP), failure to hold board meetings as required	These are adjudicated as monetary penalties
LLP Act Violations	Delay in filing LLP returns, non-compliance with LLP agreements	Covered under Section 76A of the LLP Act

WHAT ROCS DO NOT HANDLE

•     Fraud, misrepresentation, or serious offences → These remain under NCLT or special courts.

•     Matters requiring judicial interpretation → Still handled by tribunals.

EXAMPLES OF ROC PENALTY ORDERS (2025–2026)

DATE & ROC	COMPANY	VIOLATION	PENALTY IMPOSED
14 Oct 2025 – ROC Delhi	Hexafun Private Limited (Order ID: PO/ADJ/10-2025/DL/00771)	Violation of Section 42(10) of the Companies Act, 2013 (related to private placement procedures)	Monetary penalty under Section 454 adjudication powers
05 Feb 2025 – ROC Guwahati	Moonlight Associates Limited	Failure to file Annual Returns (Section 92) for multiple years (FY 2014–15 to 2021–22)	Penalties ranging from ₹90,000 to ₹2,10,000 per year on the company; ₹60,000 per year on one director

BREAKDOWN OF THE MOST COMMON PENALTY RANGES IMPOSED BY REGISTRARS OF COMPANIES (ROCS) UNDER THEIR ADJUDICATION POWERS:

Violation Type	Section	Penalty Range (Company)	Penalty Range (Officers/Directors
Delay in filing Annual Return (MGT-7)	Sec. 92	₹50,000 – ₹2,00,000	₹25,000 – ₹50,000
Delay in filing Financial Statements (AOC-4)	Sec. 137	₹50,000 – ₹2,00,000	₹25,000 – ₹50,000
Registered Office non-compliance	Sec. 12	₹1,00,000 – ₹2,00,000	₹25,000 – ₹50,000
Significant Beneficial Ownership (SBO) lapses	Sec. 90	₹1,00,000 – ₹5,00,000	₹25,000 – ₹2,00,000
CSR non-compliance	Sec. 135	₹50,000 – ₹25,00,000	₹25,000 – ₹2,00,000
Private Placement lapses	Sec. 42	₹10,000 – ₹2,00,000	₹10,000 – ₹50,000

CONCLUDING THOUGHTS

·      In FY 2024–25 alone, over 1,150 adjudication orders were issued by RoCs across India.

·    ROCs now can handle first-level enforcement, aiming to cut NCLT backlogs.

·      Empowering ROCs will likely result in them playing a bigger role –rather than just administrative work-to dispose off cases faster, reduce the burden on the NCLT, decriminalize offenses and facilitate ease of doing business.

·      MCA has increased RD offices from 7 to 10 covering Ahmadabad, Bengaluru and Chandigarh which will make adjudication easier.

·      Dual reforms enhance adjudication capacity, reduce jurisdictional confusion.

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