COMPANY FINED FOR MAKING ALLOTMENT OF SHARES WITHOUT RECEIVING FULL SHARE APPLICATION MONEY ROC DELHI VS VARDHMAN AIRPORT SOLUTIONS LIMITED

 COMPANY FINED FOR MAKING ALLOTMENT OF SHARES WITHOUT RECEIVING FULL SHARE APPLICATION MONEY

ROC DELHI VS VARDHMAN AIRPORT SOLUTIONS LIMITED 

FACTS OF THE CASE

ROC- Delhi fined Vardhman Airport Solutions Limited for allotting shares during a rights issue without first receiving the full share application money.

The adjudication order dated 24 April 2026 imposed penalties under Section 450 of the Companies Act, 2013. Although the company argued that the transactions were carried out with shareholder consent and without mala fide intent,  ROC has  treated the lapse as a technical non-compliance.

NATURE OF DEFAULT

·      Shares were allotted before receipt of full subscription money.

·      Delays of up to 98 days in receiving application money.

·      Some subscription amounts were received from third-party entities, raising traceability concerns.

·      The lapse was considered a procedural violation rather than fraud or misrepresentation.

PENALTIES IMPOSED

COMPANY PENALTY:	₹10,000 for contravention, plus ₹1,000 per day for continuing default (capped at ₹2,00,000).	Penalty levied ₹108000
DIRECTORS PENALTY:	Penalties applied to directors and key managerial personnel based on the period of default	₹ 1,50,000/= ₹ 50000 on 3 directors each

KEY LEARNINGS

·      Strict compliance with Section 62 is mandatory: shares cannot be allotted until full consideration is received.

·      Even technical lapses (without fraud or wrongful gain) attract penalties under Section 450.

·      Companies must ensure traceability of funds and avoid receiving application money from third parties.

·      ROC may take a lenient view if no mala fide intent is found, but penalties will still be imposed.

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