COMPANY FINED FOR NOT FILING FORM AOC-2 FOR RELATED PARTY TRANSACTIONS
ROC Karnataka vs SDU Projects
Private Limited
LAPSES
Company's Director's Report never disclosed its related-party
transactions like rent paid to in the mandatory Form AOC-2, as required under
Section 134(3)(h).
DEFENCE BY THE COMPANY
· The company argued these transactions were at arm's
length, in the ordinary course of business
· It is too small compared to company’s net worth— so no
AOC-2 disclosure was needed.
PENALTY IMPOSED
₹8,00,000 on company and its two directors
LESSONS LEARNED
Form AOC-2 has to be prepared and attached to the
Board's Report as a matter of procedure, every single year, irrespective of the
transaction's size or nature.
# Your
Knowledge partner R V Sekar 79047 19295,
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