THREE SEASONS EXIM WAS FINED BY ROC ₹3.5 lakh FOR NOT SENDING NOTICE OF EGM TO ONE DIRECTOR OF THE COMPANY

 THREE SEASONS EXIM WAS FINED BY ROC ₹3.5 lakh  FOR NOT SENDING NOTICE OF EGM TO ONE DIRECTOR OF THE COMPANY

ROC,VIJAYAWADA VS THREE SEASONS EXIM LIMITED

ISSUE

Extraordinary General Meeting (EGM) held on 12th December 2016

Violation: One director (Mr. Upendranath Nimmagadda) did not receive the mandatory EGM notice.

LEGAL BASIS FOR PENALTY

• Section 101 of the Companies Act, 2013: Requires that notice of every general meeting be sent to all directors, members, auditors, and other prescribed persons.

• Secretarial Standard-2 (SS-2): Reinforces the requirement that notices must reach every director and relevant stakeholders.

As per the rules, notice of a meeting is required to be sent to all Members, Directors, Auditors, the Practising Company Secretary who has issued the Compliance Certificate, Debenture Trustees, if any, and such other specified recipients as may be applicable or required.

• Section 454 of the Companies Act, 2013: Empowers ROC to adjudicate penalties for non-compliance.

PENALTY IMPOSED

• Total Fine: ₹3.5 lakh

• Responsibility: Both the company and its directors were held liable.

• Reasoning: Even though only one director missed the notice, the ROC treated it as a serious lapse in compliance.

KEY LESSONS LEARNED

1. Notices must be served to all directors and stakeholders — even a single omission can trigger heavy penalties.

2. Maintain proof of delivery (registered post, email acknowledgment, courier receipts) to safeguard against disputes.

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

CONDUCTING BM & AGM ON SAME DAY FOR APPROVAL OF FINANCIALS MAY ATTRACT PENALTIES AND RESULT IN COMPLIANCE ISSUE.

 CONDUCTING BM & AGM ON SAME DAY FOR APPROVAL OF FINANCIALS MAY ATTRACT PENALTIES AND RESULT IN COMPLIANCE ISSUE.

 Conducting a Board Meeting (BM) and Annual General Meeting (AGM) on the same day to approve financial statements is a compliance risk and not in line with good corporate governance.

STANLEY OEM SOFAS LIMITED

In the matter of M/s Stanley OEM Sofas Limited, it is cautioned that conducting the Board Meeting and the Annual General Meeting (AGM) on the same day for approval of financial statements may attract penalties under the Companies Act, 2013.

SECTION 134 OF THE COMPANIES ACT, 2013

As per Section 134 of the Act, the financial statements must be approved by the Board of Directors before being presented to the shareholders in the AGM. Adequate time must be allowed between the BM and AGM to:

•Finalize board-approved financials;

•Ensure proper dispatch of financials and AGM notice to shareholders (at least 21 clear days before the AGM as per Section 101); and

•Enable shareholder review and compliance with Secretarial Standards (SS-1 & SS-2).

BOARD MEETING & AGM CONVENED ON THE SAME DAY

•The ROC has raised concerns on how the company complied with the notice requirements under Section 101 & rules made thereunder with supporting documents like Notice, Board Minutes etc.

ROC BANGALORE IMPOSED A PENALTY OF ₹40,000

ROC Bangalore imposed a penalty of ₹40,000 on the company and its directors for non-compliance with Sec 101 of the Companies Act, 2013.

RECOMMENDATION:

AVOID PRACTICE OF PAPER MEETINGS.

Avoid conducting BM and AGM on the same day. Schedule the AGM only after dispatching AGM notice and financials duly approved by the Board, to avoid non-compliance and penalties.

 

R V SECKAR FCS,LLB 79047 19295