Delay Of 100 Days In Filing e-Form INC-20A: Registrar Of Companies Imposes Penalty Of Rs. 3.5 Lakhs On 5B Industries India & Its Directors
The Registrar of Companies, NCT of Delhi & Haryana has imposed a penalty of Rs. 3.5 Lakhs on 5B Industries India Private Limited and its directors for delayed submission of e- form INC 20A. E-form INC-20A is a declaration for the commencement of business, which is required to be filed by a company incorporated under the Companies Act, 2013, after the commencement of the...
The Registrar of Companies, NCT of Delhi & Haryana has imposed a penalty of Rs. 3.5 Lakhs on 5B Industries India Private Limited and its directors for delayed submission of e- form INC 20A.
E-form INC-20A is a declaration for the commencement of business, which is required to be filed by a company incorporated under the Companies Act, 2013, after the commencement of the Companies (Amendment) Ordinance, 2018. A director of the company must declare that the subscribers to the memorandum have paid the value of the shares agreed to be taken by them.
The filing of this form is mandatory within 180 days of the company's incorporation. If a company fails to file e-form INC-20A within this period, it cannot commence its business or exercise borrowing powers, and it may be liable for penalties under the Companies Act.
Brief Facts:
5B Industries India Private Limited was incorporated under the Companies Act, 2013, on May 26, 2023. The company's financials were not due, but other details were available on the MCA-21 portal. The company has a paid-up capital of Rs. 8,19,31,000/-. On March 14, 2024, the company submitted an application for the adjudication of penalties for default under Section 10A of the Companies Act.
According to the application, the company was incorporated with two subscribers, 5B Maverick Special Unit VIA Pty Ltd and 5B Maverick Special Unit VIB Pty Ltd. These subscribers agreed to subscribe to 81,93,100 equity shares of INR 10 each. The subscribers subscribed to 40,96,550 shares each, amounting to INR 4,09,65,500 each, and totaling INR 8,19,31,000. The subscribers, however, faced delays in arranging the necessary funds and could not transfer the money until February 26, 2024, which exceeded the stipulated timeline of 180 days.
Observations by RoC:
The RoC noted that there was a delay in remitting the funds which caused a delayed submission of e-form INC 20A. It noted that this resulted in a delay of 100 day. As a result, a Show Cause Notice (SCN) was issued to the company and its officers for non-compliance with Section 10A of the Companies Act. The company responded stating that the default was unintentional and requesting a lenient order.
However, the RoC held that according to Section 10A, a company incorporated after the commencement of the Companies (Amendment) Act, 2019, with share capital, cannot commence business or exercise borrowing powers unless a director files a declaration within 180 days of incorporation. This declaration must confirm that every subscriber to the memorandum has paid the value of the shares they agreed to take on the date of making the declaration.
The RoC held that there was a violation of Section 10A(1) of the Companies Act, which the company and its officers admitted. The penalties for this default are prescribed under Section 10A(2).
5B Industries India Private Limited was penalized fifty thousand rupees by RoC for the 100-day default. Each of the three directors, Rajendra Shrivastav, Eden James Tehan, and Christopher Neil Mcgrath, were penalized one lakh rupees each.
Adjudication Order of Penalties for Violation of Section 10A of The Companies Act, 2013 in the Matter of 5B Industries India Private Limited (CIN: U71200DL2023PTC414691)