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Penalty on fail to include web address in Director Report

Principles of Preferential Transactions 

MCA imposed Penalty on Directors’ Report non-disclosure of company’s web address

MCA imposed Penalty on non-compliance Directors’ Report non-disclosure of company’s web address with Sec 134(3)(a) and This penalty imposed by the MCA highlights the importance of compliance with statutory requirements under the Companies Act, 2013. This is an adjudication order regarding non-compliance with Section 134(3)(a) of the Companies Act, 2013, which mandates including the web address of the company in the directors’ report. MCA has imposed penalties on Priyanshi Nidhi Ltd. and its directors for failing to include the company’s web address in the directors’ report as required by Section 134(3)(a) of the Companies Act, 2013. Total penalty: Rs. 4.5 lakh. A few key takeaways from this order:

Mandatory Disclosure required in Directors’ Report non-disclosure of company’s web address with Sec 134(3)(a)

  • Section 134(3)(a) of the Companies Act, 2013 mandates that the Directors’ Report must include the company’s web address if available, ensuring transparency and easy access to corporate documents like the annual return.

Provisions of the Act:- Section 134(3) (a) of the Act reads as under:

“There shall be attached to statements laid before a company in general meeting a report by its Board of Directors, which shall include:

(a) the web address, if any, where annual return referred to in sub-section (3) of section 92 has been placed] Section 134(8) of the Act reads as under:

“The company shall be liable to a penalty of three lakh rupees, and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.”

  • Priyanshi Nidhi Limited, incorporated on 29.05.2017, with a registered office in Varanasi, Uttar Pradesh, and an authorized capital of ₹11,00,000. The company failed to include its web address in the directors’ report for FY 2017-18 and 2018-19, violating Section 134(3)(a).
  • Non-responsive to show cause notice: Despite receiving a notice on March 18, 2024, neither the company nor its directors responded, leading to the adjudication without a hearing.
  • Companies must ensure they meet all disclosure requirements in their annual reports to avoid penalties. Additionally, non-compliance could lead to further legal repercussions. Adjudicating Officer Issued on 18.03.2024, requiring the company and its officers to explain their non-compliance.  The MCA appointed the adjudicating officer u/s 454 of the Companies Act, 2013, through a notification dated 24.03.2015.
  • Penal Consequences: The failure to disclose the web address led to penalties u/s 134(8). U/s  134(8), the company is liable for a penalty of ₹3,00,000, and each officer in default faces a penalty of ₹50,000. The company was fined ₹3,00,000, and each director INR 50,000, totaling INR 4,50,000.
  • If the company wishes to contest the order, it can appeal to the Regional Director (Northern Region) within 60 days of receiving the order.

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