ROC Bangalore imposed a penalty of Rs. 50 Lakh on Directors for Non – Disclosure of “Related Party Transactions” – Section 188 of the Companies Act – 2013
RECENTLY, ROC BANGALORE IMPOSED A PENALTY OF ₹50 LAKH ON DIRECTORS FOR NON-COMPLIANCE OF “Related Party Transactions” (SEC 188 OF THE COMPANIES ACT, 2013).
In the matter of M/s Stanley Lifestyle Limited.
As per Financial Statements, AS-18 disclosures, & AOC-2 Form, the company had huge Related Party Transactions.
In the AOC-2 Form, it was disclosed that company had taken Board Approval on various dates in the FY 2015-16 & 2016-17, & continued with the same resolution even during FY 2020-21.
No Omnibus Approval was granted by the Audit Committee for these huge transactions on a year-on-year basis.
Huge transactions were carried out without proper authority.
Ex-Company Secretary was initially considered part of the default under Section 188(5) of the Companies Act, 2013.However, during the Physical Hearing, a submission was made stating that the responsibility for entering into and authorizing such transactions rested solely with the MD & WTD. Accordingly, adjudication proceedings against the Ex-CS were dropped.
The copy of the ROC order is as under:
