Tribunal imposes Rs. 8,00,000 compounding fee under Companies Act 1956

The Tribunal found it reasonable to compound the offense under Section 67(3) of the Companies Act, 1956, in the case filed by Capital Small Finance Bank Limited. The compounding fee of Rs. 8,00,000/- was imposed, to be deposited with the Ministry of Corporate Affairs in New Delhi within one month. The Registrar of Companies for Punjab and Chandigarh will oversee the payment process. The petition CP No.52/Chd/Pb/2021 was disposed of accordingly.

---

---

Issues Involved:

1. Compounding of offences under Section 441 of the Companies Act, 2013.
2. Non-compliance with Section 67(3) of the Companies Act, 1956.
3. Calculation and payment of compounding fee.
4. Exit option provided to shareholders as per SEBI circulars.

Detailed Analysis:

1. Compounding of Offences under Section 441 of the Companies Act, 2013:

The petition was filed by Capital Small Finance Bank Limited under Section 441 of the Companies Act, 2013, seeking compounding of offences and payment of compounding fee. The Tribunal has jurisdiction over this matter as the applicant company is registered under the Companies Act, 1956, with its office in Jalandhar, Punjab.

2. Non-compliance with Section 67(3) of the Companies Act, 1956:

The applicant company undertook 14 allotments of 47,71,575 equity shares during the financial year 2004-05. These allotments were made to employees, directors, existing shareholders, and other associates. However, the company inadvertently breached the thresholds provided under Section 67(3) of the Companies Act, 1956, which governs the offering of shares to the public. The company acknowledged this non-compliance as an erroneous and bona fide mistake.

3. Calculation and Payment of Compounding Fee:

The Securities and Exchange Board of India (SEBI) issued circulars allowing companies to avoid penal action by providing an exit option to investors. The applicant company’s Board of Directors approved the rectification process, offering an exit option to current shareholders of the 2004-05 allotment at a price of Rs. 86.17 per equity share, including 15% interest per annum. The maximum fine for the default was calculated as Rs. 31,87,000/- for 6364 days of default, plus Rs. 13,000/- for the period from 01.11.2021 to 26.11.2021, totaling Rs. 32,00,000/-.

4. Exit Option Provided to Shareholders as per SEBI Circulars:

The company provided an exit option to 470 shareholders holding 58,98,277 equity shares. The compliance with SEBI circulars was certified by an independent Chartered Accountant. The Registrar of Companies (RoC) confirmed that there were no complaints or pending investigations against the company.

Judgment:

The Tribunal considered the facts and circumstances and found it reasonable to compound the offence under Section 67(3) of the Companies Act, 1956, on payment of a compounding fee of Rs. 8,00,000/-. The compounding fee must be deposited with the 'Pay and Accounts Officer' Ministry of Corporate Affairs, New Delhi, within one month from the receipt of the certified copy of the order. The RoC, Punjab, and Chandigarh will ensure the payment is made before effecting the compounding order. The petition CP No.52/Chd/Pb/2021 was disposed of accordingly.

---