Company petition to NCLT -compounding and EGM to adopt accounts

[Jayanta Bandyopadhyay]

Would you please guide us in the following scenario :

FY 22-23--AGM took place to appoint auditor etc but not made it Adjourned to adopt standalone / consolidated (incl of wholly owned foreign subsidiary) financial statements -a mistake

FY 23-24- AOC4 was submitted but not MGT 7 & 8 as we can not mention date of proper AGM in FY 22-23

Planning to go to NCLT for compounding above non-compliance-- is there any direct course correction?

Please guide- how to resolve this

[YAGAY and SUN]

This situation involves non-compliance with the Companies Act, 2013, specifically regarding the annual general meeting (AGM) and filing of statutory returns. Here’s how you can approach this:

1. Understanding the Non-Compliance

• FY 22-23: The AGM was held, but not adjourned properly to adopt the standalone and consolidated financial statements, including those of the wholly owned foreign subsidiary (WOS).
• FY 23-24: AOC-4 was filed, but MGT-7 and MGT-8 were not, due to the inability to specify the AGM date for FY 22-23.

2. Potential Direct Course Correction (Without Going to NCLT)

Before resorting to the National Company Law Tribunal (NCLT) for compounding, consider these steps:

a. Filing of Missing Forms

• AOC-4 (if not already fully compliant): Ensure all required details are correctly updated, including the consolidated financials.
• MGT-7 & MGT-8: Once the AGM issue is rectified, file these forms with the correct AGM date.

b. Calling an EGM

• Purpose: To adopt the financial statements (standalone and consolidated) that were not adopted in the AGM.
• Notice: Issue a fresh notice for the EGM, specifying the date and agenda (adoption of accounts).
• Resolution: Pass the necessary resolutions to adopt the accounts.

c. Filing with Registrar of Companies (ROC):

• After the EGM, file the necessary resolutions and updated forms.
• AOC-4 (Revised): If required, to reflect the adoption of the financials.

3. If Direct Course Correction Isn’t Possible – Approach NCLT for Compounding

• Application for Compounding: File an application with the NCLT under Section 441 of the Companies Act, 2013, for compounding of offenses.
• Penalty: Be prepared to pay the prescribed fee/penalty, which is usually a fine or monetary penalty.

4. Important Considerations

• Legal Advice: Consult a company secretary (CS) or legal expert specializing in corporate law for specific advice tailored to your case.
• ROC Communication: Sometimes, the ROC may allow relaxation or guidance if you proactively approach them.
• Documentation: Keep thorough records of all communications, resolutions, and filings to support your case.

Hope that you'll find this reply to sort out your above mentioned issue.

AI Summary

Compounding of company filing defaults: remedy via EGM adoption, filing corrected returns and seeking formal compounding.
Non-compliance stems from an AGM failing to adopt standalone and consolidated financial statements (including a wholly owned foreign subsidiary) leading to incomplete statutory filings: AOC-4 filed later but MGT-7 and MGT-8 not filed due to absence of a correct AGM date. The primary remedial route is to convene an EGM to adopt the accounts and subsequently file or revise statutory forms with the Registrar; if direct correction is not possible, pursue formal compounding of the offences with payment of prescribed penalties, while securing professional advice and preserving supporting documentation.