PAS 3 penalty of 64 Lakh for failure to certify allottee list

The Office of the Registrar of Companies in Maharashtra, Pune, has imposed a significant PAS 3 penalty of 64 lakhs on N.S.J.L. NIDHI LIMITED for breaching the Companies Act 2013. The violation in question pertains to the company’s failure to certify the list of allottees attached to Form PAS-3 during the allotment of securities. This article delves into the details of the case, relevant legal provisions, and the implications of this adjudication order.

Form PAS-3 ?

Form PAS-3 holds a crucial place in India’s corporate governance framework. It is a document mandated by the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013, and is used by companies when they make an initial public offering (IPO) or when they raise capital through private placements. One of the vital components of this form is the list of allottees, which must be duly certified.

The Role of Certification:

Certification, in the context of Form PAS-3, means that the company and its officers confirm the accuracy and completeness of the information provided in the list of allottees. This certification ensures that all regulatory requirements are met and that there is transparency in the allotment of shares to investors.

Detailed Analysis of the Case:

N.S.J.L. NIDHI LIMITED is a Pune-based company governed by the Companies Act, 2013. The case originated from an inspection by the Ministry of Corporate Affairs, revealing that the company had failed to certify the list of allottees in Form PAS-3 as required by law. Several instances of non-certification were identified in the submitted forms. The Companies Act, 2013 mandates that when a company makes allotments of securities, it must file a return of allotment in Form PAS-3, including a certified list of allottees’ names, addresses, occupations, and the number of securities allotted to each. Non-compliance with these provisions can result in penalties. The Adjudicating Officer found that the company violated the provisions of Section 39(4) of the Act by failing to certify the list of allottees in Form PAS-3. The company had relied solely on the certification of the form itself, neglecting to certify the attached list. As a consequence, penalties were imposed on the company and its defaulting officers. The penalty was calculated following the rules and provisions of the Act and had to be paid through the Ministry of Corporate Affairs portal. The company was informed of its right to appeal the decision under Section 454(5) of the Act, with a sixty-day window to file the appeal. Failure to pay the penalty within the prescribed time could result in further consequences. A copy of the order was sent to N.S.J.L. NIDHI LIMITED, all directors/officers in default, the Office of the Regional Director (Western Region), and the Ministry of Corporate Affairs in New Delhi. This adjudication order serves as a reminder of the importance of strict compliance with the Companies Act, 2013. The failure to certify the list of allottees as required by law led to substantial penalties. Companies are urged to diligently adhere to legal provisions and ensure that all required certifications are in place to avoid such financial repercussions.

The Path to Compliance:

To avoid such penalties and complications, companies must be diligent in their compliance efforts. Ensuring that Form PAS-3 is correctly filled out, including the list of allottees, and duly certified is essential. Additionally, companies should stay updated on regulatory changes and seek professional advice to navigate the complexities of corporate compliance. The penalty of ₹64 lakh imposed for the failure to certify the list of allottees attached with Form PAS-3 serves as a powerful reminder of the strict regulatory environment in which companies operate. In the competitive world of corporate governance, compliance is not just a matter of good practice; it’s an absolute necessity. Companies and their officers must remain vigilant in adhering to statutory requirements, not only to avoid penalties but to foster trust and confidence among stakeholders and investors.