The Ministry of Corporate Affairs (MCA) has imposed a penalty of ₹11.11 lakh on a Nidhi company and its directors for failing to file Form MGT-14 over multiple financial years. This breach of the Companies Act, 2013 underscores the critical importance of timely regulatory compliance and serves as a cautionary reminder for all businesses to avoid similar penalties.
What Happened?
A Nidhi company with an authorised capital of ₹15 lakh failed to file Form MGT-14 for recording board resolutions approving financial statements for four consecutive financial years (2017–18 to 2020–21).
This non-compliance violated Section 117(1) read with Section 179(3)(g) of the Companies Act, 2013, which requires companies to file specific board resolutions—such as those approving financial statements—within 30 days of their passing.
Legal Requirement: What is Form MGT-14?
Form MGT-14 is a statutory compliance requirement under the Companies Act, 2013. It mandates that companies file copies of certain board resolutions and agreements with the Registrar of Companies (ROC) within 30 days of their approval. These include resolutions related to:
Approval of financial statements
Alteration of share capital
Appointment or remuneration of key managerial personnel
Other significant matters as prescribed under Section 117(1) read with Section 179(3)(g)
Failure to file Form MGT-14 within the stipulated timeframe attracts penalties under Section 117(2) of the Act.
Consequences of Non-Compliance
Due to its failure to file Form MGT-14 for board approvals of financial statements, a Nidhi company faced regulatory action from the Registrar of Companies (ROC), Kanpur, resulting in significant penalties.
Key Events:
Non-Filing Detected: ROC Kanpur identified the company’s non-compliance for four financial years.
Show Cause Notice Issued: A notice was sent on April 25, 2024, to the company and its directors.
No Response or Appearance: The company failed to respond or attend the scheduled hearing.
Penalties Imposed: In the absence of any justification, the ROC levied penalties as follows:
₹2,00,000 on the company per financial year
₹50,000 on each director per financial year
The total penalty amounted to ₹11,11,000, payable via Demand Draft to the Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, within 90 days of the order.
Penalty Breakdown:
| Financial Year | Penalty on Company | Penalty on Each Director | Total Penalty |
|---|---|---|---|
| 2017–18 | ₹2,00,000 | ₹50,000 | ₹3,00,000 |
| 2018–19 | ₹2,00,000 | ₹50,000 | ₹3,00,000 |
| 2019–20 | ₹2,00,000 | ₹50,000 | ₹3,00,000 |
| 2020–21 | ₹2,00,000 | ₹50,000 | ₹3,00,000 |
| Total | ₹8,00,000 | ₹2,00,000 (plus interest or rounding as applicable) | ₹11,11,000 |
Note: Penalties were capped in accordance with Section 117(2) of the Companies Act, 2013.
Legal Framework for Penalties:
Section 117(1): Requires companies to file board resolutions or agreements on specified matters with the ROC within 30 days.
Section 117(2):
Company: ₹10,000 + ₹100 per day for continued default (capped at ₹2,00,000)
Officer in Default: ₹10,000 + ₹100 per day (capped at ₹50,000)
Section 179(3)(g): Mandates filing of board resolutions related to the approval of financial statements under Section 117.
What Happens If the Penalty Is Not Paid?
Failure to remit the penalty within 90 days of the adjudication order may lead to further legal consequences under Section 454(8) of the Companies Act, 2013. This could include additional fines and potential prosecution of both the company and its directors.
Next Steps for the Company
The company and its directors have the right to appeal the order within 60 days by filing Form ADJ before the Regional Director (Northern Region), MCA, New Delhi, along with a certified copy of the adjudication order.
Key Takeaways: Why Timely Filing of MGT-14 Matters
This case serves as a critical reminder for Nidhi companies—and all businesses—to prioritize timely compliance with statutory obligations. Specifically, Form MGT-14 must be filed within 30 days of passing board resolutions on key matters.
1. Timely Compliance Is Mandatory
Forms like MGT-14 are not optional; they are a legal requirement under the Companies Act, 2013.
2. Penalties Add Up Quickly
Delays in compliance can lead to substantial financial penalties, impacting cash flow and business operations.
3. Directors Are Personally Liable
Non-compliance doesn’t just affect the company—officers and directors can be held individually accountable.
4. Proactive Governance Is Essential
A strong compliance framework helps prevent oversights and regulatory issues
How to Avoid Costly Compliance Mistakes
Maintain a Compliance Calendar: Track statutory filing deadlines, including MGT-14.
Monitor Board Resolutions: Ensure all key decisions—especially financial approvals—are properly documented and filed.
Consult Experts: When in doubt, seek professional guidance to ensure full compliance.
Need Help Filing MGT-14? IndiFilings Can Assist
This penalty highlights the serious implications of ignoring compliance obligations. Don’t let paperwork lapses lead to costly consequences.
IndiFilings offers expert support in preparing and filing Form MGT-14, ensuring your company stays fully compliant with the Companies Act, 2013. Our team manages the documentation and filing process end-to-end—so you can focus on running your business, stress-free.
About the Author
Manisha
Manisha is a skilled legal writer known for simplifying complex legal concepts into practical, easy-to-understand insights. Her work empowers entrepreneurs with the legal knowledge they need to confidently navigate business regulations and build compliant, successful ventures.
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