MCA imposes a 4.5 lakh penalty for not including a statement on the constitution of the Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013 in the board report.
Ceeta Industries Limited, a company headquartered in Tumkur, Karnataka, has been penalized by the Ministry of Corporate Affairs (MCA) for violating Section 134(3)(q) of the Companies Act, 2013. The violation stems from the company’s failure to include a required statement regarding the constitution of the Internal Complaints Committee (ICC) under the Sexual Harassment of Women at Workplace Act, 2013, in their Board reports for the financial year ending on March 31, 2019, and March 31, 2020.
Key point:-
Violation Details: The company did not disclose its compliance with ICC provisions in its Board reports, which was a violation of Section 134(3) of the Companies Act.
Penalties Imposed: The penalties for this violation include a fine of three lakh rupees for the company and fifty thousand rupees each for its Managing Director, CFO (Key Managerial Personnel), and Company Secretary.
Adjudication Process: The violation was identified in July 2021, and the company underwent an adjudication process, including a physical hearing where they argued that the omission was unintentional.
Small Company Argument: The company claimed that, as it had fewer than ten employees in each establishment, it was not obligated to establish an ICC. However, this argument did not exempt them from the penalty.
Importance of Compliance: The article underscores the necessity of adhering to all statutory requirements, no matter how seemingly procedural they appear, to avoid financial penalties and legal actions.
Consequences of Non-Compliance: Failure to comply with the MCA’s order could result in further legal actions under Section 454(8) of the Companies Act, 2013. This case serves as a reminder of the importance of adhering to legal requirements and maintaining regulatory compliance to avoid financial penalties and potential legal consequences.
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