Talk of ROC Bangalore at ICAI on 17th June 2022 on various non-compliance.

Some of key points highlighted by Shri. C.V. Sajeevan, Registrar of Companies, Bangalore is given below. You may listen to full talk at the https://www.youtube.com/watch?v=Bq9K0gsTv-0

1. CARO reporting should be done after carefully study. Various responsibility is casted on Auditor from Section 139 to 146 and by CARO reporting.
2. Do not shy to qualifying the audit report instead of emphasis.
3. All the provisions, sub-provisions, line etc of Company Law should be read and complied.
4. It was observed that for issue of debenture (Private Placement), no separate bank account was opened. Hence, the penalty was Rs. 2 crores or amount of money received whichever is lesser + return of money received along with penal interest. There is no provision to waive off the requirement to return the money. (Second higher penalty provision after Rs. 10 crores for fraud under Section 447).
5. The PAS-3 should be filed with 15 days from date of allotment for private placement (and not the usually 30 days). (Please do not go by the instruction kit details. See the latest rules).
6. The company cannot utilised any money before filing PAS-3.
7. Some companies had done buy-back of equity shares beyond 25%. (Some has considered the share capital as equity and preference shares). Now, the money is paid to the Shareholder which is not possible for the Companies to collect it back. However, the ROC has directed to collect the money back.
8. The company should prove with ROC that the transaction with related party is at arms length.
9. Exemption for private company cannot be claimed unless the company file Balance Sheet and Annual return.
10. Section 185 is not exempted for private company. Section 186 violation is not compoundable offence (and tantamount to Court Case)
11. Company is signing as “officer in default” for compounding application. Unless all the officer in default sign the compounding application, the same would not be adjudicated. After hearing the matter, penalty would be imposed directly on the officer in default and they have to pay the penalty (instead of paying the compounding fees).
12. One company would have collected money for deposit after offering investors trip to Goa etc. Amount taken as advance for services should be provided within 1 year, (otherwise it is a deposit). The Statutory auditor has not made any comments in the Audit Report. Auditor had to face two issues; a) Non-reporting of fraud and b), no mention of deposit in violation of Company Law in the Audit report. Petition is file u/s140 before NCLT to debar for 5 years from being auditor for any company. Further petition u/s 143 is also filed for non-disclosure of violation of deposits.
13. Company incorporated in 2011. In 2017, object clause was changed. Only accommodation entry was passed, no inventory and only 1 staff. Notice issued to auditors.
14. Wrong certification in SPICE by CA/CS etc stating that the registered office was visited, verified the KYC documents. Action on CA/CS can be u/s 447 (fraud).
15. Incorporation documents has dummy phone and email and KYC of unemployed youth.
16. 44 FIR is registered in Karnataka. One CA has incorporated 52 fraudulent Company.