Compounding of offence for violation of section 166/210

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 August 2011 One of our client Companies not held AGM for 3 years. Now we want to compound the offence. what reasons we can give for the same? Whether it is necessary to conduct the AGM on current date & file the forms before Compounding. Please suggest me how to go with the compounding.

CS Bijoy

CS Bijoy (Expert)
Follow

29 August 2011 Dear Please visit the following link to have detail view about compounding of offence...

http://www.mca.gov.in/Ministry/reportonexpertcommitte/chapter12.html

Querist : Anonymous

Querist : Anonymous (Querist)

29 August 2011 Please any one provide me checklist, format and other documents required

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

20 July 2024 Compounding is a process where a company can seek permission from the Registrar of Companies (RoC) to pay a fee in lieu of facing legal action for certain non-compliances, such as not holding Annual General Meetings (AGMs) within the prescribed time frame. Here’s a structured approach to compounding the offense of not holding AGMs for 3 years:

### Reasons for Seeking Compounding:

1. **Unavoidable Circumstances**: You can state that due to unavoidable circumstances, such as ongoing restructuring, financial difficulties, or operational challenges, the company was unable to hold AGMs within the stipulated period.

2. **Mistake or Oversight**: If it was due to inadvertence or oversight on the part of the management or due to changes in leadership resulting in administrative lapses.

3. **Rectification and Compliance**: Emphasize that the company has rectified the issue and is now committed to compliance with all statutory requirements.

### Steps to Compounding:

1. **Conducting the AGM**: It is advisable to first convene and hold the AGM for the current financial year, as per the Companies Act, to regularize the compliance going forward. Ensure minutes of the meeting are properly recorded and signed.

2. **Filing of Pending Annual Returns**: File all pending Annual Returns (Form AOC-4 and Form MGT-7) with the RoC for the years in question before applying for compounding. These forms contain details of financial statements, resolutions passed, and shareholder information.

3. **Prepare Compounding Application**: Draft an application for compounding under Section 621A of the Companies Act, 1956 (or relevant sections under the Companies Act, 2013, if applicable). The application should include:
- Details of the offense (non-holding of AGMs).
- Reasons for the delay or non-compliance.
- Steps taken to rectify the issue.
- Any additional documents supporting your case (e.g., board resolutions, AGM notices, minutes of meetings).

4. **Fee Payment**: Calculate and prepare the compounding fee as per the guidelines provided by the RoC. The fee varies based on the nature and severity of the offense.

5. **Submission of Application**: Submit the application along with all required documents to the concerned RoC office. Ensure that the application is complete and accurate to avoid delays in processing.

### Checklist and Format:

- **Checklist**: Ensure all AGMs are conducted annually as per the Companies Act going forward.
- **Format**: The format for the compounding application can typically be obtained from the RoC office or their website. It should adhere to the prescribed format and include all necessary details and supporting documents.

### Additional Documents Required:

- **Board Resolutions**: Resolutions passed by the board of directors authorizing the filing of compounding application and rectifying the non-compliance.
- **AGM Notices and Minutes**: Copies of notices convening AGMs and minutes of these meetings.
- **Financial Statements**: Copies of audited financial statements for the relevant years.
- **Director Identification and Digital Signature**: Ensure directors’ DIN and digital signatures are up-to-date for filing online, if applicable.

### Conclusion:

Compounding is a legal remedy to rectify non-compliances and avoid legal consequences. It is important to follow the procedural requirements meticulously and ensure all necessary filings and documentation are complete and accurate. Consulting with a company secretary or a legal professional specializing in corporate law can provide further guidance tailored to your specific situation and ensure compliance with regulatory requirements.