Company and its Directors penalized for filing unsigned financial statements and enclosures by the ROC - A Case Study

July 07, 2025

Overview of the Case:

Annual filings with the Registrar of Companies (ROC) are a mandatory statutory requirement, ensuring transparency, accountability, and regulatory compliance. This case study highlights the legal and financial repercussions faced by M/s. Regent Professional Academy Private Limited and its directors for failing to comply with these requirements.

The primary focus of discussion here is Form AOC-4, the statutory document for filing a company’s financial statements and related disclosures with the Registrar of Companies (ROC). It is to be filed Annually. The mandatory attachment of the said form includes the board’s report and the financial statements of the company along with its audit report.

Key Issue:

The company filed unsigned financial statements and enclosures with the ROC, leading to penalties under the Companies Act, 2013.

Legal Context and Regulatory Breach

Filing signed financial statements is a critical compliance requirement under the Companies Act, 2013. The relevant sections breached are:

• Section 134(1) – Financial statements must be approved and signed by the board of directors or authorized signatories.
• Section 134(2) – Auditors’ reports must be attached to every financial statement.
• Section 134(6) – The board’s report must be signed by the authorized directors or the chairperson.
• Section 134(8) – Non-compliance attracts penalties on both the company and the responsible officers.

Summary of the Case

• Company Overview:

  M/s. Regent Professional Academy Private Limited (CIN-U74140MP1993PTC007696) is a company registered under the Companies Act, 1956, with effect from 25th May 1993. It is based in Gwalior, Madhya Pradesh and operates under the jurisdiction of the Registrar of Companies (ROC) – Madhya Pradesh. The company has two directors on its board:

• Mr. Govind Prasad Garg
• Mrs. Savitri Garg

Incident

• The company submitted its financial statements and other statutory documents through the Ministry of Corporate Affairs (MCA) portal for the financial year 2020–21.
• The submission coincided with the COVID-19 pandemic, which caused disruptions.
• Upon review, the ROC found that the financial statements were unsigned by both the directors and the statutory auditors, thereby violating the provisions of the Companies Act, 2013:
  • Section 134(1): Financial statements must be signed by the authorized directors.
  • Section 134(6): The board's report and annexures must be signed by authorized directors.

Regulatory Action:

• The ROC, following directions from the Regional Director of the Northwestern Region via a Directorate letter dated 21st March 2023, initiated action against the company and its directors.
• A show cause notice was issued to the company and its directors, requiring them to explain the breach.
• A personal hearing was conducted to evaluate the company's response.

Company’s Defence:

• The company admitted that the failure to sign the financial statements was an oversight caused by the challenges during the COVID-19 pandemic and personal issues faced by the directors.
• The company submitted the signed financial statements, directors’ report, and auditors’ report in response to the show cause notice and requested leniency, citing that the error was inadvertent.

Verdict and Penalty:

• The Adjudicating Officer rejected the company’s defence, holding that the default was committed by the company and its directors.
• Penalties were imposed as per the Companies Act, 2013:
  • ₹3,00,000 on the company
  • ₹50,000 on each director (payable from their personal funds)
• The order was passed on 26th June 2023 and published on the Ministry of Corporate Affairs website on 21st May 2024.

Additional Consequences for Non-Payment:

• As per Section 454(8)(i) and 454(8)(ii) of the Companies Act, 2013:
  • If the penalty is not paid within 90 days of the order:
    • The company faces an additional fine between ₹25,000 and ₹5,00,000.
    • The directors could face imprisonment up to 6 months or an additional fine between ₹25,000 and ₹1,00,000, or both.

Conclusion:

This case highlights that compliance with regulatory requirements is essential and non-negotiable. Even minor errors, such as unsigned documents, can lead to significant penalties for both the company and its directors. It underscores the need for businesses to establish a robust compliance mechanism and follow a compliance checklist to ensure accuracy and diligence in regulatory filings, even during unforeseen challenges.

References: -

• The Companies Act 2013
• Companies (Adjudication of Penalties) Rules 2014
• Companies (Adjudication of Penalties) Amendments Rules 2019
• Adjudication order passed by the Registrar of Companies, of Gwalior of Madhya Pradesh on 26th June 2023 - adjudication order bearing No. F.no.ROC/G/Adj. Pen/u.s.134(1) /Regent/780 - order under section 454 of the Companies Act 2013 for violation of section 134(1) of the Companies Act 2013 read with Companies (Adjudication of Penalties) Rules 2014 - In the matter of Companies Act 2013 and in the matter of adjudication proceeding under sub-section (1) of section 134 of the Companies Act 2013 and in the matter of M/s. Regent Professional Academy Private Limited