Ministry of Corporate Affairs notified Companies (Adjudication of Penalties) Amendment Rules, 2019 on 19th February, 2019. Following significant changes have been brought in the Companies (Adjudication of Penalties) Rules, 2014 by amending Rule 3:
i) The period to show cause to written notice issued by adjudicating officer, by the company and to every officer of the company who is in default, has been decreased from 45 days to 30 days from date of service of notice.
ii) Every notice shall also draw attention to the relevant penal provisions of the Act and the maximum penalty which can be imposed, along with the nature of non-compliance or default.
iii) The reply to such notice shall be filed in electronic mode only within the period as specified in the notice.
iv) The notice for physical appearance shall be issued within 10 days of receiving the reply. Earlier, no fixed time period was stipulated.
v) Time period for passing an order has been fixed. The adjudicating officer shall pass an order within 30 days of receiving show cause reply, where physical appearance was not required and within 90 days of the date of issue of notice, where physical appearance was necessary.
vi) In case of delay, reasons shall be recorded by the adjudicating officer and no such order shall be invalid merely because of delay.
vii) Display of copy of the order passed by Adjudicating Officer
on the website, is mandatory.
viii) For adjudging quantum of penalty, the adjudicating officer shall have due regard to the these factors: size of the company, nature of business carried on by the company, injury to public interest and nature of the default in addition to amount of disproportionate gain or unfair advantage, loss caused to investors or creditors and repetition of the default.
ix) It has been clarified that, in no case, the penalty imposed shall be less than the minimum penalty if prescribed under the Act and if fixed sum of penalty is provided, the adjudicating officer shall impose that fixed sum.
x) Penalty shall be paid through Ministry of Corporate Affairs portal only.
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