Regarding section 186 compliance

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Meenakshi Ramandasani (Querist)
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01 March 2023 If any private limited did not file MGT-14 for the special resolution passed in the EGM held in the year 2019. Then what will be the consequences of not filing the form MGT-14 to ROC ??
OR

Is there any lawful remedy for saving the company from heavy penalties ??

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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10 July 2024 If a private limited company fails to file Form MGT-14 with the Registrar of Companies (ROC) after passing a special resolution in an Extraordinary General Meeting (EGM), there are legal consequences and remedies that need to be considered:

### Consequences of Not Filing Form MGT-14:

1. **Non-compliance with Law:** Failing to file Form MGT-14 is a violation of Section 117 of the Companies Act, 2013, which mandates the filing of resolutions and agreements with the ROC within specified timelines.

2. **Penalties:** The company and every officer in default (directors and company secretary) may be liable for penalties. As of the latest provisions:
- The company may face a penalty ranging from Rs. 25,000 to Rs. 5,00,000.
- Every officer in default may face imprisonment up to 6 months or a fine ranging from Rs. 25,000 to Rs. 1,00,000.

3. **Impact on Subsequent Filings:** Non-filing of Form MGT-14 may impact other filings with the ROC, such as annual returns (Form AOC-4 and Form MGT-7). The company may be required to rectify the non-compliance before subsequent filings can be accepted.

### Lawful Remedies:

To mitigate the consequences and rectify the non-compliance, the following remedies can be considered:

1. **File Form MGT-14:** Immediately file Form MGT-14 with the ROC along with the prescribed fee and necessary documents. The form should accurately reflect the details of the special resolution passed in the EGM.

2. **Rectification of Defaults:** Apply for compounding of offenses under Section 441 of the Companies Act, 2013, if applicable. Compounding involves paying additional fees and seeking approval from the ROC to condone the delay or non-compliance.

3. **Board Resolution:** If the delay was due to oversight or administrative reasons, the board of directors can pass a resolution acknowledging the default and authorizing corrective actions.

4. **Consult with Professionals:** Seek advice from legal professionals or company secretaries specializing in corporate law to understand specific implications and the best course of action.

### Practical Steps:

- **Immediate Action:** File Form MGT-14 as soon as possible to regularize the compliance status of the special resolution.

- **Rectification Application:** If penalties have been imposed or legal action initiated, consider applying for compounding to avoid or reduce further repercussions.

- **Future Compliance:** Implement robust procedures for compliance with all statutory requirements under the Companies Act, 2013, to prevent similar issues in the future.

By taking prompt and appropriate action, the company can mitigate the adverse consequences of non-compliance with filing requirements and ensure adherence to regulatory norms.

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