Section 99 of the Companies Act: Penalty for Non-Compliance with Meeting Provisions.
Punishment for default in complying with provisions of sections 96 to 98. If any default is made in holding a meeting of the company in accordance with Section 96 or section 97 or section 98 or in complying with any directions of the Tribunal, the company and every officer of the company who is in default shall be punishable with fine which may extend to one lakh rupees and in the case of a continuing default, with a further fine which may extend to five thousand rupees for every day during which such default continues
Key Provisions of Section 99
- Applicability of Section
This section applies when a company fails to:- Hold the Annual General Meeting (AGM) as mandated under Section 96.
- Convene a meeting as directed by the Tribunal under Section 97.
- Adhere to the provisions for conducting meetings as prescribed under Section 98.
- Entities Held Accountable
The law places liability on both:- The Company itself.
- Officers of the Company in default, including directors, key managerial personnel (KMP), and the company secretary, who are responsible for the non-compliance.
- Punishment for Non-Compliance
- One-Time Fine: The company and its officers are subject to a fine that may extend up to ₹1,00,000.
- Continuing Default Fine: For each day the default continues beyond the initial breach, an additional fine of ₹5,000 per day is imposed.
If a company fails to hold its AGM within the time frame prescribed under Section 96, both the company and its responsible officers will be fined. For instance:
- If the delay continues for 10 days, the penalty will include:
- One-time fine: ₹1,00,000
- Continuing fine: ₹5,000 × 10 days = ₹50,000
Total Fine: ₹1,50,000
Purpose of the Section
The objective of Section 99 is to enforce discipline and ensure compliance with the procedural requirements of holding meetings, which are critical for maintaining transparency, governance, and accountability in a company’s operations.
Case: M/s. Cinepolis India Pvt. Ltd. & Ors vs. Registrar of Companies, NCT of Delhi & Haryana
- Facts: M/s. Cinepolis India Pvt. Ltd. failed to hold its Annual General Meeting (AGM) within the stipulated time frame as mandated by Section 96 of the Companies Act, 2013. Consequently, the Registrar of Companies initiated proceedings against the company and its officers for non-compliance.
- Judgment: The National Company Law Tribunal (NCLT) observed that under Section 99, if a company defaults in holding a meeting in accordance with Sections 96, 97, or 98, or fails to comply with any directions of the Tribunal, the company and every officer in default are punishable with a fine extending up to ₹1,00,000. In the case of a continuing default, an additional fine of up to ₹5,000 for every day during which the default continues may be imposed. The NCLT imposed a compounding fee of ₹25,000 on the company and ₹25,000 each on the two directors, serving as a deterrent against future non-compliance. source:- Indian Kanoon
This case underscores the importance of adhering to statutory requirements regarding company meetings and highlights the financial repercussions of non-compliance under Section 99.
