The Registrar of Companies has penalized a company for issuing shares at a price below the registered valuer’s determined value, reinforcing compliance with Section 62(1)(c) of the Companies Act.
Penalty for Non-Compliance in Preferential Allotments
A recent ruling by the Registrar of Companies (ROC) has highlighted the critical compliance requirements under the Companies Act regarding the issuance of shares in preferential allotments. The ROC imposed a penalty when it was found that shares had been issued at a price below the registered valuer's assessed value, violating Section 62(1)(c).
Even minor deviations, such as shortfalls of ₹0.59 per share, were ruled as sufficient grounds to attract penalties, emphasizing the stringent nature of compliance standards that companies must uphold during equity issuance procedures.
This ruling serves as a cautionary note to legal counsel advising companies on share allotment strategies; it underlines the necessity of maintaining exact compliance with pricing regulations to prevent financial repercussions.
