₹50 Lakh Penalty for Non-Disclosure of Related Party Transactions — A Caution for Pvt Ltd Co.
₹50 Lakh Penalty for Non-Disclosure of Related Party Transactions — A Caution for Pvt Ltd Co.
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Recently, the Registrar of Companies (ROC) in Bangalore imposed a penalty of ₹50 lakh on the directors of M/s Stanley Lifestyle Limited. The penalty was levied under Section 188 of the Companies Act, 2013, for failure to properly disclose and authorize Related Party Transactions (RPTs).
The transactions in question, although initially approved in FY 2015–16 and 2016–17, were carried forward into FY 2020–21 without fresh approvals. The Audit Committee did not issue any omnibus approval either. As a result, the company violated key compliance provisions despite no fraudulent intent.
This incident highlights a serious point: Compliance for Private Limited Companies in India is not just a formality—it’s mandatory.
Failing to comply with statutory disclosures or annual ROC filings can lead to severe consequences for directors, including personal fines and reputational risk.
If you operate a business in read more India—especially in the IT or service sector, where Indian entities often serve as cost centers for foreign parents—you must also ensure compliance with Transfer Pricing rules and related party disclosure requirements.
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Managing compliance for foreign-funded Indian subsidiaries
Ensuring all filings are in line with the Companies Act and Income Tax Act requirements
We understand the challenges of running compliant operations in a complex regulatory environment—and offer expert guidance to ensure your company remains penalty-free and investor-ready.
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