Non-compliance Issues with the ROC

Non-compliance Issues with the ROC

The Registrar of Companies (ROC) enforces the Companies Act, 2013 and the LLP Act, 2008 through mandatory annual filings, automated portal scrutiny, and — in FY 2026-27 — an MCA V3 system that makes every default visible in real time. A single day's delay on AOC-4 or MGT-7 starts a penalty clock running at Rs. 100 per day with no upper cap. Sustained defaults across three consecutive financial years trigger director disqualification under Section 164(2), deactivating the Director Identification Number (DIN) across every company where the person holds a directorship. The fix is methodical but must start today.

What the ROC Monitors — and Why FY 2026-27 Raises the Stakes

The MCA V3 portal, which reached operational maturity through 2024-25 and is now the exclusive filing platform, does something the old MCA 21 system never reliably managed: it tracks filing status in real time, cross-links DIN status to pending forms, and issues automated deficiency notices without human intervention. For a director who sits on multiple boards, that interconnection is the single biggest compliance risk in 2026.

Before MCA V3, a small company could go years without its defaults surfacing in any systematic way. That era is over. The Registrar's office now initiates adjudication proceedings for late filings with measurably greater frequency, and the published list of disqualified directors under Section 164(2) — accessible on the MCA portal under MCA Services → Find DIN — is updated regularly.

The ROC monitors two broad categories of compliance:

• Annual recurring filings — AOC-4 (financial statements), MGT-7 or MGT-7A (annual return), DIR-3 KYC (director KYC), DPT-3 (deposit return), MSME-1 (MSME dues)
• Event-based filings — ADT-1 (auditor appointment), DIR-12 (director change), PAS-3 (share allotment), CHG-1 (charge creation), BEN-2 (significant beneficial ownership)

Miss an event-based filing and you have a discrete, containable default. Miss annual filings across multiple years and you have a pattern that triggers escalation from notice to adjudication to strike-off.

The Forms That Trip Up Companies Most — With Exact Due Dates

The following forms account for the overwhelming majority of ROC defaults among private limited companies and LLPs in India. Each has a hard statutory deadline.

AOC-4 — Financial Statements

Due within 30 days of the AGM. For companies with a March 31 year-end, the AGM must be held by September 30, making the AOC-4 deadline October 30. One Person Companies (OPCs) have 180 days from close of the financial year — effectively September 27 for a March 31 year-end.

MGT-7 / MGT-7A — Annual Return

Due within 60 days of the AGM, so November 29 if the AGM was held on September 30. MGT-7A applies to OPCs and small companies; all others use MGT-7. Certification by a Company Secretary in Practice (PCS) is mandatory where paid-up capital exceeds Rs. 10 lakh or turnover exceeds Rs. 50 lakh — filing without the required certification is itself a technical default.

DIR-3 KYC — Director KYC

Due every year by September 30. Directors who already hold an active DIN and whose details have not changed may file the simpler web-based DIR-3 KYC-W. Miss the deadline by even one day and the DIN is deactivated; reactivation requires filing DIR-3 KYC and paying a flat Rs. 5,000 fee — this is not a per-day charge.

DPT-3 — Return of Deposits and Exempt Deposits

Due by June 30 every year. This traps many founders: loans received from directors, shareholders, or relatives are classified as exempt deposits under the Companies (Acceptance of Deposits) Rules, 2014, and must be reported even though they are not public deposits. The form is required even if the outstanding balance is nil, provided such amounts existed during the year.

ADT-1 — Auditor Appointment

Due within 15 days of the AGM, i.e., October 15 for a September 30 AGM. This is persistently filed late because it is treated as a follow-on task once the audit is complete.

MSME-1 — Half-Yearly Return of Dues to MSME Suppliers

• First half (April–September): due by October 31
• Second half (October–March): due by April 30

Required if outstanding dues to MSME suppliers exceed 45 days. The penalty on the company ranges from Rs. 25,000 to Rs. 3 lakh; the managing director or whole-time director faces a personal penalty of Rs. 25,000 upward.

BEN-2 — Significant Beneficial Ownership

Filed on occurrence of the event whenever a Significant Beneficial Owner (SBO) under Section 90 is identified or changes. Missing this carries a penalty of Rs. 1 lakh to Rs. 10 lakh on the SBO, plus prosecution risk for the company under Section 90(11).

How the Penalty Clock Works: Section 403 and the Daily Additional Fee

Section 403 of the Companies Act, 2013 imposes an additional fee of Rs. 100 per day for every day after the prescribed period has expired, with no upper ceiling. This is not an adjudication penalty requiring a show-cause notice — it is a mandatory fee hardwired into the MCA V3 portal. When you attempt to file any overdue form, the portal automatically computes and displays the total before you submit.

To be precise: the Section 403 additional fee is what you pay to complete the belated filing. The ROC can separately initiate adjudication proceedings under the relevant section — for example, Section 137 for AOC-4 default, or Section 92 for MGT-7 default — and impose a further adjudication penalty through a formal order. In practice, adjudication orders are more likely when:

• Defaults span three or more consecutive financial years
• A company inspection has been initiated under Section 206
• The default has been flagged by the Serious Fraud Investigation Office (SFIO)
• The company or its directors appear on a watch-list after a previous adjudication

For most first-time late filers, the Section 403 additional fee is the dominant financial hit. For habitual defaulters, the adjudication penalty compounds on top of it.

Worked Example: What One Year of Neglect Costs

Scenario: Sunrise Components Pvt Ltd, a manufacturing company, two directors — Mr. Arjun and Ms. Priya (both DINs previously active). Financial year ended March 31, 2025. AGM held on September 25, 2025. No filings made until May 23, 2026.

Total portal fees to clear one year's backlog: Rs. 1,04,200

This is before professional fees for the CA or CS who certifies and files the forms. Now extend the scenario: the company missed the same filings for FY 2023-24 and FY 2022-23 as well — which is exactly the pattern the ROC encounters most often. Running the same calculation for two earlier years, where delays were longer, pushes the total additional fees toward Rs. 2.5–3 lakh. At that point, both directors have also crossed the three-consecutive-year threshold under Section 164(2) and face disqualification.

The DPT-3 alone — Rs. 32,700 for one year — shocks most founders when they first see the MCA portal's calculation. Many didn't know they had to file it at all.

Director Disqualification Under Section 164(2): The Cascade Nobody Plans For

Section 164(2)(a) of the Companies Act, 2013 disqualifies a director from being appointed or re-appointed as director of any company if the company of which they are a director has failed to file financial statements under Section 137 or annual returns under Section 92 for a continuous period of three financial years.

The mechanics are what catch directors off guard. The disqualification is automatic — there is no show-cause notice, no adjudication hearing. When the third consecutive year of default is established, the ROC flags the DINs of all directors of that company.

What disqualification actually does:

1. The disqualified director's DIN is marked inactive on MCA V3
2. Every company where that director serves loses a signing authority overnight — board resolutions, bank mandate renewals, and all MCA filings grind to a halt
3. The disqualification endures for 5 years from the date it takes effect
4. Section 167(1)(a) requires the director to vacate office across all companies simultaneously
5. No fresh appointments as director are possible anywhere during this period

For a promoter who holds directorships across four companies — a common structure in family business groups or for investors — this cascade is operationally devastating. Four entities simultaneously lose board-level signatory capacity, and fixing each one requires its own compliance cleanup before the disqualification can be lifted.

Can it be undone? Bringing the defaulting company's filings fully current removes the basis for the disqualification going forward, but the 5-year period is not automatically truncated by belated compliance. Legal routes exist — Section 164(2) read with Section 252 for wrongful strike-off scenarios, or petitions to the relevant High Court — but they are expensive and time-consuming. Prevention is categorically cheaper.

LLPs: Form 8 and Form 11 — the No-Cap Penalty Trap

LLPs receive far less compliance attention than private limited companies, yet they face a penalty regime that is, if anything, more unforgiving.

Form 11 — Annual Return of LLP: Due by May 30 every year (60 days from March 31).

Form 8 — Statement of Account and Solvency: Due by October 30 every year (30 days from the end of the first six months).

The penalty for late filing of both forms is Rs. 100 per day per form, with no upper cap. There is no provision under the LLP Act, 2008 equivalent to the Companies Act's Section 460 condonation route for ordinary annual filings.

Worked LLP example: Pinnacle Advisors LLP (two designated partners), both forms unfiled for FY 2024-25, finally filed on May 23, 2026.

• Form 11 (due May 30, 2025): 358 days late → Rs. 35,800
• Form 8 (due October 30, 2025): 204 days late → Rs. 20,400
• Total additional fees: Rs. 56,200

For a dormant LLP that has been filing nothing for three years, cumulative additional fees routinely exceed Rs. 3–4 lakh. Many promoters discover this liability only when they want to wind up the LLP and find that they cannot file the dissolution forms — Form 24 — while earlier annual returns remain outstanding.

Critical note on dormancy: The concept of a "dormant company" under Section 455 of the Companies Act (which reduces filing obligations) has no parallel under the LLP Act, 2008. A dormant LLP must still file Form 8 and Form 11 every year without exception.

When the ROC Stops Sending Notices and Starts Taking Action

Most compliance discussions dwell on penalties. The more serious question is when the ROC moves from sending notices to taking structural action. The escalation path:

1. Automated deficiency notice via MCA V3 — informational; no immediate penalty but creates a formal record of default
2. Show-cause notice under the relevant section — triggers an adjudication timeline; the company must respond within the specified period
3. Adjudication order from the Registrar or Adjudicating Officer — imposes a specific penalty with a payment deadline; appeals go to the Regional Director and then to the NCLT
4. Strike-off notice under Section 248(1) — issued where the ROC believes the company is defunct, has not filed for two or more financial years, and has not responded to ROC communications
5. Prosecution under Section 447 or 448 — reserved for fraud, false statements, or wilful evasion; carries imprisonment and unlimited fines

Once a company is struck off under Section 248:

• Its name is removed from the Register of Companies
• Bank accounts are frozen under Section 248(5) — banks receive direct notification from the ROC
• Revival requires a petition to the National Company Law Tribunal (NCLT) under Section 252, typically taking 12–18 months and costing Rs. 1–3 lakh in professional and court fees for straightforward cases
• Any business conducted after strike-off creates personal liability for the directors

Common Mistakes That Turn a Small Default Into a Governance Crisis

1. Treating DIR-3 KYC as optional when "nothing has changed" The filing is mandatory every year regardless of whether contact details have changed. Skipping one year deactivates the DIN; skipping it twice while also missing annual returns puts you directly on the Section 164(2) path.

2. Filing AOC-4 without ensuring the audit is complete and signed AOC-4 requires the signed auditor's report to be attached. Companies that file financial statements with unresolved audit qualifications, or that attach draft reports, face deficiency notices and must re-file — restarting the clock on an already delayed submission.

3. Filing MGT-7 without PCS certification when it is required Where paid-up capital exceeds Rs. 10 lakh or turnover exceeds Rs. 50 lakh, the annual return must carry the digital signature of a practising Company Secretary. Filing the form without it when certification is mandated is a technical default equivalent to non-filing.

4. Skipping DPT-3 on the assumption that "we don't accept deposits" Director loans, shareholder loans, and inter-corporate loans often qualify as exempt deposits reportable in DPT-3. The form is required even if the reportable balance is nil as at March 31. This mistake is epidemic among startups that treat their books informally.

5. Changing CA or CS without verifying the backlog When a company changes its professional advisor, the incoming advisor typically works from what is provided. If the outgoing advisor does not issue a compliance status certificate, or if founders do not independently verify on MCA V3, pending filings slip through the handover gap. Always pull the MCA V3 master data yourself — it takes five minutes and surfaces every SRN (Service Request Number) associated with the company.

6. Treating an LLP as "done" once business activity stops A dormant or functionally inactive LLP is still a legal entity with annual filing obligations. Promoters who park an LLP and attend to it only when they need it again often find years of accumulated penalties that exceed any practical benefit of having maintained the entity.

Step-by-Step Cleanup Roadmap — Follow This in Order

If you have discovered a compliance backlog, work through the following sequence precisely. The order matters because MCA V3 enforces filing chronology and will reject out-of-sequence submissions.

Step 1 — Establish the complete picture Log into MCA V3 (www.mca.gov.in). Go to MCA Services → View Company/LLP Master Data. Record:

• DIN status for every director (Active / Deactivated / Disqualified)
• Date of last successfully filed AOC-4 and MGT-7
• Any open SRNs awaiting resubmission
• Incorporation date, to identify the first year requiring filings

Step 2 — Build the penalty exposure calculator List every overdue form, its statutory due date, and the number of days since that date. Multiply by Rs. 100 for each. This gives you the Section 403 additional fee you will pay at the MCA portal — a cash forecast before you begin. It also identifies whether the additional fees alone are manageable, or whether you need to explore Condonation of Delay under Section 460 for procedural defaults.

Step 3 — Restore DIN status before anything else If any director's DIN is deactivated (DIR-3 KYC not filed), file DIR-3 KYC or DIR-3 KYC-W immediately and pay the Rs. 5,000 reactivation fee. Without an active DIN and a valid Digital Signature Certificate (DSC), no other MCA filing can be digitally signed and submitted.

Step 4 — File overdue annual forms in strict chronological order Begin with the oldest pending financial year and work forward year by year. For each year:

• File AOC-4 first: attach adopted financial statements (audited and signed), board resolution for adoption of accounts, and the complete auditor's report
• File MGT-7 / MGT-7A second: attach register of members snapshot, list of directors, and PCS certification where required
• File ADT-1 alongside or immediately after the AOC-4: attach auditor's written consent and the board resolution for appointment

Do not attempt to file FY 2023-24 documents before FY 2022-23 is complete. The portal enforces this sequence and will return errors.

Step 5 — File DPT-3 and MSME-1 for each applicable year These are independent of the AGM cycle and can be filed in parallel once DIN status is restored. Compute the Section 403 additional fee for each and pay via the MCA portal.

Step 6 — Evaluate Condonation of Delay under Section 460 selectively Section 460 empowers the Central Government to condone delays in specific procedural matters — for example, a technical delay in holding the AGM beyond September 30 where the company can demonstrate genuine cause. It does not eliminate the Section 403 additional fee, which is a non-waivable statutory charge. Where adjudication proceedings have already been initiated, a practising CS or CA should advise on whether a condonation application is appropriate before responding to the show-cause notice.

Step 7 — Build a forward compliance calendar as a board-level commitment After clearing the backlog, install recurring reminders in your organisation's calendar system. Minimum milestones:

Treat this calendar as a board-level key performance indicator, not a clerical checklist. The person responsible should have direct reporting access to whoever signs the financial statements.

Key Takeaways

• The Section 403 additional fee runs at Rs. 100 per day per form with no upper cap. One year of missed filings across AOC-4, MGT-7, ADT-1, and DPT-3 can generate Rs. 80,000–1,00,000+ in portal fees before any adjudication penalty is considered.
• DIR-3 KYC is the unlock step in every cleanup. A deactivated DIN blocks all other filings. Restore it first, always.
• Three consecutive missed annual filings trigger Section 164(2) disqualification, deactivating the DIN across every company where the director serves — a cascade that freezes governance across an entire portfolio of entities simultaneously.
• LLPs face an identical Rs. 100/day no-cap regime on Form 8 and Form 11, with no dormancy exception and no equivalent condonation mechanism under the LLP Act, 2008.
• DPT-3 is compulsory even when you "don't take deposits" — director loans and shareholder loans are exempt deposits that must be reported; skipping this form is one of the most common and easily avoidable penalties in practice.
• MCA V3 has eliminated silent non-compliance. Automated notices, DIN flags, and a publicly searchable disqualification list mean that defaults surface faster and more visibly than at any previous point in Indian corporate law enforcement.
• Filing order is non-negotiable in a cleanup: restore DIN → oldest year AOC-4 → MGT-7 → next year AOC-4 → MGT-7, forward. Any deviation causes portal rejections that extend the delay — and the penalty — further.