Adjudication Order Summary Against Baby Memorial Hospital Limited for Non-Compliance with Dematerialisation Rules

Adjudication Order Issued Against Baby Memorial Hospital Ltd.

Introduction

The Ministry of Corporate Affairs (MCA) has issued an adjudication order against M/s. Baby Memorial Hospital Limited, an unlisted public company, for violations of the Companies Act, 2013 concerning the dematerialisation of securities. This article summarises the background, nature of default, penalties imposed, and the compliance process.

Background of the Company

Baby Memorial Hospital Limited is incorporated under the Companies Act, 2013 and has its registered office within the jurisdiction of the Registrar of Companies, Kerala.

Nature of Default

The Company voluntarily filed an application for adjudication admitting default under:

  • Section 29(1A) of the Companies Act, 2013

  • Rule 9A(2) and Rule 9A(3)(b) of the Companies (Prospectus and Allotment of Securities) Rules, 2014

These provisions mandate the dematerialisation of securities by promoters and subscribers before issuing or subscribing to further shares.

Relevant Legal Provisions

  • Rule 9A(2): Requires all securities held by promoters, directors, and key managerial personnel to be dematerialised before making any offer.

  • Rule 9A(3)(b): Requires any subscriber to first dematerialise their existing holdings before subscribing to new securities.

Chronology of Offences

Below is the summary of the non-compliant allotments:

S.No.Board/EGM DateNo. of Shares IssuedOffereeNature of Non-Compliance
117.07.2021 / 23.07.20211,39,42,579 equity sharesMs. Ambica PraveeshNon-compliance with Rule 9A(2)
226.09.2022 / 29.09.20221,07,16,773 equity sharesMs. Ambica PraveeshNon-compliance with Rule 9A(2)
310.04.2023 / 05.06.202380,64,510 equity sharesM/s. Trinity Finsec Pvt. Ltd.Non-compliance with Rule 9A(2) & 9A(3)(b)

For the third allotment, M/s. Trinity Finsec Pvt. Ltd. held 22,11,598 shares in physical form, which were dematerialised only on 27.12.2023, after the issuance—leading to contravention of Rule 9A(3)(b).

Officers in Default

The following individuals were determined to be officers in default as per Section 2(60) of the Act:

Managing Director

  • Mr. Alexander Kadakketh Geevarghese

Whole-time Directors

  • Ms. Anitha Alexander

  • Ms. Anju Mariam Alex

  • Mr. Vineeth Abraham

Director

  • Mr. Jacob Kalluvila Babu

CFO

  • Mr. Vasant Kumar Santhosh Kumar (appointed 01.12.2022)

Company Secretary

  • Mr. Roshin (appointed 01.02.2023)

(Note: Independent Directors were exempted.)

Penalties Imposed

The Adjudicating Officer levied the following penalties:

S.No.NameRolePenalty
1M/s. Baby Memorial Hospital Ltd.Company₹30,000
2Mr. Alexander Kadakketh GeevargheseManaging Director₹30,000
3Ms. Anitha AlexanderWhole-time Director₹30,000
4Ms. Anju Mariam AlexWhole-time Director₹30,000
5Mr. Vineeth AbrahamWhole-time Director₹30,000
6Mr. Jacob Kalluvila BabuDirector₹30,000
7Mr. Vasant Kumar Santhosh KumarCFO₹10,000
8Mr. RoshinCompany Secretary₹10,000
9M/s. Trinity Finsec Pvt. Ltd.Share Subscriber₹10,000

Total Penalty: ₹2,10,000

Compliance Requirements

  • The penalties must be paid within 90 days of receiving the order using the “Pay Miscellaneous Fees” option on the MCA portal.

  • Proof of payment (Challan/SRN) must be submitted via Form INC-28 to the Registrar of Companies.

Right to Appeal

The Company and the officers in default have the right to appeal to the Regional Director (South), MCA, Chennai within 60 days from the date of the order.
Appeals must be filed in Form ADJ along with a certified copy of the adjudication order.

Consequences of Non-Compliance

Failure to pay the penalty or file proof of compliance may lead to additional fines and prosecution under Section 454(8) of the Companies Act, 2013.

Conclusion

This adjudication order underscores the importance of timely dematerialisation of securities in compliance with Section 29(1A) and Rule 9A. Companies and their officers must ensure procedural compliance to avoid penalties and regulatory scrutiny.

If you need assistance in understanding or complying with these requirements, consider seeking professional guidance.