Company Law for Startups (Part 6): Penalties, Late Fees and How to Regularise Defaults
ROC late fee of Rs 100 per day, Section 92 and 137 penalties, director disqualification, adjudication and how startups can regularise defaults before notices.
A company ignores its filings for two years and then receives a notice from the Registrar. The late fee was only the first layer; on top of it sit penalties on the company and on each officer in default, and a director who never opened the MCA portal finds his name on the notice.
1. The three layers of exposure
| Default | Statutory section | Reported penalty exposure |
|---|---|---|
| Late AOC-4 (financial statements) | Section 137(3) | Company: Rs 10,000 plus Rs 100 per day (reported cap Rs 2 lakh). Each officer: Rs 10,000 plus Rs 100 per day (reported cap Rs 50,000) (confirm) |
| Late MGT-7 (annual return) | Section 92(5) | Reported as Rs 10,000 plus Rs 100 per day, capped at Rs 2 lakh for the company and Rs 50,000 for officers in some sources; other sources report higher ranges (confirm current text) |
| Director not filing for 3 consecutive years | Section 164(2) | Disqualification for 5 years |
| Director breach of duties | Section 166(7) | Fine from Rs 1 lakh to Rs 5 lakh (confirm) |
| No registered office / INC-22 default | Section 12 | Penalty on company and officers; risk of strike-off |
| Fraud | Section 447 | Imprisonment and fine depending on amount |
2. Late fee, in numbers
| Delay | AOC-4 only | AOC-4 + MGT-7 |
|---|---|---|
| 30 days | Rs 3,000 | Rs 6,000 |
| 90 days | Rs 9,000 | Rs 18,000 |
| 180 days | Rs 18,000 | Rs 36,000 |
| 365 days | Rs 36,500 | Rs 73,000 |
These figures apply Rs 100 per day per form and assume both forms are equally late. They exclude statutory penalties.
ComplianceKart reviews your MCA record, files pending forms, replies to Registrar notices and handles adjudication and compounding applications. See our ROC compliance service.
3. Process: from default to adjudication
4. Compounding and condonation
Certain offences can be compounded under Section 441 by the Regional Director or the NCLT, depending on the punishment. Condonation or regularisation of long delays may need a formal application. Never assume a past default will quietly disappear; the Registrar’s record is public and investors check it.
5. Series recap
| Part | Core lesson |
|---|---|
| 1. Incorporation | Choose the right structure and finish the first 180 days (INC-20A) |
| 2. ROC annual filings | AOC-4 in 30 days, MGT-7 in 60 days of the AGM |
| 3. Director duties | Section 166 duties, disclosures and personal liability |
| 4. Share capital and ESOPs | Resolutions, valuation, PAS-3 and a clean cap table |
| 5. Closure | Dormant, strike-off, liquidation or merger |
| 6. Penalties | File before notice; know the three layers |
6. Ten ways to stay out of trouble
- Keep one compliance calendar with a named owner.
- Hold the AGM on time every year.
- File AOC-4 and MGT-7 before due dates.
- Complete DIR-3 KYC for every director.
- File PAS-3 and DIR-12 within time.
- Reconcile ROC, GST and income tax data.
- Maintain minutes and statutory registers.
- Clear MSME and DPT-3 reporting.
- Pay attention to notices on the MCA portal and registered email.
- Close or mark dormant any inactive company instead of ignoring it.
Why work with ComplianceKart
ComplianceKart is a boutique practice bringing Chartered Accountants, Company Secretaries and advocates under one roof. Think of a multi-speciality hospital: the physician, the radiologist and the pharmacist read from one patient file, so you never carry reports between buildings. A penalty case often involves company records, tax data and a contract dispute at once. When specialists work from one file, the reply is consistent and the story told to the Registrar is clear.
Frequently Asked Questions
Is there a cap on the Rs 100 per day additional fee?
No. For AOC-4 and MGT-7, it runs per form from the due date until the date you file.
Can directors be personally penalised?
Yes. Officers in default can face penalties, and directors can be disqualified under Section 164(2) for continuous non-filing.
What if I file before getting a notice?
You still pay the additional fee, and filing before an adjudication notice can reduce or avoid separate penalty proceedings, depending on the circumstances and scheme relief (confirm).
Who decides the penalty?
The adjudicating officer, typically the Registrar, under Section 454, subject to appeal to the Regional Director.
Can a company with years of defaults be rescued?
Often yes, by filing backlog returns, paying fees and applying for relief or condonation where needed, but delay raises cost.
Sources
- Companies Act, 2013: Sections 12, 92, 137, 164, 166, 248, 441, 447, 454
- Companies (Registration Offices and Fees) Rules, 2014 (additional fee)
- MCA circulars on the Companies Compliance Facilitation Scheme, 2026
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Educational article, last updated 11 November 2026. General information, not advice on a specific case. Laws and due dates change; confirm on the date you act. Items marked (confirm) came from secondary sources and need checking against the official text.
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