In a major compliance action, the Registrar of Companies (ROC) Bangalore has imposed a penalty of ₹50 lakh on the directors of M/s Stanley Lifestyle Limited for violating Section 188 of the Companies Act, 2013, related to non-disclosure of Related Party Transactions.

This case reinforces a critical truth for all businesses:

❗ Compliance of a Private Limited Company is not a choice — it’s a legal obligation.

???? What Happened?

The company’s financials and Form AOC-2 clearly reflected substantial Related Party Transactions across multiple years.

However:

These were based on Board approvals taken in FY 2015–16 and 2016–17, which were not renewed in later years.

No Audit Committee omnibus approval was obtained for FY 2020–21.

The company continued the transactions without seeking fresh approvals.

Initially, even the Ex-Company Secretary was named in the adjudication. But after the hearing, the responsibility was rightly pinned on the Managing Director (MD) and Whole-Time Director (WTD) — as they were solely responsible for the authorization of such transactions.

⚖️ Why Compliance of Private Limited Companies Is Crucial

Failure to comply with statutory obligations under the Companies Act can result in:

Hefty monetary penalties

Personal liability for directors

Reputational damage

Investor confidence loss

This penalty of ₹50 lakh was not due to fraud or misappropriation. It was due to non-compliance with procedural law , emphasizing that even genuine businesses face severe consequences if compliance isn’t followed strictly.

???? What Businesses Must Learn

Whether you’re running a local startup, managing a back-office for an international parent, or scaling a tech venture from India, your Private Limited Company compliance must be updated year after year.

If your Indian company acts as a cost center while the parent company earns revenue abroad, you are also expected to adhere to transfer pricing regulations and related party norms under Section 188.

That’s where a professional advisory becomes essential.

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At Akhil Amit & Associates, we are among the Best CAs in Pune, specializing in Private Limited Company compliance, startup structuring, related party disclosures, audit support, and end-to-end MCA compliance.

We assist IT firms, exporters, consultants, New Company Registration and MSMEs with:

ROC compliance (ADT-1, AOC-4, MGT-7/MGT-7A)

GST and TDS return filings

PF & ESIC registration

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✅ Final Word

Compliance is not just ticking boxes. It’s about safeguarding your business and directors from liability, loss, and future complications.

If companies like Stanley Lifestyle Ltd. can face heavy penalties for procedural lapses, it becomes even more important for small and medium businesses to be vigilant and engage the right professionals.

Ensure your company’s future is compliant, stable, and investor-friendly.

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