Corporate Affairs Ministry Levies Fines On Herox And Munjals Of Up To Rs 6 Lakh For SBO Norms Breach

The Ministry of Corporate Affairs has imposed penalties on startup Herox Pvt Ltd and two members of the Munjal family for violations related to the Significant Beneficial Owner (SBO) norms. The penalties, amounting to Rs 6 lakh for Herox and Rs 1.5 lakh each for Suman Kant Munjal and Akshay Munjal, were announced in an order issued on Tuesday.

Violations and Penalties
The violations pertain to Section 90 of the Companies Act, 2013, which requires entities to disclose details about their significant beneficial owners. The Registrar of Companies (RoC), NCT of Delhi & Haryana, issued the penalties following an investigation that revealed non-compliance by Herox and the Munjals.

BEN-1 forms are used by beneficial owners to declare their status to the company, and BEN-2 forms are subsequently filed by the company to report these details to the ministry. According to the RoC, Herox submitted the required e-forms only after the initiation of proceedings, indicating a violation of Section 90(11) of the Companies Act.

Response from Herox and the Munjals
In response to the order, Herox Pvt Ltd and the Munjal family members have expressed their intention to appeal against the penalties. According to a statement issued by the company, they plan to contest the order within the stipulated 60 days by lodging an appeal with the Regional Director of, the Northern Region.

Importance of Compliance
This case reflects the importance of compliance with SBO norms and the Companies Act, of 2013. The Ministry of Corporate Affairs has been actively targeting entities that fail to disclose beneficial ownership information, aiming to enhance transparency and accountability in corporate operations.

Section 90 of the Companies Act, 2013, mandates that companies must maintain accurate and up-to-date information about their beneficial owners. This provision is crucial for preventing fraudulent activities and ensuring that the true ownership of companies is transparent and accountable. Non-compliance can lead to penalties.

By taking decisive action against non-compliant entities, the ministry aims to foster a culture of transparency and integrity within the corporate sector. This not only helps in building investor confidence but also strengthens the overall regulatory framework governing corporate entities in India.

The recent penalties imposed on Herox Pvt Ltd and the Munjal family members highlight the critical importance of adhering to SBO norms under the Companies Act, 2013. As the Ministry of Corporate Affairs continues its efforts to enforce compliance, companies must ensure that they are fully aware of and comply with all legal requirements to avoid similar penalties.