The Online Beauty retail aggregator M/s FSN E-commerce ventures Limited, popularly known for its brand “NYKAA” has clean-up its compliance history before the launch of its IPO for the clean image of the organization.

As Incorporated under the Companies Act, 1956 in the year 2012 Mrs. Falguni might not dream for this huge success where she founded the company and registered it with the initial name of her and her spouse i.e. F-Falguni, S- Sanjay and N- Nayar (FSN E-commerce ventures Limited).

NYKAA the Sanskrit version of the word Heroin or Actress.

During the Pre-IPO period company did the following Non- Compliance and compounded voluntary for the clear image preparation before IPO which Includes delays in the appointment of a company secretary as well.

1. Appointment of Statutory Auditor without following the Section 139 of the Companies Act, 2013:

Falguni Nayar had voluntarily filed a compounding application dated May 20, 2021, by filing e-Form GNL-1 on June 02, 2021, before The Regional Director, Western Region, Ministry of Corporate Affairs (the “Regional Director”) / The National Company Law Tribunal, Mumbai under section 441 of the Companies Act, in relation to the appointment of the statutory auditor of the Company for a period of one year i.e. Financial Year 2019-20 at the seventh annual general meeting of the shareholders of our Company held on July 12, 2019, which was not in compliance with the provisions of Section 139 of the Companies Act and the rules promulgated thereunder.

The Regional Director vide its order dated September 6, 2021 compounded the offences committed under Section 139 of the Companies Act and directed our Company and Falguni Nayar to pay a compounding fee of ₹ 0.1 million and ₹ 0.02 million, respectively and accordingly disposed off the compounding application.

Falguni Nayar has paid the said compounding fee imposed by way of the above order on August 27, 2021 and August 31, 2021, respectively.

2. Delay of 238 days in Appointment of a Whole-time Company Secretary.

Company had voluntarily filed an application for adjudication dated May 20, 2021 by filing e-Form GNL-1 on June 02, 2021 before The Central Government / The Registrar of Companies, Maharashtra at Mumbai under section 454 of the Companies Act, in relation to a delay of 238 days in appointment of a whole-time company secretary of our Company, which was not in compliance with the provisions of Section 203 of the Companies Act and Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

However, the adjudication application was transferred to the compounding cell by the Registrar of Companies, Maharashtra at Mumbai on the grounds that the offense made in 2014 was originally punishable with fine.

Accordingly, Company has filed an application under Section 441 of the Companies Act for compounding the non-compliance with the provisions of Section 203 of the Companies Act.

The said application has been compounded by The Regional Director, Western Region, Ministry of Corporate Affairs vide its order dated September 29, 2021, and directed our Company and its Directors to pay a compounding fee, which was paid on September 23, 2021.

3. Omission to File “ List of allottees in PAS-3.

The company had voluntarily filed an application for adjudication dated May 20, 2021 by filing e-Form GNL-1 on June 02, 2021 before The Central Government / The Registrar of Companies, Maharashtra at Mumbai under section 454 of the Companies Act, in relation to an omission to include a list of allotees in the certified true extract of the shareholders’ resolution dated September 14, 2016, attached to the e-Form MGT-14 filed by our Company with the Registrar of Companies, Maharashtra at Mumbai on September 22, 2016, which was not in compliance with the provisions of Section 42(2) of the Companies Act and Rule 14(1) of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Further to discussions with the office of Registrar of Companies, Maharashtra at Mumbai, our Company has been advised that a non-compliance with the provisions of Section 42(2) of the Companies Act has not been committed since the list of allottees was attached e-Form MGT-14 by way of disclosure in the explanatory statement in the notice of the AGM held on September 22, 2016 and the requisite e-Forms MGT-14 and PAS-3 have been filed for the impugned preferential allotment.

Accordingly, Company has vide a letter dated September 23, 2021, has applied for withdrawal of the application for adjudication and the same has been acknowledged by the Registrar of Companies, Maharashtra at Mumbai.

4. Penalty on Officer in Default under section 203.

The company had voluntarily filed a compounding application dated September 20, 2021, by filing e-Form GNL-1 on September 21, 2021, before The Regional Director, Western Region, Ministry of Corporate Affairs (the “Regional Director”) / The National Company Law Tribunal, Mumbai under section 441 of the Companies Act, in relation to a delay of 238 days in the appointment of a whole-time company secretary of our Company, which was not in compliance with the provisions of Section 203 of the Companies Act and Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Regional Director vide its order dated September 29, 2021 compounded the offenses committed under Section 203 of the Companies Act and directed our Company and the Directors who were on the Board of Directors of our Company during the period of non-compliance, viz., Falguni Nayar, Rashmi Mehta and Om Prakash Nayar to pay a compounding fee of ₹ 0.2 million, ₹ 0.07 million and ₹ 0.07 million, respectively and accordingly disposed off the compounding application.

The Regional Director noted the fact that Om Prakash Nayar had passed away on August 16, 2016 and therefore the compounding fee of ₹ 0.07 million cannot be paid by due to his demise.

If a company has appointed any Whole-time Company Secretary within due time then it might have saved such huge amount of Compounding fee and other Penalty.

The company NYKAA is presently having 6+ associate concerns which are also dealing with multiple non-compliance under various laws which are briefed under the prospectus filed before the stock exchange.

By csannusharma

Annu Sharma is a qualified Company Secretary as well as a Certified CSR Professional and a Law graduate with rich experience of 4 years in secretarial, corporate legal affairs, management and corporate governance; in different industry sectors. Featured on Tax Guru.In, Compliance Calendar LLP and Blogger.com.