MCA Penalises Samsung Display Noida for Breach of Companies Act Norms

The ministry of corporate affairs Clipped penalties totalling ₹8,14,200 on Samsung Display Noida Private Ltd, its managing director Seung Kyu Lee and three others for alleged violation of the significant beneficial owner (SBO) norms under the Companies Act, 2013.

In its order dated June 12, reviewed by ET, the Registrar of Companies (ROC) for Uttar Pradesh under the MCA has said the company “has failed to exercise the due diligence to ascertain the SBO in terms of the provisions of the section 90 of the Act”. As per Samsung Display Noida’s February 2024 letter cited in the order, it’s fully owned by Samsung Display Co (Korea), which, in turn, is 84.8% owned by Samsung Electronics Co (Korea). Section 90 of the Companies Act, 2013, typically requires companies to disclose their significant beneficial owner details to authorities. The latest order comes weeks after the ROC for the National Capital Region and Haryanaslapped penalties in excess of ₹27 lakh on Microsoft- owned professional networking platform LinkedIn India, Microsoft chairman Satya Nadella, Linked in chief executive Ryan Roslansky and seven others for violation of such norms.

The orders underscore the ministry’s growing unease over inadequate revelation of significant beneficial owner details by companies, especially the local arms of foreign firms. A pen play of ₹25 lakh has been imposed on Samsung Display Noida and that of ₹1 lakh has been slapped on Lee, according to the order. Three others of the company have to cough up total penalties of ₹2,14,200. Samsung Display Noida and its officers have also been asked to “determine all the individuals who fall under the definition of ‘significant beneficial owner in the letter and spirit of the Act” and file the relevant details within 90 days from the date of this order. This is the third such instance in two months when the ROC penalised unlisted companies, having foreign shareholdings, for not taking the required steps to identify significant beneficial owners, according to Makarand M Joshi, founder of corporate compliance firm MMJC and Associates. “From this it is seen that the government is keen on investigating and identifying significant beneficial owners wherever foreign shareholders are holding a majority stake,” Joshi added. The company and the individuals concerned have to deposit the penalties in 90 days. They can file an appeal against this order in 60 days with the MCA’s regional director (northern region).

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