MCA Imposes Rs 18 Lakh Penalty for Concealing Beneficial Ownership Details

in general, the company and its officers failed to take necessary steps to identify the SBO leading to a violation of Section 90 4A of the Act, the order said.Section 90 of the Companies Act pertains to SBO and the relevant regulations were operationalised in 2019.The RoC noted that the filings made in SEC clearly suggest that Comvest Advisors LLC, ie the investment advisor is ultimately principally owned and controlled by its CEO Falk.

The Ministry of Corporate Affairs (MCA) has slapped penalties totalling Rs 18 lakh on a company, an American, and six other individuals for failing to disclose the significant beneficial ownership and also not complying with the relevant regulations.

The case pertains to the Significant Beneficial Owner (SBO) of Leixir Resources Pvt Ltd, which is owned by Leixir Intermediate Corp while the ultimate holding company is Comvest Leixir Holdings LLC.

The Registrar of Companies (RoC) of NCT Delhi and Haryana had sought the SBO details and a showcause notice was also issued to the company Leixir Resources, registered in Haryana.

The latest order of the RoC -- which comes under the MCA -- has been passed after carrying out a detailed scrutiny and analysing filings made by the entities concerned before the US Securities and Exchange Commission (SEC).

According to the order dated May 6, Comvest Leixir Holdings LLC, the ultimate holding company of Leixir Resources, is owned by Comvest Investment Partners V LP and Comvest Investment Partners V-A LP.

Comvest Investment Partners V LP is a pooled investment vehicle.

''A major point of determination that had emerged was who could be regarded as a SBO if a company was controlled by a Pooled Investment Vehicle (PIV). More particularly, how would an SBO be determined if the general partner and investment manager of the PIV were bodies corporate. ''However, it was noted that the subject company had not provided the details of any of these persons in relation to the PIV which was ultimately controlling the company,'' as per the 32-page order.

For violations of the Companies Act, 2013 pertaining to SBO, penalties totalling Rs 18 lakh have been imposed on Leixir Resources, Michael Falk -- who has been identified as the SBO -- and six other individuals.

A total fine of Rs 7 lakh and Rs 2 lakh have been imposed on Leixir Resources and Falk, respectively, among others.

The order said the Falk is the SBO of the company, which was acquired by the Comvest Group on April 9, 2021. Falk should have filed a form to report himself as the SBO after a lapse of 30 days from the date of acquisition but failed to do so, it added.

''... in general, the company and its officers failed to take necessary steps to identify the SBO leading to a violation of Section 90 (4A) of the Act,'' the order said.

Section 90 of the Companies Act pertains to SBO and the relevant regulations were operationalised in 2019.

The RoC noted that the filings made in SEC clearly suggest that Comvest Advisors LLC, ie the investment advisor is ultimately principally owned and controlled by its CEO Falk. Further, it said prior to the hearing, the company had erroneously submitted that Falk was working as the CEO of Comvest Advisors LLC solely in his professional capacity.

''It is clear that the earlier submissions of the subject company did not at all refer to the filings made by the investment manager before SEC. It is only when the representatives of the subject company were shown the relevant filings of the SEC that they admitted to the factum of ownership and control being exercised by Michael Falk,'' the order said.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)