MCA Likely To Penalise Unicorns For Delay In Filing Financials

SUMMARY

The MCA believes that the said move will improve compliance among the homegrown unicorns

As per the current regulations and rules, a company has to file its annual financial report with the RoC in a span of seven months after the closure of a financial year

Interestingly, MCA has proposed this move after the edtech major BYJU’S stunt where it delayed filing its audited financial statements for almost 17 months

The Ministry of Corporate Affairs (MCA) is mulling to impose penalties on Indian unicorns that are putting off filing their financials.

According to the Hindu BusinessLine report, the MCA believes that the said move will improve compliance among the homegrown unicorns.

As per the current regulations and rules, a company (unicorn) has to file its annual financial report with the Registrar of Corporate Affairs (RoC) in a span of seven months after the closure of a financial year.

If a company does not abide by this, then it will be fined INR 200 per day by the MCA. Add to that, if the filing of financial statements is delayed by 270 days, in such a case, directors of the company will be jailed for a term of over six months.

Interestingly, MCA has proposed this move after the edtech major BYJU’S stunt where it delayed filing its audited financial statements for almost 17 months. Owing to this, the edtech startup was earlier questioned by the MCA and further, asked to state the reasons for the delay.

Following this, BYJU’S announced that it received an ‘unqualified’ financial report for FY20-21 from its auditor. During that time frame, it was also reported that the edtech unicorn would be holding a board meeting before publicising the report on September 6.

Prior to this, BYJU’S along with other edtech majors were also under the government’s scrutiny for allegedly mis-selling its online courses. In July, The Department of Consumer Affairs highlighted the said issue in a meeting with India Edtech Consortium and edtech startups.

The ministry further asked BYJU’S to work along with the Advertising Standards Council of India (ASCI) for the kind of assertions made by the startup in advertisements.

If we talk about other Indian unicorns, then a slew of them akin to BYJU’S have also put off filing their audited financials.

It is pertinent to note that foodtech giant Swiggy delayed publicizing its financial reports for FY2021 by 11 months while Ola’s subsidiary Ola Electric shared its financials with the RoC after 13 months of surpassing the deadline.

Meanwhile, fintech major Razorpay filed its financials for FY2021 with RoC in March this year, which was a 12-month delay.