Compliance
Filing a delayed AOC‑4 or MGT‑7 within thirty days of the ROC notice avoids the penalty, though the filing fee still applies, saving businesses up to five lakh rupees in fines.
Check your DPDP readiness — free More on the blogSection 454 of the Companies Act, 2013 creates a special adjudication process for penalties arising from company‑law defaults. The Central Government appoints officers of at least Registrar rank to act as adjudicating officers, each with a defined jurisdiction. In practice the Registrar of Companies for the region where a firm is registered hears the case and decides whether a penalty should be imposed.
Before any penalty is levied, the adjudicating officer must give the company, the defaulting officer or any other interested party a reasonable opportunity to be heard. This procedural safeguard ensures that the company can present its case, explain the delay and propose rectification. An order that ignores this right is harder to challenge on appeal, making timely representation crucial.
If a company receives a notice for a late annual return (AOC‑4) or financial statement (MGT‑7), the proviso to section 454(3) allows the penalty to be waived provided the default is corrected before, or within, thirty days of the notice. The company must file the overdue document and inform the adjudicating officer of the filing reference number and date, thereby proving compliance within the grace period.
An order issued by the adjudicating officer can be appealed to the Regional Director who has jurisdiction over the area. The appeal must be lodged within sixty days of receiving the copy of the order. Missing this window closes the avenue of appeal, leaving the original order in force and exposing the company to further consequences. If the company fails to comply with the adjudicating officer’s order within ninety days of receipt, a separate offence arises under section 454(8). The company faces a fine ranging from twenty‑five thousand to five lakh rupees, while the defaulting officer may face up to six months’ imprisonment, a fine of twenty‑five thousand to one lakh rupees, or both. The filing fee prescribed under section 403 remains payable even when the penalty is waived. This fee is a statutory charge for submitting the annual return or financial statement and is not affected by the thirty‑day relief provision. Common pitfalls include filing the document but not notifying the adjudicating officer, thereby losing the chance to prove the default was rectified within the grace period. Another error is overlooking the hearing right, which can result in an order being made without the company’s representations, weakening any subsequent appeal. Businesses also often treat the adjudicating officer’s order as the final step, forgetting the separate compliance deadline of ninety days. Non‑compliance triggers a fresh offence with its own fine and possible imprisonment for officers, adding significant financial and reputational risk. In summary, understanding the procedural timeline—thirty days to cure a filing default, sixty days to appeal, and ninety days to obey the order—allows small firms to avoid steep penalties and focus resources on growth rather than litigation.
Submit the overdue AOC‑4 within thirty days of the ROC’s notice and reply to the notice with the filing’s SRN and date. This demonstrates that the default was cured within the grace period, triggering the proviso to section 454(3) which waives the penalty, though the standard filing fee still applies.
An appeal must be filed with the Regional Director within sixty days of receiving the copy of the adjudicating officer’s order. Missing this deadline eliminates the right to challenge the order, leaving the original penalty or directive in force.
Ignoring the order beyond ninety days creates a separate offence. The company can be fined between twenty‑five thousand and five lakh rupees, and the defaulting officer may face up to six months’ imprisonment, a fine of twenty‑five thousand to one lakh rupees, or both.
Informing the Registrar with the filing SRN and date provides evidence that the default was rectified within the thirty‑day window. Without this notice, the Registrar cannot confirm compliance, and the penalty may be imposed despite the filing being completed.
Published 2 November 2026. Founder & CEO at VidhiSar. I have watched four companies pay for the same mistake, and it was never the mistake anyone expected. VidhiSar is software, not a law firm: every answer names the section it relies on so you can check it, and anything turning on your specific facts is worth putting to a professional. More about who builds this
Maintains the law explainers, calculators, templates and blog posts on vidhisar.in: checks them against the statute text and updates them when the law changes. Errors and changes in the law can be reported to legal@vidhisar.in.