Justo Realfintech Limited, a Mumbai-based company, has received three penalty orders from the Registrar of Companies (RoC) for violating Section 42(10) of the Companies Act, 2013. The violations stem from the company's failure to maintain separate bank accounts for private placement application money.

Penalty Details

Impact and Company Response

Despite the significant penalties, Justo Realfintech has stated that there is no material impact on its financials, operations, or other activities. The company describes the non-compliance as procedural and technical, relating to a past period.

Justo Realfintech has announced that it is taking appropriate steps before competent authorities in response to these orders. The company emphasizes that the compounding order pertains to a procedural/technical non-compliance from a past period and does not affect its day-to-day business or performance.

Regulatory Implications

This case highlights the importance of strict adherence to regulatory requirements, particularly in financial matters such as private placements. Companies must ensure that they maintain separate bank accounts for application money received during private placements, as mandated by Section 42(6) of the Companies Act, 2013.

The penalties imposed on both the company and its directors underscore the personal liability that company officials may face for regulatory non-compliance. It serves as a reminder for all listed entities to maintain robust compliance mechanisms to avoid such penalties and regulatory scrutiny.

While Justo Realfintech claims no material impact from these penalties, the incident may affect investor confidence and require the company to strengthen its internal controls and compliance procedures going forward.

Justo Realfintech Limited, a Mumbai-based company, has been penalized by the Registrar of Companies for violating Section 42(10) of the Companies Act, 2013. The violation pertains to the company's failure to maintain private placement application money in a separate bank account, as required by law.

Penalty Details

The company disclosed the following details regarding the penalty:

The directors named in the penalty order are:

• Pushpamitra Das
• Vishal Vasantrao Kokadwar
• Chirag Prasanna Mehta
• Priyesh Dineshchandra Chheda

Impact on Company Operations

Despite the penalty, Justo Realfintech Limited has stated that there is no material impact on its financial operations or business activities. The company characterized the non-compliance as a procedural/technical issue from a past period, emphasizing that it does not affect the day-to-day business or performance of the company.

Regulatory Compliance

This incident highlights the importance of strict adherence to regulatory requirements, particularly in financial matters such as private placements. Companies must ensure that they maintain separate bank accounts for application money received during private placements to comply with Section 42(10) of the Companies Act, 2013.

The penalty serves as a reminder for all listed entities to maintain rigorous compliance with regulatory standards to avoid similar sanctions and maintain investor trust.

Conclusion

While Justo Realfintech Limited faces this regulatory setback, the company's assertion of no material impact on its operations suggests that it views this as a minor issue. However, the incident underscores the need for vigilance in regulatory compliance, especially for companies in the financial sector.

Investors and stakeholders will likely monitor the company's future compliance practices closely to ensure that such violations do not recur.