MCA mulls imposing fines on unicorns over delay in filing financials

The Ministry of Corporate Affairs (MCA) may soon impose penalties on several unicorns in India after they delayed filing their audited financials. The MCA is of the view that the move would improve compliance, a report in Hindu BusinessLine stated. 

Byju's is already 17 months late in filing the results for FY21. In August, the MCA had asked the edtech major why it had not filed the results. On July 4, the company said that it would file its results before July 14. Now, the company is reportedly planning to file the results by September 6. 

Swiggy had delayed its FY21 result filing by 11 months and Ola Electric was at least 13 months late in filing the financials with the RoC, the report added. 

Razorpay, a new unicorn, filed its FY21 financial in March 2022, 12 months late. Experts believe that the delays in filing the reports may impact funding rounds. 

"The shareholder agreement does have several compliance requirements to be adhered to by the stakeholders and start-ups have no reason to not follow the rules, especially the unicorns,” Brijesh Damodaran, partner of growth stage at Auxano Capital, told BL. 

Experts suggested that a delay might be acceptable, but if it is longer than 12-17 months, it is a big "red flag". 

According to current rules, a company is required to file its annual results with the RoC within seven months of the end of the financial year. After that, a fine of Rs 200 per day is charged by the MCA. Also, directors of the companies, that delay the filing by 270 days can be imprisoned for a term not less than six months, the report said.