| F.No:9/02/ADI/SEC.42(10)&247BEFORE THE REGIONAL DIRECTOR,of 2013/SOUTH ROC(AP)/RD(SER)/2025 /2EAST REGION Th 6/6 _ MINISTRY OF CORPORATE AFFAIRS, HYDERABAD Z-d2) IN THE MATTER OF COMPANIES ACT, 2013 IN THE MATTER OF LOCALBUY TECHNOLOGIES PRIVATE LIMITED

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1. M/s. Localbuy Technologies Private Limited rey Rigene (cio ees<br>B-Block, G-6, Palace Heights, Sivaii Nagar, | Beery, Bed aa) |<br>Kurmannapalem, Nr Aganampudi Toll Gate, | Srapor breos a:<br>Visakhapatnam, Andhra Pradesh, India, 530046. | ; “FATCHED<br>2. Mr. Neeraj Menta ; AUG 2035 |<br>Road No 9, Central Bank Colony, EST ap y e :<br>.<br>GSI ES OR A] Dy . {<br>Post, 3-9-57, Plot No. 107, Mansoorabad, Lis. race MURECTOR |<br>_ Rangareddi, Andhra Pradesh - 50068. ~ ee DDER AE<br>----- End of picture text -----<br>

2. Mr. Sailesh Tulshan , No. 26, Ozone Residenza, 3/3 Harlur Main Road, HSR Layout, Bangalore, Karnataka —- 560102.

3. Mr. Anil Thontepu Naga Purushothama B-Block, G-6, Palace Heights, Sivaii Nagar, Kurmannapalem, Visakhapatnam, Andhra Pradesh - 530046.

wecueeeee Appeallant

Date of hearing: 02.07.2025 Present: Mr. T. Sriram, PCS

ORDER

1. This is an appeal filed under section 454(5) of the Companies Act, 2013 by the above appellants in e-form ADJ vide SRN AB2819066 dated 26.02.2025 against the adjudication order Petition No. PO/AD3I/12-2024/VW/00025 dated 30.12.2024 under section 454 read with section 42 (10) of the Companies Act, 2013 passed by the Registrar of Companies, Andhra Pradesh for default in compliance with the requirements of Section 42 (10).

2. Inthe appeal, it is stated as under:

   • (a) That the Board meeting of the subject company held on December 19, 2019 proposed before the members to issue and offer 1,973 (One

   • | Thousand Nine Hundred and Seventy-Three) Seed 1 Cumulative

• : Compulsorily Convertible Preference Shares (“Seed 1 CCCPS”) for consideration to identified investors by way of private placement.

• (b) The Members in their Extra Ordinary General Meeting held on December 20, 2019 approved the issuance of 1,973 (One Thousand Nine Hundred and Seventy-Three) Seed 1 Cumulative Compulsorily Convertible Preference Shares (“Seed 1 CCCPS”) for consideration to identified investors by way of private placement as identified by the Board.

• (c) After seeking requisite approval(s) from the members, the Board passed necessary resolutions with assent received from the directors on January 06, 2020 by allotting 1,973 Seed 1 CCCPS in two tranches.

• (d) However, the following omission(s)/error(s) were made by the Company in the abovementioned offer:

ved from the directors on January 06, 2020 by allotting 1,973 Seed 1 CCCPS in two tranches.

• (d) However, the following omission(s)/error(s) were made by the Company in the abovementioned offer:

  - (i) That the applicant had filed Form MGT-14 with ROC vide SRN: R25412214 dated December 21%, 2019 to file the special resolution passed by the company for issuance of Seed 1 CCCPS whereas as a part of attachment, the applicant had attached the certified true copy of the resolution for issuance of 1,973 (One Thousand Nine Hundred and Seventy-Three) Seed i CCCPS for consideration to identified investors by way of private placement. However, the attached term sheet of seed 1 CCCPS capturss the incorrect terms of Seed 1 CCCPS. 
  
  - (ii) According to Section 247 of the Companies Act, 2013 and Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014, it is mandatory to obtain a Valuation Report from a 
  
  - ; Registered Valuer by Companies issuing shares. However, the Applicant has procured the Valuation report from the Merchant Banker instead of Registered Valuer towards the abovementioned issuance of Seed 1 CCCPS. 
  

  • (e) It is also submitted that the default was entirely unintentional, inadvertent and was committed without any malafide intention on the part of the Applicant(s).

  • (f) The offence committed is not of such a nature as to cause any or significant prejudice to the interest of any investor, member or any other stakeholder dealing with the Company as there are no changes to the issuance/offer.

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f such a nature as to cause any or significant prejudice to the interest of any investor, member or any other stakeholder dealing with the Company as there are no changes to the issuance/offer.

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3. Registrar of Companies in his order of adjudication it has been stated that there was Non-compliance of Section 42(10) of the companies Act, 2013 and being small company provisions of Section 446(B) of the Companies Act, 2013 will be applicable. .

4. ROC, Andhra Pradesh had issued e adjudication notice dated 22.10.2024 and imposed a penalty vide adjudication order No. PO/ADJ/12-2024/VW/00025 dated 30.12.2024 of Rs. 2,00,000/- on Company and Rs. 1,00,000/- on its defaulting officers., namely Mr. Neeraj Menta Mr. Sailesh Tulshan and Mr. Anil Thontepu Naga Purushothama (total aggregating to Rs.5,00,000/-).

5. Aggrieved by the said order dated 36.12.2024, the applicants herein have filed the instant appeal ADJ vide SRN AB2819066 dated 26.02.2025 and the matter was fixed for hearing on 02.07.2025. The authorized representative, Mr. T. Sriram, Practicing Company secretary appeared on behalf of the appellant.

6. During the course of hearing the Authorized Representative submitted the following arguments: )

resentative, Mr. T. Sriram, Practicing Company secretary appeared on behalf of the appellant.

6. During the course of hearing the Authorized Representative submitted the following arguments: )

• (a) That the applicant has filed form MGT-14 with ROC vide SRN R25412214 dated 21.12.2019 to file the special resolution passed by the Company for issuance of seed 1 CCCPS where as part of the attachments the applicant had attached the certified true copy of the resolution for issuance of 1,973 (one thousand nine hundred and seventy three) seed 1 CCCPS shares for consideration to identified investors by way of private

• | placement. However, the certified true copy of the resolution for issuance of seed 1 CCCPS incorrectly captures the terms of seed 1 CCCPS.

• (b) According to Section 247 of Companies Act, 2013 and Rule 13 of the companies Act (Share Capital and Debentures) Rules, 2014, a valuation report from a Registered valuer is mandatory to obtain by the companies

• ) issuing shares. However, the applicant has not produced the valuation report from the registered valuer. Valuation report was procured from merchant Banker instead of registered valuer towards the above mentioned issuance of seed 1 CCCPS.

• : 7. The Regional Director heard the matter and also taking into consideration the facts of the Appeal and the submissions made by the authorised Representative on behalf of the Company and its directors, the Regional Director observe as under:

also taking into consideration the facts of the Appeal and the submissions made by the authorised Representative on behalf of the Company and its directors, the Regional Director observe as under:

  - (a). The company is a start-up company and the provisions of Section 446(B)-in respecting of levying lesser penalty of the Companies Act, 2013 would be applicable in this case. 

  - (b) The Registrar of Companies imposed penalty for violation of provisions of Section 42 of the Companies Act, 2013. The penalty fee which is as per Section 42(10) read with Section 446(B) of the Companies Act, 2013. Section 42(10) provided that Subject to SubSection (11), if a company makes an offer or accepts monies in contravention of this Section, the company, its promotors and directors shall be liable for a penalty which may extent to the amount raised through the private placement or Two Crore Rupees, whichever 

  - is lower, and the company shall also refund all monies with interest as specified in sub-section(6) to subsidiaries with a period of thirty days of the order imposing the penalty. 

• (c) In this regard it was observed that there was no violation of Section 42 and the company had fellowed the entire procedure and filed all documents as required by. the provisions of Section 42 of the Companies Act, 2013 and therefore penalty for the violation of Section 42 was not to be imposed upon the company and its directors.

all documents as required by. the provisions of Section 42 of the Companies Act, 2013 and therefore penalty for the violation of Section 42 was not to be imposed upon the company and its directors.

• (d) The violation relates to filing wrong attachment to PAS-4 filed along with MGT-14. PAS-4 is the application form for private placement under Rule 14 of the Companies (Prospectus and allotment of Securities) Rules, 2014, It is relevant that PAS-4 was required to be filed with ROC as attachment of MGT-14 till 06.08.2018 but the requirement to file PAS -4 with ROC was done away with the amendment of said Rule 14 w.e.f. 07.08.2018. Therefore, as such there was no legal requirement for the Company to file PAS-4 with ROC, however, as the company did file the same, but with a defective attachment it will at most be a violation of Rule 14 of the Companies

• a. (Prospectus and Allotment of Securities) Rules, 2014. Since no penal

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provision is provided for the violation of the said Rule, the penalty given under section 450 r/w 446B of the Companies Act, 2013 is applicable.

8. In view of the above and after taking into consideration the fact of the appeal and the submissions made by the authorised representative, the appeal is allowed and the order of the IO is modified. The penalty imposed by the Registrar of Companies, Andhra Pradesh, as per Section 42 is set-aside and the penalty as per Section 450 r/w 446B of the Act is imposed. The penalty levied for the violation of Rule 14 of Prospectus and allotment of Securities is asunder.

per Section 42 is set-aside and the penalty as per Section 450 r/w 446B of the Act is imposed. The penalty levied for the violation of Rule 14 of Prospectus and allotment of Securities is asunder.

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Issued under my hand my hand hand and seal on this the Abe, the Abe, Abe, day of Perot 2025. Perot 2025. 2025.

Copy for information and necessary action to:

1. Registrar of Companies, Ministry of Corporate Affairs, Andhra Pradesh, Vijayawada.

   • )

2. The Joint Secretary, Bence ini orporate Affairs, New Delhi.

Ministry of Corpora '

(AL. Kalba. aeat PHGT/ RICHA KUKREJA are Perce (was...)/ REGIONAL DIRECTOR(S.E.R.) QO Saurara JHYDERABAD a