MCA Imposes ₹2.5 Lakh Penalty on Company & Director for Not Appointing Internal Auditor

Key Points:

• The Ministry of Corporate Affairs (MCA) imposed a ₹2.5 lakh penalty on Exotel Techcom Private Limited and its director for failing to appoint an Internal Auditor as required by law.
• This penalty arises from non-compliance with Section 138 of the Companies Act, 2013, and Rule 13(1)(c) of the Companies (Accounts) Rules, 2014, which mandates internal auditor appointments for companies exceeding a certain turnover threshold.
• The case highlights the critical importance of adherence to corporate governance regulations and the financial repercussions of neglecting statutory obligations.

Background: Exotel Techcom Private Limited was required to appoint an Internal Auditor starting from FY 2022-23 due to its turnover exceeding ₹200 crore in FY 2021-22. The company failed to make this appointment until November 14, 2024, resulting in a default period of 958 days.

What's Next: The company and its director are expected to comply with the penalty payment and ensure future adherence to internal audit requirements to avoid further legal repercussions.