MGT-14 Filing Penalty Under Section 117: The Garuda Aerospace Order Every Public Company and Funded Startup Director Must Read in 2026

By CS Sapna Malpani, Practising Company Secretary, Bangalore · Last updated 3 June 2026

On 26 March 2026, the Registrar of Companies, Chennai, signed an order fining drone-maker Garuda Aerospace Limited and its directors Rs 33,400 each for a single, avoidable slip: it filed the MGT-14 for two funding-round resolutions 234 days after the 30-day deadline. The resolutions were ordinary corporate housekeeping — allotment of 300 equity shares and 340 compulsorily convertible debentures raised through a private placement. Nobody committed fraud. The company even pleaded the delay was accidental. ROC rejected the plea outright, because the MGT-14 filing penalty under Section 117 applies whether or not you meant to be late. If a venture-backed company with a full finance team can be caught, so can yours.

Why the Section 117 MGT-14 deadline catches good companies

Form MGT-14 is filed under Section 117(1) of the Companies Act, 2013 read with Rule 24 of the Companies (Management and Administration) Rules, 2014. It is the form through which a company tells the Registrar, “here is an important resolution we just passed.” The list of what must be filed sits in Section 117(3), and it is wider than most founders realise.

The reason this provision bites is structural. A resolution is passed in a board meeting or general meeting, the minutes go into a folder, the deal closes, the money lands, and everyone moves on to building the product. The 30-day filing clock, meanwhile, has already started ticking from the date of the resolution — not from the date the minutes are signed, and not from the date the funds arrive. By the time the company secretary reconciles the year’s filings, the window has often closed and a per-day penalty is already accruing. That is exactly the shape of the Garuda Aerospace default: resolutions in May 2025, filing in February 2026.

The Garuda Aerospace timeline: how 30 days became 234

What Section 117(3) actually requires you to file

Section 117(3) lists the resolutions and agreements that must reach the Registrar in MGT-14. The ones that matter for private companies and growth-stage startups are:

• All special resolutions — clause (a). This is the big one. Any matter needing a 75 percent majority, from amending the articles to a preferential allotment, lands here.
• Resolutions agreed to by all members that would otherwise have required a special resolution — clause (b).
• Board resolutions on managing director appointment, re-appointment or variation of terms — clause (c).
• Resolutions passed under Section 179(3) — clause (g). These are the everyday Board powers: to make calls, buy back securities, issue securities, borrow money, invest the company’s funds, grant loans or give guarantees, approve financial statements, and more.

According to the ROC Chennai order, Garuda Aerospace was caught under Section 117(1) read with Section 179(3) — the allotment of securities is a Board power under Section 179(3), and the resolutions exercising it were filed 234 days late. The defence that the delay was unintentional was recorded and dismissed; the order states the penalty attaches irrespective of intention.

MGT-14 late filing penalty under Section 117(2)

The Section 117(2) figures were substituted by the Companies (Amendment) Act, 2019. The reduced quantum in the Garuda order reflects the limited delay being adjudicated and the relief available to eligible companies under Section 446B — but the maximum exposure for a non-eligible company running a long default remains Rs 25 lakh plus Rs 5 lakh per officer.

The private company exemption that is not the exemption you think

Here is where most founders and even some advisors get it wrong. By MCA Notification G.S.R. 464(E) dated 5 June 2015, private companies were exempted from Section 117(3)(g) — that is, from filing MGT-14 for the Board resolutions passed under Section 179(3). So a private company does not file MGT-14 when its Board borrows money, invests funds, or issues securities.

The exemption stops there. It does not touch special resolutions under Section 117(3)(a). And a typical funding round is built on special resolutions: the special resolution to approve a preferential allotment under Section 62(1)(c), the special resolution authorising a private placement under Section 42, the special resolution to alter the authorised capital or the articles to insert investor rights. Every one of those must be filed in MGT-14 within 30 days, private company or not.

Garuda Aerospace is a public limited company — note the “Limited”, not “Private Limited” — which is precisely why even its Board allotment resolutions under Section 179(3) had to be filed, with no exemption to fall back on. The lesson cuts both ways: public companies file for both special resolutions and 179(3) Board resolutions, while private companies escape only the 179(3) Board resolutions and remain fully exposed on the special resolutions their fundraising depends on.

Private company vs public company: who files what in MGT-14

What you must do now: the MGT-14 filing checklist

Treat every resolution as a filing trigger until you have ruled it out. Here is the sequence that keeps you out of an adjudication hearing.

1. Classify the resolution on the day it is passed. Ask: is it a special resolution? Is it a Board resolution under Section 179(3) in a public company? Is it an MD appointment or variation? If yes to any, MGT-14 is due.
2. Write the deadline into the minutes. The minute book entry should carry the line “MGT-14 due on or before [resolution date + 30 days].” The deadline runs from the resolution date, full stop.
3. Assemble the attachments early. You need the certified true copy of the resolution and the explanatory statement annexed to the notice. For a private placement, keep the PAS-4 offer letter and the Board/members’ resolutions linked.
4. File on the MCA V3 portal. e-Form MGT-14 is filed with the prescribed fee and the digital signature of a director and a practising professional where required.
5. Record and verify the SRN. Note the SRN, confirm the form is approved, and file the proof in your statutory register. An unverified “submitted” status is not a filed form.
6. If you have already missed the window, act before the penalty grows. Up to 300 days late, MGT-14 can be filed with additional fees, though the Section 117(2) adjudication penalty still applies. Beyond 300 days, you must go through condonation (see below). Either way, filing today stops the Rs 500-per-day meter.

Fixing a delay beyond 300 days: the condonation chain

Why this matters more for funded companies than they expect

According to CS Sapna Malpani, the MGT-14 default is the single most common finding when she runs a pre-due-diligence health check on a growth-stage company. “Founders remember to file PAS-3 for the allotment and FC-GPR for the foreign money, then forget that the resolution authorising the round had its own 30-day clock. A diligence lawyer pulls the MCA master data, sees an MGT-14 filed eight months late, and now there is an open compliance default sitting in the data room right when the term sheet is being negotiated.” A late MGT-14 rarely kills a deal, but it becomes an indemnity line item and a reason for the investor’s counsel to widen the representations.

The forward-looking risk is enforcement intensity. The Garuda order is one of a visible run of MCA adjudications in 2025-26 on procedural filings that were historically ignored — woman director appointments, DIR-3 KYC, AOC-4, and now Section 117. The MCA V3 system makes these defaults machine-readable, which means adjudication is increasingly automated and increasingly unforgiving of the “we didn’t mean to” defence.

MGT-14 is not PAS-3, and not MGT-7

Three forms get conflated around a funding round, and filing one does not discharge the others. MGT-14 reports the resolution that authorised the action, due 30 days from the resolution. PAS-3 reports the actual allotment of securities, due 15 days (for private placement) or 30 days from the allotment. MGT-7 or MGT-7A is the annual return filed once a year after the AGM. A company can file PAS-3 perfectly and still be in default on MGT-14, because they cover different events on different clocks. Map all three the moment a round closes.

Five MGT-14 triggers founders routinely miss

Beyond the headline funding-round resolutions, a handful of everyday corporate actions quietly carry their own MGT-14 obligation. These are the ones that surface as defaults during diligence:

• Conversion of a loan into equity. Approving the conversion of a director’s or investor’s loan into shares is a special resolution under Section 62(3) — and it must be filed in MGT-14, even by a private company.
• Amending the Articles of Association. Inserting investor protective provisions, anti-dilution clauses or a revised share-transfer regime needs a special resolution. Founders update the articles in the closing set and forget the 30-day filing.
• Increasing or reclassifying authorised capital coupled with an article change. The ordinary resolution for the capital increase goes in SH-7, but any accompanying article amendment is a special resolution requiring MGT-14.
• Adopting a new set of Articles on conversion. When a private company converts to a public company ahead of a larger raise or an IPO, the special resolution adopting fresh articles is filed in MGT-14, and the company immediately steps into the wider public-company filing net.
• ESOP scheme approval. A private company approving an ESOP plan by special resolution must file MGT-14, a step often missed when the plan is rushed through before a hiring spree.

The common thread is that each of these sits inside a larger transaction, so the filing is overshadowed by the deal itself. A simple rule covers all of them: if the matter needed 75 percent approval, assume MGT-14 is due in 30 days until a professional confirms otherwise.

Frequently asked questions

What is the penalty for late filing of MGT-14 under Section 117?

Under Section 117(2), a company that misses the 30-day window is liable to Rs 1,00,000 plus Rs 500 for each day the default continues, capped at Rs 25,00,000. Every officer in default, including the liquidator if any, is liable to Rs 50,000 plus Rs 500 per day, capped at Rs 5,00,000. Recognised startups, small companies and one-person companies get a 50 percent reduction under Section 446B, with the company’s penalty capped at Rs 2,00,000 and each officer’s at Rs 1,00,000. The MGT-14 filing penalty under Section 117 runs from the day after the deadline, so the longer you wait, the larger the figure.

Are private companies exempt from filing MGT-14?

Only for one category. MCA Notification G.S.R. 464(E) dated 5 June 2015 exempts private companies from filing MGT-14 for Board resolutions passed under Section 179(3) — issuing securities, borrowing, investing and the like. Private companies are not exempt from filing special resolutions, and that is the category that catches them during fundraising, since a preferential allotment under Section 62 or a private placement under Section 42 is approved by special resolution.

When does the 30-day MGT-14 clock start?

From the date the resolution is passed at the board or general meeting, not from the date the minutes are signed or the transaction completes. This is the single most common reason companies file late — they wait for the round to close or the audit to finish, by which time the window has already lapsed.

Can I file MGT-14 after the deadline without condonation?

Up to 300 days late, yes — MGT-14 can be filed directly with additional fees, although the Section 117(2) adjudication penalty still applies on top. Once the delay crosses 300 days, the form is blocked and you must obtain a condonation of delay in Form CG-1 under Section 460, pay the penalty, file INC-28 with the order, and then file MGT-14 quoting the INC-28 SRN.

Does a startup have to file MGT-14 for a funding round?

In nearly all cases, yes. The special resolution authorising the preferential allotment or private placement must be filed by every company. If the company is a public limited, the Board resolution allotting the securities under Section 179(3) must be filed as well — which is exactly what tripped up Garuda Aerospace Limited.

Is a genuine mistake a defence against the MGT-14 penalty?

No. Section 117(2) is a civil penalty that applies regardless of intention. The Garuda Aerospace order records the company’s plea that the delay was accidental and without malice, and then rejects it. Timely filing is the only dependable protection.

Sources and references

• Section 117, Companies Act 2013 — India Code: indiacode.nic.in
• ROC Chennai Adjudication Order No. PO/ADJ/03-2026/CN/01823 dated 26 March 2026 — reported by Taxscan, 11 April 2026: taxscan.in
• Companies (Amendment) Act, 2019 — substitution of Section 117(2): aaptaxlaw.com
• Section 117 ready reckoner (CAIRR): ca2013.com
• MGT-14 list of resolutions and agreements: cleartax.in
• MGT-14 filing, due date and Section 117 penalty: saginfotech.com
• MCA ROC adjudication orders portal: mca.gov.in

Disclaimer: This article is for general information and does not constitute legal advice. Verify the current form, fee and timeline on the MCA V3 portal or consult a practising company secretary before acting.