The Centre has fined Zerodha Asset Management Private Limited and its key directors, including founder Nithin Kamath, for delaying the appointment of Chief Financial Officer (CFO) within the stipulated timeframe given by the Ministry of Corporate Affairs (MCA).
Admitting its fault, Zerodha Asset Management on July 9 filed a suo-moto application and said it has violated Section 203 of the Companies Act, 2013, Moneycontrol reported on Friday.
As per the Section 203 of the Companies Act, 2013, companies like Zerodha, which are deemed public companies with a paid-up share capital exceeding Rs 10 crore, should have a full-time key managerial personnel, including a CFO.
“Section 203(1) of the Act mandates that companies of certain sizes must have full-time key managerial personnel, including a CFO and company secretary. Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, specifies that any public company with a paid-up share capital of Rs 10 crore or more must comply,” the order read.
The firm did not follow the rule till March 24, 2023. After that, Chintan Bhatt was appointed. This delay, spanning 459 days, led to the ministry’s decision to impose significant penalties.
“The Company did not have Chief Financial Officer till the appointment of Chintan Vasantlal Bhatt on 24.03.2023, thereby violating the relevant provisions of the Act from 20.12.2021 to 23.03.2023 i.e. 459 days,” the order read.
According to the report, the Ministry of Corporate Affairs (MCA) has imposed a maximum penalty of Rs 5 lakh on the company. Additionally, Founder and Director Nithin Kamath, director Rajanna Bhuvanesh, and CEO Vishal Virendra Jain received individual penalties of Rs 4.08 lakh, Rs 5 lakh, and Rs 3.45 lakh, respectively.
Furthermore, Zerodha AM’s company secretary Shikha Singh was penalised with Rs 3.45 lakh, while directors Nithya Easwaran and Tushar Mahajan were fined Rs 1.50 lakh each.
Zerodha Fund House is a collaboration between Zerodha brokerage and smallcase wealth-tech platform. Established in November 2023, this passive-only asset management company (AMC) has achieved a significant milestone by exceeding Rs 2,000 crore in assets under management (AUM).
ZAMPL has positioned itself as a specialized entity dedicated to the creation of passive investment products. Zerodha’s primary emphasis lies in formulating index funds and ETFs designed for effortless investment and utmost transparency for all stakeholders. Leveraging a technology-centric strategy, the organization tailors funds that are accessible to diverse investor profiles.
