COMPANIES ACT, 2013 FINES, PENALTIES AND PROSECUTION CA. Arun Saxena Saxena & Saxena Chartered Accountants 811, Ansal Bhawan 16, Kasturba Gandhi Marg, New Delhi – Mob.:

FINE AND PENALTY Penalty Non- Compliance Imposed by Superior Authority Fine Breaking of LawImposed by court Conviction is important SAXENA & SAXENA 2

PENALTIES  Some of the important penalties provided in the new Companies Act, 2013:- SAXENA & SAXENA 3 SectionParticularsMinimum PenaltyMaximum Penalty 8Non-Profit making companies i.Company – Rs lakh ii.Director /Officer – Rs.25,000/- Rs.1 Crore Rs lakhs 11Commencement of Business -Company- Rs Director /Officer – Rs everyday

SectionParticularsMinimum PenaltyMaximum Penalty 12Registered OfficeCompany & Officer in default– Rs for everdayRs.1 Lakh 15Alteration of MOA to be noted in every copy Company & Officer in default– Rs for every copy _ 16Rectification of name of company Company – Rs everyday Officer in default – Rs _ Rs. 1 Lakh SAXENA & SAXENA 4

SectionParticularsMinimum PenaltyMaximum Penalty 17Copy of MOA, AOA to members Company & Officer in default – Rs everyday Rs. 1 Lakh (whichever is less) 26Matters to be stated in Prospectus Company & any other person Rs. 50,000/-Rs. 3 Lakhs 39Allotment of SecuritiesCompany & Officer in default – Rs each day Rs. 1 Lakh (whichever is less) SAXENA & SAXENA 5

Section ParticularsMinimum PenaltyMaximum Penalty 40Securities to be dealt in Stock Exchange Company – Rs. 5 Lakhs Officer in default– Rs Rs. 50 Lakhs Rs. 3 Lakhs 46Default in issue of duplicate certificate of shares with intend to defraud Five times of face value Ten times of face value or Rs crores whichever is higher SAXENA & SAXENA 6

SectionParticularsMinimum PenaltyMaximum Penalty 48Variation of Shareholders Rights Company & Officer in default – Rs Rs. 5 Lakhs 53Prohibition on issue of Shares at discount Company & Officer in default – Rs. 1 LakhRs. 5 Lakhs 56Transfer and Transmission Company – Rs Officer in default– Rs. 10,000 Rs. 5 Lakhs Rs. 1Lakhs SAXENA & SAXENA 7

SectionParticularsMinimum PenaltyMaximum Penalty 59Rectification of register of members Company – Rs. 1 Lakh Officer in default– Rs. 1 Lakh Rs. 5 Lakhs Rs. 3 Lakhs 66Reduction of share capital Company – Rs. 5 LakhRs. 25 Lakhs 68Purchase of own shares or buy back Company & Officer in default – Rs. 1 LakhRs. 3 Lakhs SAXENA & SAXENA 8

SectionParticularsMinimum PenaltyMaximum Penalty 74 Repayment of deposit Company – Rs.1.00 crores Officer in default – Rs 25 Lakhs Rs crores Rs.2.00 crores 77-87Registration of charges Company – Rs. 1 Lakh Officer in default– Rs Rs. 10 Lakhs Rs. 1 Lakh 88Register of MembersCompany- Rs. 50,000 If default continues Rs. 3 Lakhs Rs everyday SAXENA & SAXENA 9

SectionParticularsMinimum PenaltyMaximum Penalty 92Annual ReturnCompany & Officer in default – Rs. 50,000Rs. 5 Lakhs 96-98Annual General Meeting Company & Officer in defaultRs. 1 Lakh (Rs for everyday during which default continues) 102Explanatory Statement Director, Promoter, manager or KMP 50,000 or 5times amount of benefit (whichever is more) SAXENA & SAXENA 10

SectionParticularsMinimum PenaltyMaximum Penalty 117Resolutions and agreements to be filed Company – Rs. 5 Lakhs Officer in default– Rs. 1 Lakh Rs. 25 Lakhs Rs. 5 Lakhs 118Minutes Tampering of minutes Company Officer in default Rs Rs Rs. 1 Lakh 121Report on AGMCompany – Rs. 1 Lakh Officer in default– Rs Rs. 5 Lakhs Rs. 1 Lakh SAXENA & SAXENA 11

SectionParticularsMinimum PenaltyMaximum Penalty 124Unpaid Dividend Account Company – Rs. 5 Lakhs Officer in default– Rs. 1 Lakh Rs. 25 Lakhs Rs. 5 Lakhs 127Punishment for failure to distribute dividend Officer – Rs for everyday 128Books of accounts etc., to be kept by company Officer Rs. 50,000 Rs. 5 Lakhs SAXENA & SAXENA 12

SectionParticularsMinimum PenaltyMaximum Penalty 129Financial StatementAll the Directors Rs. 50,000Rs. 5 Lakhs 134Financial Statements, Board Report Company – Rs. 50,000 Officer in default– Rs. 50,000 Rs. 25 Lakhs Rs. 5 Lakhs 137Copy of financial statement to filed with registrar Company – Rs. 1,000 everyday Officer in default– Rs. 1Lakh Rs. 10 Lakhs Rs. 5 Lakhs 140Removal, Resignation of Auditor and giving of Special Notice Auditor- Rs. 50,000Rs. 5 Lakhs SAXENA & SAXENA 13

SectionParticularsMinimum PenaltyMaximum Penalty 147Contravention of Chapter X relating to Audit or Auditors Company-Rs. 25,000 Officer in default – Rs. 10,000 Auditor- Rs. 25,000 Rs. 5 Lakhs Rs. 1 Lakh Rs. 5 lakhs 157Company to inform DIN to registrar Company- Rs. 25,000 Officer in default – Rs. 25,000 Rs. 1 Lakh 165Number of Directorship Director-Rs for each day Rs for each day SAXENA & SAXENA 14

SectionParticularsMinimum PenaltyMaximum Penalty 172Contravention of any section of Chapter XI (appointment & Qualification of Directors) Company- Rs. 50,000 Officer in default – Rs. 50,000 Rs. 5 Lakhs 173Meetings of BoardOfficer responsibleRs. 25, Audit Committee, Nomination & Remuneration Committee and Stakeholder Relationship Committee Company- Rs. 1 Lakh Officer in default – Rs. 25,000 Rs. 5 Lakhs Rs. 1 Lakh SAXENA & SAXENA 15

SectionParticularsMinimum PenaltyMaximum Penalty 184Disclosure of InterestDirector – Rs. 50,000Rs. 1 Lakh 185Loan to DirectorsCompany- Rs. 5 Lakhs Director or other person– Rs. 5 Lakhs Rs. 25 Lakhs 186Loan & Investment by company Company- Rs. 25,000 Officer in default – Rs. 25,000 Rs. 5 Lakhs Rs. 1 Lakh 187Investment of company in its own name Company- Rs. 25,000 Officer in default – Rs. 25,000 Rs. 25 Lakhs Rs. 1 Lakh SAXENA & SAXENA 16

SectionParticularsMinimum PenaltyMaximum Penalty 188Related Party Transactions Any director – Rs Rs. 5 Lakhs 189Register of contracts in which Directors are interested Every DirectorRs. 25, Prohibition on forward dealings in securities Director or KMP Rs. 1 LakhRs. 5 Lakhs 195Prohibition on insider trading of securities Any person Rs. 5 Lakhs Rs. 25 Crores or 3 times the amount Whichever is higher SAXENA & SAXENA 17

SectionParticularsMinimum PenaltyMaximum Penalty 197Maximum Managerial Remuneration Any person Rs. 1 LakhRs. 5 Lakhs 203Appointment of KMPCompany Rs. 1 LakhRs. 5 Lakhs 204Secretarial Audit for bigger companies Company or officer of Co. or CS in practice Rs. 1 LakhRs. 5 Lakhs 207Conduct of Inspection and Inquiry Director or officer Rs Rs. 1 Lakh SAXENA & SAXENA 18

SectionParticularsMinimum PenaltyMaximum Penalty 221Freezing of Assets of company on inquiry and investigation by Tribunal Company- Rs. 1 Lakh Officer in default – Rs. 25,000 Rs. 25 Lakhs Rs. 5 Lakhs 232Merger & Amalgamation Company- Rs. 1 Lakh Officer in default – Rs. 1 Lakh Rs. 25 Lakhs Rs. 3 Lakhs 242Contravention of order of Tribunal Company- Rs. 1 Lakh Officer in default – Rs Rs. 25 Lakhs Rs. 1 Lakh SAXENA & SAXENA 19

SectionParticularsMinimum PenaltyMaximum Penalty 247Valuation by Registered Valuer If intention to defraud Valuer – Rs Rs. 1Lakh Rs. 5 Lakh 267Revival & Rehabilitation of Sick Companies Any person who violated section or order of Tribunal Rs. 10 Lakhs 274Direction for filing Statement of Affairs Director or officer in default Rs Rs. 5 Lakhs 302Dissolution of Company by Tribunal Company Liquidator for non filing of order with registrar Rs for every day SAXENA & SAXENA 20

SectionParticularsMinimum PenaltyMaximum Penalty 305Declaration of Solvency Director Rs. 50,000Rs. 3 Lakhs 306Meting of CreditorsCompany- Rs. 50,000 Officer in default – Rs. 50,000 Rs. 2 Lakhs 307Publication of Resolution of Voluntary winding up Company Officer in default Rs for everyday 312Notice of appointment of liquidator to Registrar Company Officer in default Rs. 500 for everyday SAXENA & SAXENA 21

SectionParticularsMinimum PenaltyMaximum Penalty 318Final Meeting and Dissolution of Company Company Liquidator Rs. 1 Lakh 337Penalty for fraud by Officers Any person Rs. 1 Lakh Rs. 3 Lakhs 347Disposal of Books and Papers of company Any personRs. 50, Companies incorporated outside India Company- Rs. 1 Lakh Officer in default – Rs. 20,000 Rs. 3 Lakhs Rs. 5 Lakhs SAXENA & SAXENA 22

SectionParticularsMinimum PenaltyMaximum Penalty 447Punishment for FraudAny person guilty of Fraud Amount involved in Fraud 3 times amount involved in Fraud 449Punishment for False Evidence Any PersonRs. 10 Lakhs 450Punishment where no specific penalty or punishment provided Company & any officer If default continues Rs. 10,000 for everyday Rs for everyday SAXENA & SAXENA 23

SectionParticularsMinimum Penalty Maximum Penalty 453Punishment for improper use of “limited” or “private limited” Any person Rs. 500 for every day Rs for everyday 454Adjudication of Penalties Company Rs Officer in default Rs Rs. 5 Lakhs Rs. 1 Lakh SAXENA & SAXENA 24

PROSECUTION  Some of the important Sections in the new Companies Act, 2013 where prosecution is provided:- SAXENA & SAXENA 25 SectionParticularsMinimumMaximum 8Non-Profit making companies _ 3 yrs 26Matters to be stated in Prospectus - 3 yrs

SectionParticularsMinimumMaximum 40Securities to be dealt in Stock Exchange _1 yr 48Variation of Shareholders rights _6 months 53Prohibition on issue of Shares at discount _6 months 59Rectification of Register of Members _1 yr 68Purchase of own shares or buy back _1 yr SAXENA & SAXENA 26

SectionParticularsMinimumMaximum 77-87Registration of Charges_6 months 92Annual Return_6 months 118Tampering with minutes of meeting _2yrs 127Failure to distribute dividends_2yrs 128Books of Accounts, etc to be kept by company _1yrs 129Financial Statements_1yrs SAXENA & SAXENA 27

SectionParticularsMinimumMaximum 134Financial Statement. Board’s Report etc _3yrs 137Copy of financial Statements to be filed with Registrar _6 months 147Contravention of Chapter X relating to Audit or Auditors _1yr 167Vacation of office of Director _1yr Audit Committee, Nomination & Remuneration Committee and Stakeholder Relationship Committee _1yr 184Disclosure of Interest by Director _1yr SAXENA & SAXENA 28

SectionParticularsMinimumMaximum 185Loan to Directors_6 months 186Loan & Investment by Company _2 yrs 187Investment of company to be held in its own name _6 months 188Related Party Transactions_1 yr 194Prohibition on forward dealings in securities _2 yrs 195Prohibition on Insider Trading of Securities _5 yrs SAXENA & SAXENA 29

SectionParticularsMinimumMaximum 207Conduct of Inspection and Inquiry _1 yr 221Freezing of Assets of company on inquiry and investigation by Tribunal _3 yrs 232Merger & Amalgamation of Companies _1 yr 242Powers of Tribunal_6 months 245Class Action as taken by Tribunal _3 yrs SAXENA & SAXENA 30

SectionParticularsMinimumMaximum 247Valuation by registered valuer (intention to defraud the company) _1 yr 267Revival & Rehabilitation (Penalty + prosecution) _7 years 274Directions for filing Statement of Affairs _6 months 305Declaration of Solvency in case of proposal to wind up voluntarily 3 yrs5yrs 306Meeting of Creditors_6 months SAXENA & SAXENA 31

SectionParticularsMinimumMaximum 336Offences by officers of companies liquidation 3 yrs5yrs 337Penalty for fraud by officers1 yr3yrs 338Liability where proper accounts are not kept (Penalty + Prosecution) 1 yr3yrs 347Disposal of Books and papers of company _6 Months Companies incorporated outside India _6 Months SAXENA & SAXENA 32

SectionParticularsMinimumMaximum 447Punishment for fraud Where involves public interest 6 months 3yrs 10yrs 449Punishment for false evidence3yrs7yrs 454Adjudication of Penalties _6 months SAXENA & SAXENA 33

Defaults punishable under Section 447 SECTIONPARTICULARS 7company incorporated by false or fraudulent manner 8company contravenes any condition upon which license was issued 34,35,36misleading statement in prospectus 38personnation for acquisition of securities 46defraud intention in issue of Share certificate SAXENA & SAXENA 34

SECTIONPARTICULARS 213if proved after investigation that business conducted with intention to defraud 229furnishing of false statement, Mutilation, destruction of documents 251Fraudulent application for removal of name 339Fraudulent conduct of business 448Punishment for false statement SAXENA & SAXENA 35

PROCEDURE  Penalty to be adjudicated not below rank of Registrar.  To give reasonable opportunity  Appeal to RD within 60 days  Compounding – of fine only – (Section 441)  By Tribunal  By RD where maximum fine does not exceed Rs. 5 Lakhs SAXENA & SAXENA 36

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