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

COMPANIES ACT, 2013

FINES, PENALTIES AND PROSECUTION

CA. Arun Saxena

Saxena & SaxenaChartered Accountants

811, Ansal Bhawan

16, Kasturba Gandhi Marg,

New Delhi – 110 001.

Mob.: 9810037364E-mail : [email protected]

FINE AND PENALTY

Penalty

Non- Compliance

Imposed by Superior Authority

Fine

Breaking of Law

Imposed by court

Conviction is important

SAXENA & SAXENA

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PENALTIES

Some of the important penalties provided in the new Companies Act, 2013:-

SAXENA & SAXENA

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Section

Particulars Minimum Penalty

Maximum Penalty

8 Non-Profit making companies

i. Company – Rs.10.00 lakh

ii.Director /Officer – Rs.25,000/-

Rs.1 Crore

Rs.25.00 lakhs

11 Commencement of Business

- Company- Rs. 5000

Director /Officer –Rs. 1000 everyday

Section


Maximum Penalty

12 Registered Office

Company & Officer in default– Rs. 1000 for everday

Rs.1 Lakh

15 Alteration of MOA to be noted in every copy

Company & Officer in default– Rs. 1000 for every copy

_

16 Rectification of name of company

Company – Rs. 1000 everydayOfficer in default – Rs. 5000

_

Rs. 1 LakhSAXENA & SAXENA

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Section


Maximum Penalty

17 Copy of MOA, AOA to members

Company &Officer in default – Rs. 1000 everyday

Rs. 1 Lakh(whichever is less)

26 Matters to be stated in Prospectus

Company & any other personRs. 50,000/-

Rs. 3 Lakhs

39 Allotment of Securities

Company &Officer in default – Rs. 1000 each day

Rs. 1 Lakh(whichever is less)

SAXENA & SAXENA

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Section


Maximum Penalty

40 Securities to be dealt in Stock Exchange

Company – Rs. 5 Lakhs

Officer in default– Rs. 50000

Rs. 50 Lakhs

Rs. 3 Lakhs

46 Default in issue of duplicate certificate of shares with intend to defraud

Five times of face value

Ten times of face value or Rs.10.00 crores whichever is higher SAXENA & SAXENA

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Section


Maximum Penalty

48 Variation of Shareholders Rights

Company &Officer in default – Rs. 25000

Rs. 5 Lakhs

53 Prohibition on issue of Shares at discount

Company &Officer in default – Rs. 1 Lakh

Rs. 5 Lakhs

56 Transfer and Transmission

Company – Rs. 25000

Officer in default– Rs. 10,000

Rs. 5 Lakhs

Rs. 1Lakhs

SAXENA & SAXENA

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Section


Maximum Penalty

59 Rectification of register of members

Company – Rs. 1 Lakh

Officer in default– Rs. 1 Lakh

Rs. 5 Lakhs

Rs. 3 Lakhs

66 Reduction of share capital

Company – Rs. 5 Lakh Rs. 25 Lakhs

68 Purchase of own shares or buy back

Company &Officer in default – Rs. 1 Lakh

Rs. 3 LakhsSAXENA & SAXENA

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Section


Maximum Penalty

74 Repayment of deposit

Company –Rs.1.00 crores

Officer in default –Rs 25 Lakhs

Rs.10.00 crores

Rs.2.00 crores

77-87 Registration of charges

Company – Rs. 1 LakhOfficer in default– Rs. 25000

Rs. 10 Lakhs

Rs. 1 Lakh

88 Register of Members

Company-Rs. 50,000If default continues

Rs. 3 LakhsRs. 1000 everydaySAXENA & SAXENA

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Section


Maximum Penalty

92 Annual Return Company &Officer in default – Rs. 50,000

Rs. 5 Lakhs

96-98 Annual General Meeting

Company &Officer in default

Rs. 1 Lakh(Rs. 5000 for everyday during which default continues)

102 Explanatory Statement

Director, Promoter, manager or KMP

50,000 or 5times amount of benefit(whichever is more)

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Section


Maximum Penalty

117 Resolutions and agreements to be filed



Rs. 25 Lakhs

Rs. 5 Lakhs

118 Minutes

Tampering of minutes

CompanyOfficer in defaultRs. 25000

Rs. 25000Rs. 5000Rs. 1 Lakh

121 Report on AGM Company – Rs. 1 Lakh

Officer in default– Rs. 25000

Rs. 5 Lakhs


11

Section


Maximum Penalty

124 Unpaid Dividend Account



Rs. 25 Lakhs

Rs. 5 Lakhs

127 Punishment for failure to distribute dividend

Officer – Rs. 1000 for everyday

128 Books of accounts etc., to be kept by company

OfficerRs. 50,000

Rs. 5 Lakhs

SAXENA & SAXENA

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Section


Maximum Penalty

129 Financial Statement

All the Directors Rs. 50,000 Rs. 5 Lakhs

134 Financial Statements, Board Report

Company – Rs. 50,000

Officer in default– Rs. 50,000

Rs. 25 Lakhs

Rs. 5 Lakhs

137 Copy of financial statement to filed with registrar

Company – Rs. 1,000 everyday

Officer in default– Rs. 1Lakh

Rs. 10 Lakhs

Rs. 5 Lakhs

140 Removal, Resignation of Auditor and giving of Special Notice

Auditor- Rs. 50,000

Rs. 5 Lakhs

SAXENA & SAXENA

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Section


Maximum Penalty

147 Contravention of Chapter X relating to Audit or Auditors

Company-Rs. 25,000Officer in default – Rs. 10,000Auditor-Rs. 25,000

Rs. 5 Lakhs

Rs. 1 Lakh

Rs. 5 lakhs

157 Company to inform DIN to registrar

Company-Rs. 25,000Officer in default – Rs. 25,000

Rs. 1 Lakh

Rs. 1 Lakh

165 Number of Directorship

Director-Rs. 5000 for each day

Rs. 2500 for each day

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Section


Maximum Penalty

172 Contravention of any section of Chapter XI(appointment & Qualification of Directors)


Rs. 5 Lakhs

Rs. 5 Lakhs

173 Meetings of Board

Officer responsible

Rs. 25,000

177-178

Audit Committee, Nomination & Remuneration Committee and Stakeholder Relationship Committee

Company-Rs. 1 LakhOfficer in default – Rs. 25,000

Rs. 5 Lakhs

Rs. 1 Lakh

SAXENA & SAXENA

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Section


Maximum Penalty

184 Disclosure of Interest

Director – Rs. 50,000

Rs. 1 Lakh

185 Loan to Directors Company-Rs. 5 LakhsDirector or other person– Rs. 5 Lakhs

Rs. 25 Lakhs

Rs. 25 Lakhs

186 Loan & Investment by company


Rs. 5 Lakhs

Rs. 1 Lakh

187 Investment of company in its own name


Rs. 25 Lakhs

Rs. 1 Lakh

SAXENA & SAXENA

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Section


Maximum Penalty

188 Related Party Transactions

Any director – Rs. 25000

Rs. 5 Lakhs

189 Register of contracts in which Directors are interested

Every Director Rs. 25,000

194 Prohibition on forward dealings in securities

Director or KMPRs. 1 Lakh Rs. 5 Lakhs

195 Prohibition on insider trading of securities

Any personRs. 5 Lakhs

Rs. 25 Crores or3 times the amountWhichever is higher

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Section


Maximum Penalty

197 Maximum Managerial Remuneration

Any person Rs. 1 Lakh Rs. 5 Lakhs

203 Appointment of KMP

Company Rs. 1 Lakh Rs. 5 Lakhs

204 Secretarial Audit for bigger companies

Company or officer of Co. or CS in practice Rs. 1 Lakh

Rs. 5 Lakhs

207 Conduct of Inspection and Inquiry

Director or officerRs. 25000


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Section


Maximum Penalty

221 Freezing of Assets of company on inquiry and investigation by Tribunal


Rs. 25 Lakhs

Rs. 5 Lakhs

232 Merger & Amalgamation

Company-Rs. 1 LakhOfficer in default – Rs. 1 Lakh

Rs. 25 Lakhs

Rs. 3 Lakhs

242 Contravention of order of Tribunal

Company-Rs. 1 LakhOfficer in default – Rs. 25000

Rs. 25 Lakhs

Rs. 1 Lakh

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Section


Maximum Penalty

247 Valuation by Registered ValuerIf intention to defraud

Valuer – Rs 25000

Rs. 1Lakh

Rs. 1 Lakh

Rs. 5 Lakh

267 Revival & Rehabilitation of Sick Companies

Any person who violated section or order of Tribunal

Rs. 10 Lakhs

274 Direction for filing Statement of Affairs

Director or officer in defaultRs. 25000

Rs. 5 Lakhs

302 Dissolution of Company by Tribunal

Company Liquidator for non filing of order with registrar

Rs. 5000 for every day

SAXENA & SAXENA

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Section


Maximum Penalty

305 Declaration of Solvency

Director Rs. 50,000

Rs. 3 Lakhs

306 Meting of Creditors


Rs. 2 Lakhs

Rs. 2 Lakhs

307 Publication of Resolution of Voluntary winding up

CompanyOfficer in default

Rs. 5000 for everyday

312 Notice of appointment of liquidator to Registrar

CompanyOfficer in default

Rs. 500 for everydaySAXENA & SAXENA

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Section


Maximum Penalty

318 Final Meeting and Dissolution of Company

Company Liquidator

Rs. 1 Lakh

337 Penalty for fraud by Officers

Any personRs. 1 Lakh

Rs. 3 Lakhs

347 Disposal of Books and Papers of company

Any person Rs. 50,000

379-393

Companies incorporated outside India


Rs. 3 Lakhs

Rs. 5 LakhsSAXENA & SAXENA

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Section


Maximum Penalty

447 Punishment for Fraud

Any person guilty of Fraud Amount involved in Fraud

3 times amount involved in Fraud

449 Punishment for False Evidence

Any Person Rs. 10 Lakhs

450 Punishment where no specific penalty or punishment provided

Company & any officer

If default continues

Rs. 10,000 for everyday


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Section


Maximum Penalty

453 Punishment for improper use of “limited” or “private limited”

Any personRs. 500 for every day


454 Adjudication of Penalties

Company Rs. 25000Officer in defaultRs. 25000

Rs. 5 Lakhs

Rs. 1 Lakh

SAXENA & SAXENA

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PROSECUTION

Some of the important Sections in the new Companies Act, 2013 where prosecution is provided:-

SAXENA & SAXENA

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Section

Particulars Minimum Maximum

8 Non-Profit making companies

_ 3 yrs

26 Matters to be stated in Prospectus

- 3 yrs

Section


40 Securities to be dealt in Stock Exchange

_ 1 yr

48 Variation of Shareholders rights

_ 6 months

53 Prohibition on issue of Shares at discount

_ 6 months

59 Rectification of Register of Members

_ 1 yr

68 Purchase of own shares or buy back

_ 1 yr

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Section


77-87 Registration of Charges _ 6 months

92 Annual Return _ 6 months

118 Tampering with minutes of meeting

_ 2yrs

127 Failure to distribute dividends

_ 2yrs

128 Books of Accounts, etc to be kept by company

_ 1yrs

129 Financial Statements _ 1yrsSAXENA & SAXENA

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Section


134 Financial Statement. Board’s Report etc

_ 3yrs

137 Copy of financial Statements to be filed with Registrar

_ 6 months

147 Contravention of Chapter X relating to Audit or Auditors

_ 1yr

167 Vacation of office of Director _ 1yr177-178

Audit Committee, Nomination & Remuneration Committee and Stakeholder Relationship Committee

_ 1yr

184 Disclosure of Interest by Director

_ 1yrSAXENA & SAXENA

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Section


185 Loan to Directors _ 6 months

186 Loan & Investment by Company

_ 2 yrs

187 Investment of company to be held in its own name

_ 6 months

188 Related Party Transactions

_ 1 yr

194 Prohibition on forward dealings in securities

_ 2 yrs

195 Prohibition on Insider Trading of Securities

_ 5 yrsSAXENA & SAXENA

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Section


207 Conduct of Inspection and Inquiry

_ 1 yr

221 Freezing of Assets of company on inquiry and investigation by Tribunal

_ 3 yrs

232 Merger & Amalgamation of Companies

_ 1 yr

242 Powers of Tribunal _ 6 months

245 Class Action as taken by Tribunal

_ 3 yrs

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Section


247 Valuation by registered valuer(intention to defraud the company)

_ 1 yr

267 Revival & Rehabilitation(Penalty + prosecution)

_ 7 years

274 Directions for filing Statement of Affairs

_ 6 months

305 Declaration of Solvency in case of proposal to wind up voluntarily

3 yrs 5yrs

306 Meeting of Creditors _ 6 monthsSAXENA & SAXENA

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Section


336 Offences by officers of companies liquidation

3 yrs 5yrs

337 Penalty for fraud by officers

1 yr 3yrs

338 Liability where proper accounts are not kept(Penalty + Prosecution)

1 yr 3yrs

347 Disposal of Books and papers of company

_ 6 Months

379-393

Companies incorporated outside India

_ 6 Months

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Section


447 Punishment for fraud

Where involves public interest

6 months

3yrs

10yrs

10 yrs

449 Punishment for false evidence

3yrs 7yrs

454 Adjudication of Penalties _ 6 months

SAXENA & SAXENA

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Defaults punishable under Section 447

SECTION

PARTICULARS

7 company incorporated by false or fraudulent manner

8 company contravenes any condition upon which license was issued

34,35,36

misleading statement in prospectus

38 personnation for acquisition of securities

46 defraud intention in issue of Share certificate

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SECTION

PARTICULARS

213 if proved after investigation that business conducted with intention to defraud

229 furnishing of false statement, Mutilation, destruction of documents

251 Fraudulent application for removal of name

339 Fraudulent conduct of business

448 Punishment for false statementSAXENA & SAXENA

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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

THANK YOU

37 SAXENA & SAXENA

Documents

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