Offence: Meaning of offence in general language is a breach of a law or rule. Now, non-observing of law specifically if we are talking about Companies Act, 2013 which is governing law for all companies unless they are regulated by their own industry Acts, can put a company under the lens of Registrar of Companies or other authorities to initiate an action.
When a company contravenes a specific provision of The Companies Act, 2013 by doing something which is barred/ restricted/ limited or in any way prohibited or by not doing which are specifically provided, led to offence by a Company and/or by any officer thereof depending upon the contravention of specific provision/(s).
Compounding of an offence is a settlement mechanism by making the non compliance good, by which, the offender is given an option to pay money in lieu of his prosecution, thereby avoiding a prolonged litigation. There is no definition of the word “compounding” in the Companies Act 2013, however, the legal meaning of compounding is “doing good the default/non-compliance”.
TYPES OF OFFENCE
We can divide Offence into two parts:-
Any offence which is punishable with fine or penalty only under the specific section of the Companies Act, 2013 is compoundable offence.
Non Compoundable Offence
Any offence which is punishable with imprisonment only or with imprisonment and fine or penalty only under the specific section of the Companies Act, 2013 is non compoundable offence.
The Companies Act, 2013 read with related rules, any compoundable offence may be compounded under section 441 on payment of fees by the company or officer as the case may be, to the Central Government of such sum as directed by Tribunal or the Regional Director or any officer authorised by the Central Government, as the case but such amount to be credited must not exceed the amount of fine/penalty stated under the specific section for whom the application for compounding is made.
The application/ petition for compounding shall be given to:-
Important Points to be noted before compounding of offence under The Companies Act, 2013
Once a company has filled a application/petition under the Companies Act, 2013 for compounding of offence and the order has been passed by Tribunal or The Regional Director or any officer authorised by the Central Government shall be binding.
Hence, Any officer or other employee of the company who fails to comply with any order made by the Tribunal or the Regional Director or any officer authorised by the Central Government under sub-section (4) shall be punishable with imprisonment for a term which may extend to six months, or with fine not exceeding one lakh rupees, or with both.
Disclaimer:– The above article is extract of Section 441 under the Companies Act, 2013. While making an application, there are other important aspects also which are considered and are kept in mind while preparing them as cases varies and depend upon merits of the company’s profile. Hence, the professional/(s) who are involved should consider the whole case. The author shall not liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.
(The Author is Corporate Consultant and provides varied array of services including Start-ups, Secretarial, Legal, Intellectual property, taxation, Audit, GST, Book keeping and other ancillary advisory service in Delhi, Chandigarh as well as The National Capital Region (NCR) and can be contacted through email id:- firstname.lastname@example.org)