pri Fine vs Penalty under Companies (Amendment) Act, 2019 Fine vs Penalty under Companies (Amendment) Act, 2019

Brief of 17 Sections under the Companies (Amendments) Act, 2019

What is Fine and Penalties under the Companies Act, 2013

*Note- Fine is imposed when any Compounding application/ Petition filed with NCLT or any Court, but the Penalty imposed when Company made noncompliance and adjudicating authority directly can imposed penalty on them.

Sr. No. Section Description
1 53(3) Prohibition of Issue of shares at a discount
2 64(2) Notice to be given to Registrar for alteration of share capital
3 92(5) Annual Return
4 102(5) Statement to be annexed to Notice
5 105 Proxies
6 117(2) Resolutions and Agreements to be filed
7 121(3) Report on annual general meeting
8 137(3) Copy of financial statement to be filed with Registrar
9 140(3) Removal, resignation of auditor and giving of special notice
10 157(2) Company to inform Director Identification Number to Registrar
11 159 Punishment for Contravention in respect of DIN
12 165(6) Number of Directorships
13 191(5) Payment to Director for Loss of Office
14 197(15) Overall maximum managerial remuneration and managerial remuneration in case of absence or
inadequacy of profits
15 203(5) Appointment of Key Managerial Personnel
16 238(3) Registration of the offer of scheme involving transfer of shares
17 446B Lesser Penalties for OPC or Small Companies

Let’s take an Example!

Section 53(3)-Prohibition of issue of shares at Discount:

A Company shall not issue shares at Discount. If it contravenes the provisions of this Section 53.

Before Amendment i.e Fine After Amendment i.e Penalties
Company Company shall be punishable with fine not less than 1 Lakh but which may extend to 5 Lakh Where any company fails to comply with the provisions of this section, such company and every officer who is in default shall be liable to a penalty which may extend to an amount equal to the amount raised through the issue of shares at a discount or five lakh rupees, whichever is less, and the company shall also be liable to refund all monies received with
interest at the rate of twelve per cent. per
annum from the date of issue of such shares to the persons to whom such shares have been issued.”.
Officer in Default Punishable with imprisonment for max term of 6 Months or with fine not less than 1 Lakh but which may extend to 5 Lakh.

*Note: Therefore, before Amendment default can be make good by petition in NCLT by filing compounding application Suo Moto or after receipt of notice form ROC/ MCA. And, After Amendment ROC may start levying penalty by issuing Show Cause Notice without any petition to NCLT or any other authorities.

Reason of Amendment

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July 2021