Officer who is in default | Section 2(60) | Companies Act, 2013

Section 2(60) of the Companies Act defines ‘Officer who is in default’ and it mentions officers such as whole-time director, KMP, directors, etc. who shall be liable to any penalty or punishment in case of default committed by the company under the Companies Act, 2013.

However, there is a mechanism to assign a specific officer (who has immediate authority of the Board) to comply with any specific provisions of the Companies Act and thereafter, such assigned person shall be the “officer who is in default” in exclusion of all other persons named in Section 2(60). Assigned person may be termed as ‘Officers in Charge’ in accordance with Section 2(60)(iv) of the Act.

Major Points:

• Assigned person has to give consent letter in the name of Board of Directors to take charge of the Specific provisions of the Companies Act, 2013 (Draft format of consent letter is enclosed as Annexure-I)
• ‘Officers in Charge’ shall be responsible for only such provisions of Companies Act for which he/she has given consent, not for any other Section or Act or Laws.
• Board has to approve this matter in Board meeting (Draft format of Board Resolution is enclosed as Annexure-II)
• File e-Form GNL-3with the MCA alongwith consent letter and copy of Board resolution
• Details of maximum three ‘officers in Charge’ can be filed in a single form.
• DSC of ‘officers in Charge’ shall be affixed in this Form
• The withdrawal of the consent for the charged person is also to be informed to MCA.

Extract of Law (Section 2(60) of the Companies Act, 2013

“officer who is in default”, for the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any penalty or punishment by way of imprisonment, fine or otherwise, means any of the following officers of a company, namely:—

• whole-time director;
• key managerial personnel;
• where there is no key managerial personnel, such director or directors as specified by the Board in this behalf and who has or have given his or their consent in writing to the Board to such specification, or all the directors, if no director is so specified;
• any person who, under the immediate authority of the Board or any key managerial personnel, is charged with any responsibility including maintenance, filing or distribution of accounts or records, authorises, actively participates in, knowingly permits, or knowingly fails to take active steps to prevent, any default;
• any person in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act, other than a person who gives advice to the Board in a professional capacity;
• every director, in respect of a contravention of any of the provisions of this Act, who is aware of such contravention by virtue of the receipt by him of any proceedings of the Board or participation in such proceedings without objecting to the same, or where such contravention had taken place with his consent or connivance;
• in respect of the issue or transfer of any shares of a company, the share transfer agents, registrars and merchant bankers to the issue or transfer;

Annexure -I

Consent of the person charged by the Board with the responsibility of complying with the provisions of the Companies Act, 2013

(Pursuant to Section 2(60) of the Companies Act, 2013)

The Board of Directors

Company Name_________

Reg. Off. ______________

_______________________

I, …………………………………… son of ………………………………R/o. ………………………………… PAN No. ……………… hereby give my consent for being charged by the Board of Directors of the Company pursuant to the provisions of Section 2(60)(iv) of the Companies Act, 2013 with the responsibility of complying with the following provisions of the Companies Act, 2013:

• ……………………………
• ……………………………
• ……………………………

Signature ……………………….

Name of the Person ……………………….

Date:

Place: 

Annexure-II

Draft Board resolution for Officer in Charge

“RESOLVED THAT pursuant to Section 2(60) of the Companies Act, 2013, Mr. ______________________________ of the Company, who has given his consent dated …….…., and placed before the Board members, be and is hereby charged with the responsibility of compliance with the following provisions of Companies Act, 2013:

• ……………………………
• ……………………………
• ……………………………”

“RESOLVED FURTHER THAT Director and Company secretary of the Company be and is hereby severally authorized to sign and submit the Form GNL-3 or such other form(s) as may be necessary to file with the Registrar of Companies to give effect to the aforesaid matter.”