Srihari Kota

Companies Act 2013 has brought out vigorous punishments not only to public companies but also to private companies and to its directors to our surprise.

Table given below contains all the applicable penalties or punishments applicable to private companies and to its directors, if any of the provisions of the Act are contravened.

Penalties if the provisions of Companies Act 2013 are contravened

Sec-
tion
Section
Applica-bility
Penalty
For
Company
For
Director
No
Name
for Private Company
Heading
Penalty
Penalty
Imprison-
ment
Sec 8
Formation of Companies with Charitable Objects
Yes
Default in complying with any of the requirements laid down in this section Concerning formation of Companies with charitable objects
Rs. 10 Lakhs – Rs.1 Crore
Rs.25,000 – Rs.25 Lakhs
Maximum 3 years
Affairs of a company registered under Sec 8 were conducted fraudulently
Any person found to be guilty of fraud – Imprisonment 6 Months(Min) – 10 Years(Max), Fine – 1 time(Min) to 3 times(Max) the amount involve in the fraud
Sec 10
Effect of Memorandum & Articles
Yes
Defaulting in complying with any requirement under this section
Rs.10 Lakhs – Rs.1 Crore
Sec 12
Registered office of the company
Yes
Non Affixing of Name, CIN, Fax, email , address etc of the registered office on all correspondances
Rs.1,000/- per day not exceeding Rs. 1 Lakh
Rs.1,000/- per day not exceeding Rs. 1 Lakh
Sec 15
Alteration of memorandum & articles to be noted in every copy
Yes
Default in complying the provisions of this section
Rs.1,000/- for every copy of memorandum & articles
Rs.1,000/- for every copy of memorandum & articles
Sec 16
Rectification of name of company
Yes
Default in complying the provisions of this section
Rs.1,000/- for every day of default
Rs.5,000 – Rs.1 Lakh
Sec 17
Copies of memorandum, articles etc to be given to members
Yes
Default in complying the provisions of this section
Rs.1,000/- for every day of default or Rs. 1 Lakh whichever is less
Rs.1,000/- for every day of default or Rs. 1 Lakh whichever is less
Sec 19
subsidiary company not to hold shares in its holding company
Yes
Default in complying the provisions of this section
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 20
Service of documents
Yes
Non Communication of Mode of service of Documents
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 21
Authentication of documents, proceeding & Contracts
Yes
Non signing by any KMP or an officer of company duly authorised by the board
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 42
Offer or invitation for subscription of securities on private placement
Yes
a. Private company alloting shares to outsiders before allotment to existing shareholders and by not passing special resolution and not complying with the provisions of private placement ( sec 42)
Amount of Offer or 2 crores whichever is higher.
Amount of Offer or 2 crores whichever is higher.
Sec 46
Certificate of shares
Yes
Issue of a duplicate share certificate with an intention to default
5 times(Min) – 10 times(max) the value of the shares involved in the issue of duplicate certificate or Rs.10 Crores which ever is higher
1 time(Min) – 3 times(max) the amount involve in the fraud
6 Months – 10 Years
Defaulting in complying with any requirement under this section
Rs.10,000/- + Rs.1,000 for every day(It it is a continuing one) after the first during which the contravention continues
Rs.10,000/- + Rs.1,000 for every day(It it is a continuing one) after the first during which the contravention continues
Sec 53
Prohibition on issue of shares at discount
Yes
Defaulting in complying with any requirement under this section
Rs. 1 Lakh – Rs. 5 Lakhs
Rs. 1 Lakh – Rs. 5 Lakhs
Maximum 6 months
Sec 56
Transfer & transmission of securities
Yes
Default in complying the provisions of this section
Rs.25,000 – Rs.5 Lakhs
Rs.10,000 – Rs.1 Lakh
Sec 57
Punishment for personation of shareholder
Yes
Defaulting in complying with any requirement under this section
Rs. 1 Lakh – Rs.5 Lakhs
1 Year (Min) – 3 years(Max)
Sec 58(6)
Refusal of registration and appeal against refusal
Yes
Defaulting in complying with any requirement under this section
Rs. 1 Lakh – Rs.5 Lakhs
1 Year (Min) – 3 years(Max)
Sec 59(5)
Rectification of register of members
Yes
Defaulting in complying with any requirement under this section
Rs. 1 Lakh – Rs. 5 Lakhs
Rs. 1 Lakh – Rs.3 Lakhs
Maximum 1 year
Sec 60
Publication of authorised, subscribed & paid up capital
Yes
No indicating its authorised capital in any notice/ ad/letter in the same font and style of subscribed capital and paid up capital.
Rs.10,000/-
Rs.5,000/-
Sec 64
Notice to be given to registrar for alteration of share capital
Yes
Default in complying the provisions of this section
Rs.1,000/day or Rs.5 Lakhs whichever is less
Rs.1,000/day or Rs.5 Lakhs whichever is less
Sec 67
Restriction on purchase by company or giving of loans by it for purchase of its shares
Yes
Default in complying the provisions of this section
Rs.1 Lakh – Rs.25 Lakhs
Rs.1 Lakh – Rs.25 Lakhs
3 Years
Sec 68(11)
Power of Company to purchase its own securities
Yes
Defaulting in complying with any requirement under this section
Rs. 1 Lakh – Rs. 3 Lakhs
Rs. 1 Lakh – Rs. 3 Lakhs
Maximum 3 years
Sec 71(11)
Debentures
Yes
Defaulting in complying with any requirement under this section
Rs. 2 Lakh – Rs. 5 Lakhs
Maximum 3 years
Sec 73
Prohibition on acceptance of deposits from public
Yes
Default in complaince of acceptance of money from Customers, Directors, members etc
Rs.5,000/- plus Rs.500/- per day till contravention continues
Rs.5,000/- plus Rs.500/- per day till contravention continues
Sec 77
Duty to register charges
Yes
Not registering the particulars of charge within 30 days to ROC
Rs.1 lakh to Rs. 10 lakhs
Rs.25,000 – Rs.1 Lakh
6 months
Sec 85
Company’s register of charges
Yes
Non maintenance of Register of Charges in Form CGH7 at its registered office
Rs.1 lakh to Rs. 10 lakhs
Rs.25,000 – Rs.1 Lakh
6 months
Sec 88
Register of members
Yes
Non maintenance of Register of Members in Form MGT 1
Rs.50,000 – Rs.3 Lakhs, plus Rs.1,000/- per day till the contravention continues
Rs.50,000 – Rs.3 Lakhs, plus Rs.1,000/- per day till the contravention continues
Sec 89
Declaration in respect of beneficial interest in any share
Yes
Not stating the particulars of Form No.MGT 4 & MGT 5     in the register of members and non filing of MGT 6 with ROC within 30 days
Rs.50,000/- plus Rs.1,000/- per day till contravention continues
Rs.50,000/- plus Rs.1,000/- per day till contravention continues
Sec 92(5)
Annual return
Yes
Non filing of Annual Return to ROC in Form MGT 7 within 60 days and non signing by the director etc
Rs.50,000 – Rs.5 Lakhs
Rs.50,000 – Rs.5 Lakhs
Maximum 6 months
Sec 94
Place of Keeping and inspection of registers, returns etc
Yes
Default in complying the provisions of this section
Rs.1000/- per ever day subject to maximum of Rs.1 Lakh
Rs.1000/- per ever day subject to maximum of Rs.1 Lakh
Sec 96
AGM
Yes
Not holding AGM within 15 mnths from last AGM or not holding within 6 months from the end of financial year
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 100
Calling of EGM
Yes
Default in complying the provisions of this section
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 101
Notice of Meeting
Yes
21 days clear notice was not given while calling for a general meeting
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 102
Statement to be annexed to notice
Yes
Defaulting in complying with any requirement under this section
For every Promoter, Director, manager or KMP – Rs.50,000 or 5 times the benfit accruing to them or their relatives which ever is more
Sec 105
Proxy
Yes
Default in complying the provisions of this section
Upto Rs.1 Lakh
Sec 111
Circulation of members resolution
Yes
Default in complying the provisions of this section
Rs. 25,000/-
Rs. 25,000/-
Sec 117
Filing of resolutions with ROC
Yes
Failure to file Copy of resolution with copy of agreement/ explanatory statement in Form No.MGT-14 with ROC within 30 days
Rs. 5 Lakhs – Rs. 25 Lakhs
Rs. 1 Lakh – Rs. 5 Lakhs
Sec 118(11)
Minutes of proceedings of general meeting, meeting of Board and other meeting & resolution passed by postal ballot
Yes
Default in complying with the provisions of this section
Rs. 25,000
Rs. 5,000
Sec 118(12)
Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting and resolutions passed by postal ballot.
Yes
Any person found guilty of tampering with the minutes- Maximum imprisonment for 2 years and Fine- Not less than Rs. 25,000 but which may extend to Rs. 1 lakh
Sec 119
Inspection of Minute book of General Meeting
Yes
Default in complying with the provisions of this section
Rs. 25,000
Rs.5,000 for each refusal
Sec 123
Declaration of dividend
Yes
Default in complying the provisions of this section
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 127
Punishment for failure to distribute dividends
Yes
Non posting of warrant within 30 days in case of declaration of dividend – every director of the company if he is knowingly a party the default
Simple interest @ 18% P.a for the period of default
Rs.1,000 for every day during which such default continues
2 Years
Sec 128(6)
Books of account, etc., to be kept by Company
Yes
Defaulting in complying with any requirement under this section
Rs.50,000 – Rs.5 Lakhs
Maximum 1 Year
Sec 129(7)
Financial statement
Yes
Defaulting in complying with any requirement under this section
Rs.50,000 – Rs.5 Lakhs
Maximum 1 Year
Sec 134
Financial statement, Board’s report, etc
Yes
Default in complying the provisions of this section
Rs. 50,000 – Rs.25 Lakhs
Rs.50,000 – Rs.5 Lakhs
Maximum 3 Years
Sec 135
CSR Responsibility
Yes
Default in complying with the provisions of this section
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 137(3)
Copy of financial statement to be filed with Registrar
Yes
Non-filing of copy of financial statements in Form AOC-4 within 30 days
Rs.1,000 for   every day in default but not more than 10 lakhs
Rs. 1 Lakh – Rs.5 Lakhs
Maximum 6 Months
Sec 140
Removal, resignation of auditor & giving special notice
Yes
Removal of auditor without passing special resolution or without obtaining approval from Central Govt or Non-filing of Form ADT-2 with government while removal
Rs.25,000 – Rs.5 Lakhs
Rs.10,000 – Rs.1 lakh
1 Year
Sec 141
Eligibility, qualifications & disqualifications of auditors
Yes
Default in complying the provisions of this section
Rs.25,000 – Rs.5 Lakhs
Rs.10,000 – Rs.1 lakh
1 Year
Sec 149
Company to have Board of directors
Yes
Default in complying the provisions of this section
Rs. 50,000 – Rs.5 Lakhs
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 152
Appointment of directors
Yes
Non submission of DIR-2 & declaration that he is not disqualified to be as a director & Non-filing of DIR-12 with ROC within 30 days of appointment
Rs. 50,000 – Rs.5 Lakhs
Rs.50,000 + Rs.500/- per day from the first during which the contravention continues
Maximum 6 Months
Sec 155
Prohibition to obtain more than one DIN
Yes
Defaulting in complying with any requirement under this section
Rs.50,000 + Rs.500/day after the first during with the contravention continues
Maximum 6 months
Sec 156
Director to intimate DIN
Yes
Defaulting in complying with any requirement under this section
Rs.50,000 + Rs.500/day after the first during with the contravention continues
Maximum 6 months
Sec 157
Company to inform DIN to registrar
Yes
Failure to furnish DIN under subsection (1), before the expiry of the period specified under section 403 with additional fee
Rs.25,000 – Rs.1 Lakh
Rs.25,000 – Rs.1 Lakh
Sec 158
Obligation to indicate DIN
Yes
1)Non furnishing of DIN of any of the directors with ROC. 2) Non filing of DIR-6 (when any change in the particulars of director) along with DIR-7 within a period of 30 days with central Government
Rs. 50,000 – Rs.5 Lakhs
Rs. 50,000 – Rs.5 Lakhs
Sec 162
Appointment of director to be voted individually
Yes
Default in complying with any requirement under this section
Rs.50,000 – Rs. 5 Lakhs
Rs.50,000 – Rs. 5 Lakhs
Sec 165
Number of Directorships
Yes
Defaulting in complying with any requirement under this section
Rs.5,000 – Rs.25,000   for every day during which the contravention continues
Rs.5,000 – Rs.25,000   for every day during which the contravention continues
Sec 166
Duties of directors
Yes
Defaulting in complying with any requirement under this section
Rs.1 Lakh – Rs.5 Lakh
Sec 167
Vacation of office of director
Yes
Any person who after knowing that the office of director held by him has become vacant on account of any disqualification specified in subsection(1), still acts as a director
Rs.5,000/- to Rs.25,000 per day during which the contravention continues
Rs. 1 Lakh – Rs. 5 Lakhs
Maximum 1 Year
Sec 168
Resignation of director
Yes
1) Non submission of notice to company by the director while resigning. 2)No intimation to ROC by the company about the fact of such resignation in report of directors. 3) Not forwaded a copy of resolution along with detailed reasons to the ROC within 30 days in FORM DIR-11
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 170
Register of Directors and KMP and their shareholding
Yes
Default in complying with the provisions of this section
Rs.50,000 – Rs. 5 Lakhs
Rs.50,000 – Rs. 5 Lakhs
Sec 173
Meetings of board
Yes
Failure by the officer of the company to give notice under this section
Rs. 25,000
Sec 174
Quorums for meeting of board
Yes
Default in complying with the provisions of this section
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 179
Powers of board
Yes
Default in complying with the provisions of this section
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 180
Restrictions on powers of board
Yes
Non passing of special resolution in the case of 1) Sell, lease of any undertaking of the company. 2) Borrow of money, where the (money to be borrowed+ Already borrowed money) > (Paid up capital+Free reserves)
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 182(4)
Prohibitions and restrictions regarding political contributions
Yes
Defaulting in complying with any requirement under this section
5 times of the amount of contribution in contravention
5 times of the amount of contribution in contravention
Maximum 6 Months
Sec 184(4)
Disclosure of interest by director
Yes
Defaulting in complying with any requirement under this section
Rs.50,000 – Rs.1 Lakh
Minimum 1 year
Sec 185(2)
Loan to directors
Yes
When a company has advanced an loan directly or indirectly to any of its directors or to such other person in whom the director is interested.
Rs. 5 Lakhs – Rs.25 Lakhs
Rs. 5 Lakhs – Rs.25 Lakhs
Maximum 6 months
Sec 186(13)
Loan and investment by Company
Yes
Defaulting in complying with any requirement under this section
Rs. 25,000/- – Rs.5 Lakhs
Rs. 25,000/- – Rs.1 Lakh
Maximum 2 years
Sec 187(4)
Investments of Company to be held in its own name
Yes
Defaulting in complying with any requirement under this section
Rs. 25,000/- – Rs.25 Lakhs
Rs. 25,000/- – Rs.1 Lakh
Maximum 6 Months
Sec 188(5)
Related party transactions
Yes
Defaulting in complying with any requirement under this section
In case of unlisted Company, Rs.25,000 – Rs.5 Lakhs
Sec 189
Register of Contracts/Arrangements
Yes
Defaulting in complying with any requirement under this section
Rs. 25,000
Sec 190
Contract of employment with managing or whole-time directors
Yes
Default in complying with the provisions of this section
Rs. 25,000
Rs.5,000 for each default
Sec 191
Payment to director for loss of office in connection with transfer of undertaking, property or shares
Yes
Defaulting in complying with any requirement under this section
Rs.10,000 + Rs.1,000/day after the first during which the contravention continues
Rs.25,000 – Rs.1 Lakh
Sec 194
Prohibition on forward dealings in securities of company by director or KMP
Yes
Defaulting in complying with any requirement under this section by adirector or KMP
Rs.1 Lakh – Rs.5 Lakhs
May extend to 2 years
Sec 204
Secretarial audit for bigger companies
Yes for certain class of companies
Default in complying with the provisions of this section
Rs.1 Lakh – Rs.5 Lakhs
Rs.1 Lakh – Rs.5 Lakhs
Sec 206
Power to call for information, inspect books and conduct enquires
Yes
Default in complying with the provisions of this section
Rs.1 Lakh + Rs.500/day it the default continues
Rs.1 Lakh + Rs.500/day it the default continues
Sec 207
Conduct of inspection and inquiry
Yes
Defaulting in complying with any requirement under this section
Rs.25,000/- – Rs.1 Lakh
Maximum 1 year
Sec 405
Power of Central Government to direct companies to furnish information or statistics
Yes
Default in complying with the provisions of this section
Rs. 25,000
Rs.25,000 – Rs.3 Lakh
6 months
Sec 447
Punishment for Fraud
Yes
Defaulting in complying with any requirement under this section
Any person who is found to be guilty of fraud- Maximum imprisonment of 6 months may extend to 10 years & also liable to fine which may extent to 3 times the amount involved.
Sec 450
Punishment where no specific penalty or punishment is provided
Yes
Where no specific penalty/punishment is provided during contravention
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Rs.10,000/- plus Rs.1,000/- per day till the contravention continues
Sec 451
Punishment in case of repeated default.
Yes
Default in complying with the provisions of this section
Twice the amount of fine already impounded
Twice the amount of fine already impounded
Same imprisonment already impounded
Sec 452
Punishment for wrongful witholding of property
Yes
Default in complying with the provisions of this section
Rs.1 Lakh – Rs.5 Lakhs
Sec 453
Punishment for improper use of “Limited” or “private Limited”
Yes
Default in complying with the provisions of this section
Rs.500/day – Rs.2,000/day for every continuing day of default
Rs.500/day – Rs.2,000/day for every continuing day of default
Sec 454
Adjudication of penalties
Yes
Default in complying with the provisions of this section
Rs.25,000 – Rs.5 Lakhs
Rs.25,000 – Rs.1 Lakhs
6 Months
Chapter IV
Registration of charges
Yes
Defaulting in complying with any requirement under this section
Rs. 1 Lakh – Rs. 10 Lakhs
Rs. 25,000/- – Rs.1 Lakh
Maximum 6 months

 Note :

1) Officer 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:—

(i) whole-time director;

(ii) key managerial personnel;

(iii) 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;

(iv) 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;

(v) 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;

(vi) 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;

(vii) 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;

2) General punishment where no specific penalty/punishment is provided [Sec 450]:

If a company or any person contravenes any provision of this Act or the rules made there under, for which no penalty/punishment is provided elsewhere in this Act – fine upto Rs 10,000 on company and officer in default & in case of continuous contravention with further fine upto Rs.1,000 per day.

(Author can be reached at kotasrihari.sgp@gmail.com)

More Under Company Law

Posted Under

Category : Company Law (3489)
Type : Articles (14984)
Tags : Companies Act (1960) Companies Act 2013 (1732)

0 responses to “Penalties applicable to Pvt Companies and its directors under Companies Act, 2013”

  1. J V R Punnarao says:

    In Supporting srihari, providing further more clarification,

    1.If a company is unable to spend the contribution amount in a year it should specify the reasons for not spending that amount in its Board of Director’s annual report.
    2.There is no penal provision regarding non-compliance of the said provisions in means of spending or in reporting part. However, there are clear penal consequences if a company fails to even set up the CSR committee or fails to create a policy etc.
    If a company fails to spend the money, it only has to report this along with reasons. Section 134(8) of the Act provides for such penal provision stating in case the company does not disclose the reasons in the Board‘s report, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.

    3. The new law does not specify punishment for failure to spend CSR expenditure. However such cases are covered under section 450 read with section 451 which provides for residual provisions for the same. Fine under section 450 may extend to ten thousand rupees, and where the contravention is continuing one, a further fine to one thousand rupees for every day after the first during which contravention continues is imposed.

    “Excellence should be a Habit”, but not in the case of offences or defaults in the 2013 Act. “Default should not be a habit” says the new law. As per Section 451 of the 2013, the defaulter is punished either with fine or with imprisonment and where the same offence is committed for the second or subsequent occasions within a period of three years, then, that company and every officer thereof who is in default shall be punishable with twice the amount of fine for such offence in addition to any imprisonment provided for that offence.

  2. Varsha says:

    Good and handy summary of important section. The section relating to CRS is provided in the chart. My qurey is which section of Company’s Act specifies the actual penalty amount for violation of CSR provision.

    • Kota Srihari says:

      Dear Varsha, Companies Act 2013 doesn’t specify any specific penalty for CSR Violation. But as per Sec 450 of CA 2013 it states a general punishment of Fine where no penalty or punishment is provided elsewhere in the act which is Rs.10,000/- plus Rs.1,000/- per day till the contravention continues. Please let me know if i was wrong.

Leave a Reply

Your email address will not be published. Required fields are marked *