Penalties After Incorporation under Companies Act, 2013 – Part II
Updated on: Jun 17th, 2024
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3 min read
This article is the second part of a two-part series on penalties after the incorporation of a company. This part covers penalties from Chapter XIII-Chapter XXV.
Also, read about penalties before incorporation.
| Section No and Description | Defaulting party | Civil Liability | Criminal Liability (Imprisonment) |
| Sec 197 – Breach of the limit of the overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits. | Any person | Min: INR 1 Lakh Max: INR 5 Lakhs | |
| Sec 203 – Default in complying with provisions relating to appointment of KMP | Company Every director & KMP | Min: INR 1 Lakh Max: INR 5 Lakhs INR 50 thousand In the case of Continuing one INR 1 thousand per day | |
| Sec 204 – Failure to comply with provisions related to secretarial audit, annexing of secretarial audit report and failure by the Board to provide an explanation to the qualifications stated. | Company/ every officer/company secretary in default | Min: INR 1 Lakh Max: INR 5 Lakhs | |
| Sec 206 – Business of a company has been or is being carried on for a fraudulent or unlawful purpose Company fails to furnish any information or explanation or produce any document required by the registrar. | Every officer in default Company and every officer in default | Min: Amount involved in the fraud Max:3 times the amount involved INR 1 Lakh In case of continuing failure INR 5 hundred for every day of default | Min:6 Months Max:10 Years *Fraud involving public interest: Min: 3 years |
| Sec 207-Director/ officer of the company disobeys the direction issued by the Registrar or the inspector in matters related to inspection and enquiry | Director/Officer | Min: INR 25 thousand Max: INR 1 Lakh & | Max: 1 year |
| Sec 213- Any person concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud | Every officer in default & persons concerned in the formation of the company | Min: Amount involved in the fraud Max:3 times the amount involved & | Min:6 Months Max:10 Years *Fraud involving public interest: Min: 3 years |
| Sec 217- Disobeying the orders issued by Registrar/inspector A person fails without reasonable cause or refuses -to produce information OR-to appear personally or answer any question OR-to sign the notes of any examination | Director or officer Any person | Min: INR 25 thousand Max: INR 1 Lakh Min: INR 25 thousand Max: INR 1 Lakh In case of continuing failure INR 2 thousand for every day of default & | Max: 6 months |
| Sec 221 – Removal/transfer of assets/fund/property in contravention to orders of the tribunal | Company Every officer in default | Min: INR 1 Lakh Max: INR 25 Lakhs Min: INR 50 thousand Max: INR 5 Lakhs OR | Max: 3 years OR Both |
| Sec 222 – Securities issued/transferred in contravention to orders of the tribunal post restrictions imposed by the tribunal | Company Every officer in default | Min: INR 1 Lakh Max: INR 25 Lakhs Min: INR 25 thousand Max: INR 5 Lakhs OR | Max: 6 months OR Both |
| Sec 229 – Penalty for furnishing a false statement, mutilation, destruction of documents | Officer/Employee | Min: Amount involved in the fraud Max:3 times the amount involved & | Min:6 Months Max:10 Years *Fraud involving public interest: Min: 3 years |
| Sec 232-Contravention of provisions related to merger and amalgamation of companies | Transferor /Transferee Company Every officer in default | Min: INR 1 lakh Max: INR 25 Lakhs Min: INR 1 lakh Max: INR 3 Lakhs OR | Max: 1 year OR Both |
| Sec 238-Issuance of circular without registering the same with the registrar involving a transfer of shares. | Director | Min: INR 25 thousand Max: INR 5 Lakhs | |
| Sec 242- Alteration in MOA/Articles inconsistent with the order of the tribunal. | Company Every officer in default | Min: INR 1 Lakh Max: INR 25 Lakhs Min: INR 25 thousand Max: INR 1 Lakh | Max: 6 months OR Both |
| Sec 243-Acting as a managing director/director/manager in contravention of the order of the tribunal. | Managing director/director/manager/every director knowingly contravening | INR 5 Lakhs OR | Max: 6 months OR Both |
| Sec 245- Failure to comply with the orders of the tribunal pertaining to class actions. | Company Every officer in default | Min: INR 5 Lakh Max: INR 25 Lakhs Min: INR 25 thousand Max: INR 1 Lakh & | Max: 3 years |
| Sec 247 – Contravention of provisions related to valuation by registered valuers Defraud company/members | Valuer Valuer | Min: INR 25 thousand Max: INR 1 lakh Min: INR 1 Lakh Max: INR 5 Lakhs & | Max: 1 year |
| Sec 249 – Filing for removal of name from the register of companies in contravention to provisions enshrined in this section | Company | Max: INR 1 Lakh | |
| Sec 251-Fraudulent application for removal of a name. | Persons in charge of the management of the company | Min: Amount involved in the fraud Max:3 times the amount involved & | Min:6 Months Max:10 Years *Fraud involving public interest: Min: 3 years |
| Sec 267 – 1) Violation of Provisions of chapter XIX or order of tribunal/appellate tribunal 2) Provides False evidence/false statement before the Tribunal/Appellate Tribunal 3) Attempts to tamper with the records of reference or appeal filed under this Act | Any person | Max: INR 10 Lakhs & | Max: 7 years |
| Sec 274 -Failure to file the statement of affairs. | Director or officer in default | Min: INR 25 thousand Max: INR 5 Lakhs OR | Max: 6 months OR Both |
| Sec 15 – Failure to note alteration in every copy of the articles or memorandum as the case may be | Company and every officer in default | INR 1 thousand for every copy issued without alteration | |
| Sec 447- Punishment for fraud | Any person guilty of fraud | Min: Amount involved in the fraud Max:3 times the amount involved & | |
| Sec 448- Punishment for false statement | Any person guilty of fraud | Min: Amount involved in the fraud Max:3 times the amount involved & | |
| Sec 449-Punishment for false evidence | Any person | Max: INR 10 lakhs & | |
| Sec 450-Punishment where no specific penalty or punishment is provided | Company & every officer un default | INR 10 thousand In case of continuing failure INR 1 thousand for every day of default | |
| Sec 451 – Punishment in case of repeated default ( Same offence within a period of 3 years) | Company/Officer | Twice the amount of fine for such offence | |
| Sec 452 – Punishment for wrongful withholding of Property | Officer/Employee | Min: INR 1 Lakh Max: INR 5 Lakhs | |
| Punishment for improper use of “Limited” or “Private Limited” | Person | INR 500 to INR 2000 for every day of usage of the name | |
| Sec 454 – Non-payment of the penalty imposed by the adjudicating officer or the Regional Director within a period of ninety days from the date of the receipt of the copy of the order | Company Officer | Min: INR 25 thousand Max: INR 5 Lakhs Min: INR 25 thousand Max: INR 1 Lakh OR | |
| Sec 464 – Formation of association or partnership of persons exceeding a certain number | Every member of an association or partnership carrying on business | Max: INR 1 Lakh |
Quick Summary
The article discusses penalties post-incorporation of a company from different sections, outlining the defaulting party, civil, and criminal liabilities. Different sections and descriptions specify penalties for various violations post-incorporation like breach of remuneration, non-compliance with appointment provisions, and more.
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