Penalties Before Incorporation under Companies Act, 2013
Updated on: Jul 21st, 2021
|
5 min read
Any responsible firm must make sure that it complies with all the guidelines set in the Companies Act, 2013 during incorporation. Non-compliance my attract certain penalties. You can also read about the penalties post incorporation.
| No | Section No and Description | Defaulting party | Civil Liability | Criminal Liability (Imprisonment) |
| 1) | Sec 4- Company Name applied by furnishing wrong information & if Company is not incorporated | Person Applying for the name | Max: INR 1 lakh | |
| 2) | Sec 7- Furnishing false/incorrect particulars or suppressing material information in relation to the registration of a company | The person furnishing such information | 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 |
| 3) | Sec 8 – Failure to comply with provisions relating to the formation of companies with charitable objects Affairs of the company conducted fraudulently. | Company Directors /Officers in default Every officer in default | Min: INR 10 Lakh Max: INR 1 Crore Min: INR 25 Thousand Max: INR 25 Lakhs OR Min: Amount involved in the fraud Max: 3 times the amount involved & | Max: 3 years OR Both Min: 6 Months Max:10 Years *Fraud involving public interest: Min: 3 years |
| 4) | Sec 11- Failure to file a declaration by the director with the registrar that every subscriber has paid the value of the shares taken by him and Failure to file verification of registered office to the registrar within 30 days of incorporation | Company Officer | Max: INR 5 Thousand INR 1 thousand for every day of default | |
| 5) | Sec 12 – Default in complying with the provisions outlined as regards the registered office of the company | Company and every officer in default | INR 1 thousand for every day of default Max: INR 1 Lakh | |
| 6) | 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 | |
| 7) | Sec 16 – Failure to rectify the name of the company where in the opinion of Central government the name is too identical/similar to an existing company name within 3 months after passing an ordinary resolution When an application is made by a registered proprietor of trademark to the central government within 3 years of incorporation/registration/change of name of the company and the central government opines that the name is too identical/similar to an existing trademark and the company fails to rectify the name within 6 months after passing ordinary resolution | Company Officer | INR 1 thousand for every day of default Min: INR 5 thousand Max: INR 1 Lakh | |
| 8) | Sec 17- Failure to provide copies of Memorandum/Articles etc to members within 7 days of the request. | Company and every officer in default | INR 1 thousand for every day of default OR INR 1 Lakh Whichever is less | |
| 9) | Sec 42-Company making an offer or accepting monies in contravention of section pertaining to a private placement. | Company Promotor Director | The amount involved in the fraud OR INR 2 Crores Whichever is higher | |
| 10) | Sec 16 – Failure to rectify the name of the company where in the opinion of Central government the name is too identical/similar to an existing company name within 3 months after passing an ordinary resolution When an application is made by a registered proprietor of trademark to the central government within 3 years of incorporation/registration/change of name of the company and the central government opines that the name is too identical/similar to an existing trademark and the company fails to rectify the name within 6 months after passing ordinary resolution | Company Officer | INR 1 thousand for every day of default Min: INR 5 thousand Max: INR 1 Lakh |
Quick Summary
Compliance with Companies Act, 2013 guidelines is crucial. Non-compliance can result in penalties, including fines and imprisonment, as detailed in various sections. Defaulting parties face civil and criminal liabilities, emphasizing the importance of adhering to all regulations during and post incorporation.
Was this summary helpful?
Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.
Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.
CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.
Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.
Cleartax is a product by Defmacro Software Pvt. Ltd.
Company PolicyTerms of use
ISO 27001
Data Center
SSL Certified Site
128-bit encryption