Penalties After Incorporation under Companies Act, 2013 – Part II

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 DescriptionDefaulting partyCivil LiabilityCriminal 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 personMin: INR 1 Lakh Max: INR 5 Lakhs 
Sec 203 – Default in complying with provisions relating to appointment of KMPCompany Every director & KMPMin: 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 defaultMin: 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 defaultMin: 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 defaultMin: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 enquiryDirector/OfficerMin: 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 fraudEvery officer in default & persons concerned in the formation of the companyMin: 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 examinationDirector or officer Any personMin: 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 tribunalCompany Every officer in defaultMin: INR 1 Lakh Max: INR 25 Lakhs Min: INR 50 thousand Max: INR 5 Lakhs ORMax: 3 years OR Both
Sec 222 – Securities issued/transferred in contravention to orders of the tribunal post restrictions imposed by the tribunalCompany Every officer in defaultMin: INR 1 Lakh Max: INR 25 Lakhs Min: INR 25 thousand Max: INR 5 Lakhs ORMax: 6 months OR Both
Sec 229 – Penalty for furnishing a false statement, mutilation, destruction of documentsOfficer/EmployeeMin: 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 companiesTransferor /Transferee Company Every officer in defaultMin: INR 1 lakh Max: INR 25 Lakhs Min: INR 1 lakh Max: INR 3 Lakhs ORMax: 1 year OR Both
Sec 238-Issuance of circular without registering the same with the registrar involving a transfer of shares.DirectorMin: INR 25 thousand Max: INR 5 Lakhs 
Sec 242- Alteration in MOA/Articles inconsistent with the order of the tribunal.Company Every officer in defaultMin: INR 1 Lakh Max: INR 25 Lakhs Min: INR 25 thousand Max: INR 1 LakhMax: 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 contraveningINR 5 Lakhs ORMax: 6 months OR Both
Sec 245- Failure to comply with the orders of the tribunal pertaining to class actions.Company Every officer in defaultMin: 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/membersValuer ValuerMin: 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 sectionCompanyMax: INR 1 Lakh 
Sec 251-Fraudulent application for removal of a name.Persons in charge of the management of the companyMin: 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 ActAny personMax: INR 10 Lakhs &Max: 7 years
Sec 274 -Failure to file the statement of affairs.Director or officer in defaultMin: INR 25 thousand Max: INR 5 Lakhs ORMax: 6 months OR Both
Sec 15 – Failure to note  alteration in every copy of the articles or memorandum as the case may beCompany and every officer in defaultINR 1 thousand for every copy issued without alteration 
Sec 447- Punishment for fraudAny person guilty of fraudMin: Amount involved in the fraud Max:3 times the amount involved & 
Sec 448- Punishment for false statementAny person guilty of fraudMin: Amount involved in the fraud Max:3 times the amount involved & 
Sec 449-Punishment for false evidenceAny personMax: INR 10 lakhs & 
Sec 450-Punishment where no specific penalty or punishment is providedCompany & every officer un defaultINR 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/OfficerTwice the amount of fine for such offence 
Sec 452 – Punishment for wrongful withholding of PropertyOfficer/EmployeeMin: INR 1 Lakh Max: INR 5 Lakhs 
Punishment for improper use of “Limited” or “Private Limited”PersonINR 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 orderCompany OfficerMin: 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 numberEvery member of an association or partnership carrying on businessMax: INR 1 Lakh 
 
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