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What is the punishment for non-compliance with company law provisions?

Posted by jobseeker Krish Chandna | Approved
Answers (3)

1. Monetary Penalties: Imposed on the company and its officers in default.
For example, failure to file annual returns or financial statements can attract fines up to ₹1 lakh or more,
plus additional daily penalties for continued default.

2. Imprisonment: Certain offences involving fraud, misstatement in prospectus, or falsification of records can
lead to imprisonment of responsible persons for up to 10 years (especially under Section 447 for fraud).

3. Compounding of Offences: Minor, non-serious offences may be compounded by paying a specified sum,
avoiding prosecution.

4. Debarment and Disqualification: Directors can be disqualified from holding office for up to 5 years under
Section 164 if the company fails to file financial statements or repay debts.

5. Adjudication by ROC/NCLT: The Registrar of Companies (ROC) or National Company Law Tribunal (NCLT)
may initiate action against companies for violations.

Answered by jobseeker Vipra | Approved

The punishment for non-compliance with company law provisions in India varies depending on the nature and seriousness of the offence, as laid down under the Companies Act, 2013. Penalties can include monetary fines, imprisonment, or both, and they apply to the company, its directors, key managerial personnel (KMP), and officers in default.

For minor non-compliances, such as failure to file annual returns or financial statements (e.g., Sections 92 and 137), the Companies Act prescribes monetary penalties, which may be levied daily until the default is rectified. These penalties were decriminalized and made more civil in nature after the Companies (Amendment) Act, 2020, to promote ease of doing business.

For serious offences, such as fraud (Section 447), false statements (Section 448), or non-compliance with tribunal orders, the punishment can include rigorous imprisonment up to 10 years and heavy fines, sometimes extending to three times the amount involved in fraud.

Moreover, repeated or willful defaults may lead to disqualification of directors under Section 164, prosecution, and in extreme cases, winding up of the company. Regulatory authorities like the Registrar of Companies (RoC), NCLT, and SEBI (for listed entities) are empowered to initiate action against violators.

In summary, the Companies Act, 2013 enforces a graded penalty structure—civil for procedural lapses and criminal for fraudulent or intentional violations—to ensure compliance and uphold corporate governance standards.

Answered by jobseeker Ritik Bhardwaj | Approved

Non-compliance with company law provisions in India can result in a range of penalties, including fines, imprisonment, or both, depending on the specific violation. For instance, failure to file annual returns can lead to fines up to INR 5,00,000. Additionally, certain defaults can incur daily penalties until compliance is achieved. Beyond financial penalties, non-compliance can also lead to legal actions, damage to the company's reputation, and disruptions in business operations.

Answered by jobseeker Garima Rajput | Approved

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