Important Penalties in Company Law

Important Penalties in
Company Law
SECTIONS Only for Old Syllabus 124 (3), 124 (7), 127, 140 (3), 147
Section 124 (3)
Default in transferring the required amount to Unpaid Dividend Account
PENALTY
12%
12 % per annum on such amount from the date of default { as benet to members of the
company in proportion to amount remaining unpaid to them}
Section 124 (7)
Contravention of Section 124
PENALTY
Company Ofcer
Minimum 5,00,000 Minimum 1,00,000
Maximum 25,00,000 Maximum 5,00,000
Section 127
Punishment for failure to distribute dividends when declared
PENALTY
Company Ofcer
18 % per annum during the Imprisonment upto 2 years
period for which the default and Minimum ne of Rs 1000
continues. every day till the default
continues
Section 140 (3)
The Auditor fails to intimate about his resignation to the Company and ROC
PENALTY
Rs 50,000 or amount equal to remuneration of the auditor, w.i.l. and in case of continuing failure, with
further penalty of Rs 500 for each day after rst during which such failure continues, subject to max
Rs 5 lakhs.
CA SANIDHYA SARAF www.apnamentor.com sanidhyasaraf@gmail.com
Important Penalties in Company Law

Section 147
The Auditor Contravenes of Section 139,143, 144 or 145
PENALTY Contravened
General knowingly
Minimum 25,000 Minimum 50,000
Maximum 5,00,000 Maximum 25,00,000
or or
4 times the remuneration w.i.l 8 times the remuneration w.i.l
Section 159
Penalty for contravention of Section 152, 155 and 156 { on the individual or director
making default}
PENALTY
Upto extend of Rs 50,000 and where the default is a
continuing one with further penalty which may extend to
Rs 500 for each day after the rst during which the
default continues.
Section 165 (6)

5000 Y If a person accepts more than 20 directorship in contravention
DA
EACH of 165 (1)
PENALTY
He shall be liable to penalty of Rs 5,000 for each day after the
rst during which such contravention continues.
Section 167 (2)

The director refuses to vacate his ofce when ofce held
by him becomes vacant on grounds given in 167(1).
PENALTY
Imprisonment upto 1 year { or with ne ranging from Rs 1
lakh to Rs 5 lakh or both

Section 182 (4)
PENALTY
Company Ofcer
Upto 5 times of the amount Imprisonment upto 6 months
contributed. and with ne which may
extend upto 5 times of
amount so contributed.
Section 184
The Director contravenes the provisions of Section
184(1) or 184(2)
PENALTY
Imprisonment upto 1 year or ne which may extend to
one lakh Rs or both.
Section 185 (3)
PENALTY
Company Ofcer and
The other person to whom any
Minimum 5,00,000 loan is advanced
Maximum 25,00,000 Imprisonment which may
extend to six months or ne
which shall not be less than
Rs 5,00,000 but whic h
extend to 25 lakh Rs or both.
Section 186 (13)

PENALTY
Company Ofcer
Minimum 25,000 Imprisonment upto 2 years and
ne minimum Rs 25,000 but
but which may extend which may extend to one lakh
to Rs 5,00,000 Rupees.

Section 247 (4)
Valuer has contravened the valuation rules
PENALTY
General Intentional
Minimum 25,000 Intention to defraud
Maximum 1,00,000 Imprisonment upto 1 year
and ne ranging from Rs
1,00,000 to 5,00,000
Section 392
Punishment for contravention
PENALTY
Company Ofcer
Fine Ranging from 1 lakh to Rs 3 Imprisonment upto 6 months or
lakh and in case of a continuing ne ranging from Rs 25,000 to
offence, with additional ne which 5,00,000 or both.
may extend to Rs 50000 per day
during which the contravention
continues.
Section 447
Any person who is found of Fraud
PENALTY
If amount involved is atleast Rs 10 lakhs or
one percent of the turnover of the company
w.i.l., imprisonment for minimum 6
months:- { 3 years if public interest is involved}
and maximum it may extend upto 10 years and Fine
which shall not be less than the Amount involved in
fraud and may extend to 3 time the amount involved
in fraud.
If amount involved is less than Rs 10 lakhs
or one percent of the turnover of the
company, w.i.l. :- Imprisonment upto 5 years or
with ne upto Rs 50 lakhs or both.

Section 450
Valuer has contravened the valuation rules
PENALTY
The company and the ofcer in default or such
other person shall be punishable with ne which may
extend upto Rs 10,000 , and further ne of Rs 100
per day for the period during which contravention
continues.
Section 128 (6)

PENALTY
Penalty for ofcers in default-
Fine Ranging from Rs 50,000 to Rs 5,00,000 or upto
1 year imprisonment or both.
Section 129 (7)

Contravention of Section 129 same as Section 128
Section 134 (8)

PENALTY
Penalty for ofcers in default-
Fine Ranging from Rs 50,000 to Rs 5,00,000 or upto
3 year imprisonment or both.
Section 135
Contravention of CSR provisions
x PENALTY
No penalty is specied. General penalty
specied in Section 450 shall be attracted.
CA SANIDHYA SARAF www.apnamentor.com

x
sanidhyasaraf@gmail.com

Section 137 (3)
Company fails to le the copy of nancial statements to the ROC within the specied
time period.
PENALTY
Company Ofcer
Rs 1000 every day for which Liable to penalty of Rs 1
default continues subject to lakh and in case of continuing
Maximum Rs 10 lakhs. failure , further penalty of Rs
100 every day subject to
maximum Rs 5,00,000.
Please Note
U W.i.l means whichever is less.
U Penalties of the chapters Dividend, Company Accounts and Company Audit are relevant only
for Audit purpose for New Syllabus Students.

Important Penalties in
Allied & Economic Law
FOREIGN EXCHANGE MANAGEMENT ACT, 1999
Section 11
Authorised person contravenes any direction by RBI or failure to le any return as
directed by RBI.
PENALTY
Upto 10,000
If continuing offence additional penalty upto 2,000 per day.
Section 13
Of any provision of the Act, or any rule, regulation, notication, direction or order or of
any condition subject to which an authorisation issued
PENALTY
ÏUpto three times, the sum involved, if it is quantiable.
ÏIf not quantiable upto ` 2 lacs.
ÏIf continuing, further penalty upto ` 5,000 per day after
rst day.
Section 14
Failure to pay penalty as above
-where demand is of an amount exceeding ` 1 crore
-in any other case
PENALTY
Civil Imprisonment
Upto 3 years
Upto 6 months

Prevention of money laundering act
Section 4
Person directly or indirectly involved in Money Laundering
PENALTY
+ 3 years to 7 years imprisonment and ne.
+ 3 years to 10 years imprisonment and ne if offence is

committed under Narcotics and Psychotropic substances Act,
1985
Section 13
If the reporting entity or any of its designated director fails to comply with
the obligations of chapter
PENALTY
Minimum 10,000
Maximum 1,00,000
For each failure
SECURITIES EXCHANGE BOARD OF INDIA
SECTION 15 F-
F- Penalty for default in case of stock broker
CONTRAVENTION PENALTY
Fails to issue contract notes in the form and Minimum Rs 1 lakh Maximum –5 times of
manner specied by the stock exchange. Amount of Contract Note.
Fails to deliver any security or fails to Minimum Rs 1 lakh,

make payment of the amount due to the Further penalty of Rs 1 lakh every day
investor. Maximum Rs 1 crore.
Charges an amount of brokerage which is Rs 1 lakh
in excess of the brokerage specied in the Or 5 times of excess
regulations. of brokerage Whichever is higher.

Section 15 G
Penalty for insider trading
PENALTY
Minimum 10,00,000
Maximum 25,00,00,000
or 3 times the amount of prots
made out of insider training w.i.h.
Common Penalties under the Chapter

Fine upto Rs `1 lac/day or 1 cr Fine upto Rs 25 crore or 3 times of
whichever is less amount of prot whichever is more
… Failure to maintain records or to le
returns or to furnish information … Penalty for insider training
… Failure to redress investor … Failure to comply with requirements
grievances of Take over code
… Defaults by Mutual fund/Asset … Adopting fraudulent or
Management Co and Collective manipulative practices.
investment scheme
… Failure to enter into contract or
contract in specied format

Important Penalties in Company Law

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CA SANIDHYA SARAF www.apnamentor.com sanidhyasaraf@gmail.com