IMPORTANT PENALTIES

(ONLY IMPORTANT PENALTIES FROM EXAM POINT OF VIEW ARE

COVERED)
CONTRAVENTION PENALTY PRESCRIBED
Any person who is found guilty of fraud involving an amount of
at least 10 Lakhs or 1% of turnover of company, whichever is
lower, shall be punishable with imprisonment not less than 6
months but not more than 10 years and shall also be liable for
fine of not less than the amount involved in the mis-statement,
but not more than 3 times the amount involved.

If the fraud in question involves public interest, the term of

LIABILITY IN CASE OF imprisonment shall not be less than 3 years.
FRAUD
Provided further that where the fraud involves an amount less
than ten lakh rupees or one per cent. of the turnover of the
company, whichever is lower, and does not involve public
interest, any person guilty of such fraud shall be punishable
with imprisonment for a term which may extend to five years
or with fine which may extend to twenty lakh rupees or with
both.

Against Company:
Fine of Not Less than Amount Involved but not more than 3
times of Amount Involved

Against Officer/Directors:
MISSTATEMENT IN
Fine of Not Less than Amount Involved but not more than 3
PROSPECTUS
times of Amount Involved
Imprisonment of Not less than 6 months but not more than 10
years.
If public interest is involved than not less than 3 years.

CONTRAVENTION WITH Not Less than Amount involved or 2 Crores; Whichever is

PRIVATE PLACEMENT Higher
REGULATIONS

DEFAULT IN PROVISIONS Company: Fine of Not less than 1 Crore or Twice the amount
OF DEPOSITS deposits accepted by company but maximum Rs. 10 Crores

Officer: Fine of not less than Rs. 25 Lakhs but maximum Rs. 2
Crores and
Imprisonment of upto 7 years.

CONTRAVENTION WITH Fine which may extend to Rs.1,000/- for each day during
THE REGULATIONS OF which such default continues, or Rs.5 Lacs, whichever is less.
ALTERATION OF SHARE
CAPITAL
Against Company:
Fine which shall not be less than Rs.50,000/- but which may
extend to Rs.3 lacs
NON SUBMISSION OF
COPY OF PROSPECTUS
Against Officer/Director:
WITH ROC
Every person who is knowingly a party to the issue of such
prospectus shall be punishable with imprisonment for a term
which may extend to 3 years or with fine not less than

1|Page
 Rs.50,000/- but which may extend to Rs.3 lacs, or with both.

CONTRAVENTION WITH Rs. 50,000 for each default

ISSUE OF ABRIDGED
PROSPECTUS
ILLEGAL ASSOCIATION Upto Rs. 1,00,000
CARRYING ON BUSINESS
DEFAULT IN Company: Rs. 1 Lakh to Rs. 10 Lakhs
REGISTRATION OF Officers: Rs. 25,000 to Rs. 1 Lakh& Imprisonment not
CHARGE exceeding 6 months

RETURN OF ALLOTMENT Company & Officers: Rs. 1,000 each day or Maximum Rs.
1,00,000.
No Criminal Liability

DEFAULT IN HOLDING Company: Fine upto Rs. 1,00,000 & in case of Continuing
AGM default Rs. 5,000 per day.

CONTRAVENTION WITH Company: Fine upto Rs. 25,000

RULES OF MINUTES Officer: Fine upto Rs. 5,000.

TAMPERING WITH Officers: Fine not less than Rs. 25,000 but maximum Rs.
MINUTES 1,00,000.
Imprisonment of upto 2 Years.

DEFAULT IN FILING Company: Fine not less than Rs. 1 lakh and Maximum Rs. 5
REPORT ON AGM (ONLY Lakhs
FOR LISTED COMPANY) Officers: Fine not less than Rs. 25,000 but upto Rs. 1 Lakh
No Criminal Liability
NON MAINTENANCE OF Every Director shall be liable for a penalty of Rs. 25,000/-
REGISTER OF RELATED
PARTY
CONTRAVENTION WITH Company:5 Times of amount so contributed
CONTRIBUTIONS Officer: Imprisonment which may extend to 6 months or
(CHARITABLE/POLITICAL) Penalty of 5 Times or Both

CONTRAVENTION WITH Director: Imprisonment which may extend to 1 Year or Penalty

VACATION OF OFFICE not less than Rs. 1,00,000 but Not more than Rs. 5,00,000 or
both.

CONTRAVENTION WITH Not Less than Rs. 5,000 but not more than Rs. 25,000 for
NUMBER OF every day after the first day of contravention.
DIRECTORSHIPS
CONTRAVENTION WITH For Company: Not Less than Rs. 50,000 which may extend to
CSR ACTIVITIES Rs. 25 Lakhs.
For Every Officer: Not Less than Rs. 50,000 which may extend
to Rs. 5 Lakh or Imprisonment upto 3 Years or Both.

CONTRAVENTION WITH For Company: not less than Rs.50,000/- which may extend
BOARD REPORT upto Rs.5,00,000/-,
PREPARATION For every officer in default: Imprisonment upto 3 years, or fine
from Rs.50,000/- to Rs.5,00,000/- or Both

DEFAULT IN TRANSFER For Company : Fine – Minimum Rs.5 lakh & Maximum Rs.25
TO INVESTOR lakh,

2|Page
 EDUCATION AND For Officer: Fine – Minimum Rs.1 lakh & Maximum Rs.5 lakh
PROTECTION FUND

CONTRAVENTION IN Not Less Than Rs. 1,00,000 but which may extend to Rs.
SECRETARIAL AUDIT 5,00,000.
CONTRAVENTION WITH Company: Fine not less than Rs. 25,000 but which may extend
PROVISION OF LOANS to 5,00,000.
AND INVESTMENT BY Officer: Imprisonment which may extend to 2 Years or Fine not
COMPANY less than Rs. 25,000 but which may extend to 5,00,000.
LOAN TO DIRECTORS Company: Fine Not less than 5 Lakhs but which may extend to
CONTRAVENTION Rs. 25 lakhs.
Director: Imprisonment which may extend to 6 Months or Fine
Not less than 5 Lakhs but which may extend to Rs. 25 lakhs or
both

DEFAULT IN Company & Officer: Imprisonment of upto 1 Year or Fine not

MAINTENANCE OF less than 50,000 which may extend to Rs. 5,00,000 or both.
BOOKS OF ACCOUNTS

FAILURE TO DISTRIBUTE Director: Imprisonment of Upto 2 Years or Fine not less than
DIVIDEND AFTER Rs. 1,000 per day of default AND
DECLARATION Company: Simple Interest @ 18% p.a till the default continues.
ISSUE OF SHARES AT Company: Fine not less than Rs. 1 lakh but which may extend
DISCOUNT to Rs. 5 Lakh
Officer: Imprisonment of upto 6 months or Fine not less than
Rs. 1 lakh but which may extend t o Rs. 5 Lakh or both.

GENERAL PENALTY In case no penalty is specified in case of any contravention,

(SECTION 450) Fine up to `10,000 and further fine up to `1,000 for each day
of default in case of contravention continues can be levied.

CONTRAVENTION BY No Fraud: Fine not less than 25,000 but which may extend to
AUDITORS 5,00,000 or 4 times the remuneration of Auditor; whichever is
less

Fraud (intentionally): Fine not less than 1,00,000 but which

may extend to 25,00,000 or 8 times the remuneration of the
auditor; whichever is less.

If Auditor found guilty of willful contravention then:

(i) refund the remuneration received by him to the company;
and (ii) pay for damages to the company, statutory bodies or
authorities or to the members or Creditors of company for loss
arising out of incorrect or misleading statements of particulars
made in his audit report.

"Provided that in case of criminal liability of an audit firm, in

respect of liability other than fine, the concerned partner or
partners, who acted in a fraudulent manner or abetted or, as the
case may be, colluded in any fraud shall only be liable."

3|Page