Compounding of offences under Section 441 of Companies Act, 2013

The Term "Offence" is not defined in the Companies Act, 2013, But as per section 3 (38) of General Clause Act, 1897 "Offence" shall be termed as any act or omission made punishable by any law for the time being in force.

Offences can be classified as Civil Offence or Criminal Offence and be further classified as Compoundable or Non-Compoundable Offence.

According to provisions of Section 441 of Companies Act, 2013 any offences punishable under this Act with fine only may either before or after the institution of any prosecution can be compounded by:

• Regional Director (RD) or any officer authorised by Central Government (if the fine amount does not exceed Rs. 25 Lacs)
• NCLT (if fine amount exceeds 25 lacs)

Compounding of Offences shall not be possible in following cases:

• Where the investigation has been initiated or is pending.
• In case a similar offence committed has been compounded and period of 3 years has not expired.

Procedure for filing compounding application

1. Hold the Board Meeting pass a resolution for filing compounding application and authorizing any one director for signing compounding application and related documents.

2. Calculating amount of fine involved for deciding jurisdiction of Regional Director (RD) or National Company Law Tribunal (NCLT)

3. Drafting of compounding application as per the provisions of Section 441(3) (a) of Companies Act, 2013 and National Company Law Tribunal (NCLT) rules.

4. Filing compounding application with respective Registrar of Companies (ROC) in E-Form GNL-1 along with following documents:

A. Where Application/Petition is to be filed with Regional Director (RD)

1. Compounding Application/Petition
2. Incorporation Certificate
3. Memorandum of Association (MOA)
4. Article of Association (AOA)
5. Board Resolution authorising director to file application/petition.
6. Affidavit verifying the petition
7. Evidence that offence has been made good.
8. Memorandum of Appearance or Vakalatnama, as the case may be.
9. Any notice received from ROC/RD (If any)
10. Any additional documents as required.

*The entire set shall be in triplicates.

B. Where Application/Petition is to be filed with National Company Law Tribunal (NCLT)

1. Compounding Application/Petition in Form No. NCLT-1
2. Incorporation Certificate
3. Memorandum of Association (MOA)
4. Article of Association (AOA)
5. Notice of Admission in Form No. NCLT-2
6. Board Resolution authorising director to file application/petition.
7. Affidavit verifying the petition in Form No. NCLT-6
8. Notice in Form No. NCLT-5
9. Evidence that offence has been made good.
10. Memorandum of Appearance or Vakalatnama in Form No. NCLT-12
11. Any notice received from ROC/RD (If any)
12. Any additional documents as required.

*The entire set shall be in triplicates.

5. Once application/petition has been received by Registrar of Companies (ROC), the same will be considered and forwarded to respective Regional Director (RD) or National Company Law Tribunal (NCLT) having jurisdiction together with their report.

6. Regional Director (RD) or National Company Law Tribunal (NCLT) will consider the matter and pass relevant order.

7. Once the offence is compounded, the same shall be informed to respective Registrar of Companies (ROC) within 7 days from date of order being available.

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Disclaimer: Please note that the above article is based on the interpretation of related laws, which may differ from person to person and is not legal advice.