Penalties after incorporation of the company - Part 3

Neethi V. Kannanth | Last updated: 24 September 2022

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Quick Summary

This article, the final part of a series, details various penalties companies and their officers may face after incorporation. It outlines specific sections of the law that impose civil and criminal liabilities, including imprisonment, for defaults such as fraudulent business practices, non-compliance with registrar directions, and tampering with records. The penalties vary based on the nature of the default and can include substantial fines and lengthy prison sentences.

We have come to the final part of the series on the discussion of Penalties After Incorporation of the Company. Let us have a look into what are the remaining penalties- Click here to read the 1st part of the article Click here to read the 2nd part of the article

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FAQ :

If a company's business is conducted for fraudulent or unlawful purposes, the company and every officer in default can face civil liability of at least the amount involved in the fraud, up to three times that amount, or a minimum of INR 1 Lakh. Criminal liability includes imprisonment from a minimum of 6 months to 10 years, or 3 years if the fraud involves public interest.

A director or officer who disobeys a direction issued by the registrar or inspector during an inspection or enquiry can be fined a minimum of INR 25,000, up to INR 1 Lakh, and may face imprisonment for up to 1 year.

Furnishing false statements, or mutilating or destroying documents, can lead to civil liability of at least the amount involved in the fraud, up to three times that amount. Criminal liability includes imprisonment from a minimum of 6 months to 10 years, or 3 years if the fraud involves public interest.

If a company or its officers transfer assets, funds, or property in contravention of a tribunal's orders, the company faces a civil penalty of INR 1 Lakh to INR 25 Lakhs, and officers in default face INR 50,000 to INR 5 Lakhs, or up to 3 years imprisonment, or both.

Persons in charge of a company's management who make a fraudulent application for name removal face civil liability of at least the amount involved in the fraud, up to three times that amount. Criminal liability includes imprisonment from a minimum of 6 months to 10 years, or 3 years if the fraud involves public interest.