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Penalty 4 acting as Director widout qualification shares

Kumar (Article) (922 Points)

25 September 2010

A person does not holds qualification shares even after 2 months of his being appointed as Director.His office as Director becomes void but he still continues to act as director. What is the penalty ?

1. Rs. 5000/- per day as per section 283 (2A)

2. Rs. 500/- per day as per section 272

3 Rs. 5,500/- combination of both.

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4 Replies

ravindranth (company secretary) (114 Points)
Replied 25 September 2010

if the articles provides for holding the qualification shares for being appointed as director, then he should take qualification shares.i hope in your case the articles provide for the same.

in that case, i think the penalty should be under both the sections

Jagruti (CS) (Service) (1953 Points)
Replied 25 September 2010

First know Company is private or Public as Section 272 is not applicable to Private Company than only Section 283 penalty will be applicable till he continues as Director.

For public Company both the Section 272 & 283 will be applicable i.e. 5500 per day till he continues to act as director after 2 months

However, both the above penalty is applicable only if Director is liable to hold qualification shares as per Articles otherwise not.

CS Vijay Daxini (At Practice) (732 Points)
Replied 25 September 2010

agree with jagruti

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 25 September 2010

Originally posted by : Jagruti (CS)
	First know Company is private or Public as Section 272 is not applicable to Private Company than only Section 283 penalty will be applicable till he continues as Director. For public Company both the Section 272 & 283 will be applicable i.e. 5500 per day till he continues to act as director after 2 months However, both the above penalty is applicable only if Director is liable to hold qualification shares as per Articles otherwise not.