Shares in a pvt ltd company allotted as part of the paid up capital were transferred by the MD to himself without the owner's consent. The MGT 7 was filed by the company for two financial years consecutively. Both the MGT 7 have the details of these transfers.
Legal notices are sent, case to be filed soon - what is the penalty/imprisonment for this and how will the complainant be compensated ?
As per Section 447 of the Companies Act, 2013,
If amount under fraud involves an amount of at least ten lakh rupees or one per cent. of the turnover of the company, whichever is lower, then imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud.
Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years.
If amount under 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, then 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 fifty lakh rupees or with both
The case may also needs professional guidance as many other clause of Company Law and CPC may get attracted. So, view of the professional Lawyer/Company Secretary is advisable.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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