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More than 13 thousand companies prosecuted for non compliance of various provisions of the Companies Act during last 3 years

The Government has informed Lok Sabha that 13,437 companies were prosecuted for non compliance of provisions of the Companies Act, 1956 during the last three years i.e. during the years 2006-07, 2007-08 and 2008-09. In reply to a question Shri Salman Khirshid, Minister for Corporate Affairs, informed the House that 4,531 cases are pending for prosecution and process of filing prosecution in these cases has been initiated.


Stringent provisions have been proposed under different clauses of the Companies Bill, 2009 - that was introduced in the Lok Sabha on 3rd Aug, 2009 - for non compliance of provisions of the Bill. Section 631 of the existing Companies Act, 1956 provides for penalty against persons who carry on the business under any name or title in which the word “limited” or the word “private limited” are used, meaning thereby posing themselves to be carrying on business as a limited company without actually getting it registered under the Companies Act. The punishment provided under Section 631 is fine which may extend to five hundred rupees for every day upon which the name or title has been used. Provisions corresponding to existing section 631 of the Companies Act, 1956 have been retained in the Companies Bill, 2009, with enhanced punishment by way of minimum fine of Rs.1 lakh which is extendable up to Rs.5 lakh.


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