Criminal Liabilities of Directors under the Companies Act 2013

Companies Act 2013 has increased monetary penalties and imprisonment. The civil and criminal liabilities are not just on directors but includes “Officers in Default”. There is heightened corporate governance requirements even for startups and unlisted companies, even though there is no public money invested.

“Officer in default” would broadly cover whole-time directors, Key Managerial Personnel (KMP) and such other directors as specified by the Board in the absence of KMP and every director who is aware of contravention of law by virtue of receipt of board proceedings or participation therein without raising any objection or where non-compliance has taken place with his consent or connivance.

Below table is indicative of some of the sections which deal with imprisonment.

• Company-Fine- Not less than Rs. 1 lakh and may extend to Rs. 5 lakhs
• Officer in default- Maximum imprisonment of 6 months or Fine- Not less than Rs. 1 lakh and may extend to Rs. 5 lakhs or with both.

• Company-Fine- Not less than Rs. 1 lakh and may extend to Rs. 3 lakhs
• Officer in default- Maximum imprisonment of 3 years or Fine- Not less than Rs. 1 lakh and may extend to Rs. 3 lakhs or with both.

• Officer in default- Maximum imprisonment of 3 years or Fine- Not less than Rs. 2 lakh and may extend to Rs. 5 lakhs or with both.

• Company-Fine- Not less than Rs. 50,000 Thousand and may extend to Rs. 5 lakhs
• Officer in default- Maximum imprisonment of six months or Fine- Not less than Rs. 50,000 Thousand and may extend to Rs. 5 lakhs or with both.

• Any person found guilty of tampering with the minutes- Maximum imprisonment for 2 years and Fine- Not less than Rs. 25,000 but which may extend to Rs. 1 lakh

• Officer in default- Maximum imprisonment of 1 year or Fine- Not less than Rs. 50,000 and may extend to Rs. 5 lakhs or with both.

• Officer in default- Maximum imprisonment of 1 year or Fine- Not less than Rs. 50,000 and may extend to Rs. 5 lakhs or with both.

• Company-Fine- Not less than Rs. 50,000 and may extend to Rs.25 lakhs
• Officer in default- Maximum imprisonment of 3 years or Fine- Not less than Rs. 50,000 and may extend to Rs. 5 lakhs or with both.

• Director – Maximum imprisonment for 1 year or Fine- Not be less than Rs. 1 lakh and may extend to Rs. 5 lakhs or with both.

• Company-Fine- Not less than Rs. 5 lakhs and may extend to Rs.25 lakhs
• Officer in default- Maximum imprisonment of 6 months or Fine- Not less than Rs. 5 lakhs and may extend to Rs. 25 lakhs or with both.

• Company-Fine- Not less than Rs.25,000 and may extend to Rs. 5 lakhs
• Officer in default- Maximum imprisonment of 2 years or Fine- Not less than Rs. 25,000 and may extend to Rs. 1 lakh or with both.

• In case of unlisted Company, be punishable with fine which shall not be less than 25,000 rupees but which may extend to 5 lakh rupees

• Such person in default- Minimum 1 year to Maximum 3 years imprisonment or Fine- Not less than Rs. 1 lakh and may extend to Rs. 5 lakhs.

• Such person in default- Minimum 1 year to Maximum 3 years imprisonment or Fine- Not less than Rs. 1 lakh and may extend to Rs. 5 lakhs.

• Company-Fine- Not less than Rs.1 lakh and may extend to Rs.5 lakhs
• Officer in default- Maximum imprisonment of 1 years or Fine- Not less than Rs. 1 lakh and may extend to Rs. 3 lakhs or with both.

• Company-Fine- Not less than Rs.1 lakh and may extend to Rs.10 lakhs
• Officer in default- Maximum imprisonment of six months or Fine- Not less than Rs. 25,000 and may extend to Rs. 1 lakh or with both.

• Company-Fine- Not less than Rs.1000 for every day in default but not more than 10 lakhs
• Officer in default- Maximum imprisonment of 6 months or Fine- Not less than Rs. 1 lakh and may extend to Rs. 5 lakhs or with both.

• Company-Fine- 5 times of the amount of contribution in contravention
• Officer in default- Maximum imprisonment of 6 months and Fine- 5 times of the amount of contribution in contravention

• Such person in default- Minimum 1 year imprisonment or Fine- Not less than Rs. 50,000 and may extend to Rs. 1 lakh or both.

• Company-Fine- Not less than Rs.25,000 and may extend to Rs.25 lakhs
• Officer in default- Maximum imprisonment of 6 months or Fine- Not less than Rs. 25,000 and may extend to Rs. 1 lakh or with both

• Any person who is found to be guilty of fraud- Maximum imprisonment of 6 months may extend to 10 years
• Such person also liable to fine which may extent to 3 times the amount involved.

Disclaimer: There are many details that the Act prescribes, please speak with your attorney for advice. This is not a legal opinion and should not be construed as one.