Compliance Management, Audit and Due Diligence · Legal Framework Governing Company Secretaries

Penalties, Offences and Miscellaneous Provisions under the Company Secretaries Act

Updated 11 October 2026 · Fact-checked

This topic covers what happens when someone breaks the Company Secretaries Act, 1980, and the general provisions that keep it working. Offences by companies make the company and those in charge liable, subject to defences. The Council makes regulations with Central Government approval; the Central Government makes rules and can direct the Council.

Understand Penalties, Offences and Miscellaneous Provisions

The Company Secretaries Act, 1980 does three jobs. It sets up the Institute, it regulates members, and it protects the profession from outsiders. The penalty and offence provisions do the third job. The miscellaneous provisions at the end of the Act say who makes the detailed rules and how the Act runs day to day.

Start with the offences. The Act contains penalty provisions that make certain acts punishable. This page does not list those offences or their punishments. Read the penalty sections of the Act and your study material, and check the exact section, offence and punishment there before you quote anything. Do not guess fines or section numbers.

Next, offences by companies. Under Section 28, if a company commits an offence under the Act, the company and every person in charge of, and responsible to, the company for its business at that time are deemed guilty. There is a defence: the person escapes if they prove the offence was done without their knowledge, or that they used all due diligence to prevent it. Section 28(2) goes further. Even if the person was not in charge, a director, manager, secretary or other officer is also guilty if it is proved that the offence was committed with their consent or connivance, or is attributable to their neglect. For this section, company means any body corporate and includes a firm or other association of individuals, and director for a firm means a partner.

Now the law-making powers. Section 39 lets the Council make regulations by notification in the Gazette of India to carry out the Act. The list in Section 39(2) is illustrative, not limiting, because it is stated to be without prejudice to the general power. Section 39(3) adds a safeguard: all regulations are subject to previous publication and to the approval of the Central Government. Section 38A gives a separate power to the Central Government to make rules by notification, for matters such as election and nomination to the Council, the form and manner of filing a complaint, and the procedure of Boards of Discipline and Disciplinary Committees.

Other general provisions in the text: Section 1 says the Act extends to the whole of India. Section 7 says every member in practice must, and any other member may, use the designation Company Secretary, and no member using it may use any other description. Section 35 lets the Central Government give directions to the Council, which is bound to follow them, including directions to make, amend or revoke regulations. If the Council persistently defaults, the Government can dissolve it after giving it a chance to state its case. Section 31 dissolved the old company called the Institute of Company Secretaries of India on commencement of the Act. Section 21D keeps complaints pending before the 2006 amendment under the old provisions.

Key rules to remember

Regulation-making power (Section 39): Council + Gazette notification + previous publication + Central Government approval = valid regulation; Section 39(2) is without prejudice to the general power in Section 39(1). Section 39(3) imposes the publication and approval condition.
Rule-making power (Section 38A): Central Government + notification = rules; Covers matters like Council elections, complaint form and fee, and procedure of Boards of Discipline and Disciplinary Committees. Do not mix up rules (Government) and regulations (Council).
Offence by a company (Section 28(1)): Company + every person in charge of and responsible for its business at the time = deemed guilty; Defence in the proviso: offence without knowledge, or all due diligence exercised. The person must prove it.
Officer liability (Section 28(2)): Consent or connivance, or attributable to neglect, of a director, manager, secretary or other officer = officer also guilty; The offence must be proved to be linked to consent, connivance or neglect.
Meaning of terms in Section 28: Company = any body corporate, including a firm or association of individuals; Director of a firm = partner; Wider than the Companies Act meaning of company.
Directions of Government (Section 35): Directions bind the Council; persistent default + opportunity to be heard = Council may be dissolved; On dissolution, the Government may authorise a person or body to take over management until a new Council is constituted.
Designation (Section 7): Member in practice must use Company Secretary; other member may; no other description; A firm whose partners are all members in practice may be known as Company Secretaries. Members may add letters showing other recognised memberships or qualifications.

How to solve Penalties, Offences and Miscellaneous Provisions questions

Most questions give a short fact pattern and ask whether someone is liable, or who has power to make a rule. Use the same path each time.

1Identify the type of question: offence by an individual, offence by a company, power to make regulations or rules, or Government control over the Council.
2State the provision in plain words, with the section number only if you are sure of it. For Sections 28, 39, 38A, 35 and 7 you can name the section.
3List the key facts: who did the act, who was in charge of the business, whether there was knowledge, consent, connivance or neglect.
4Apply the provision to each person separately. For company offences, test the company, the person in charge, and then any other officer.
5Check for a defence or condition: lack of knowledge, due diligence, Gazette notification, previous publication, Central Government approval.
6Write a clear conclusion for each person or authority, then add a practical point such as what the Council or member should do next.

Quickest way: Who, what, which section

When to use it: When you have under ten minutes for a short case-based answer.

Write who is acting: company, officer, Council or Central Government.
Pick the matching rule: company offence is Section 28, regulations is Section 39, rules is Section 38A, directions is Section 35, designation is Section 7.
Write the test in one line, for example: in charge and responsible, or consent, connivance or neglect.
Apply it to the facts in two or three lines, naming each person.
Close with one line conclusion and the defence or condition that decides it.

Common mistakes in Penalties, Offences and Miscellaneous Provisions

Saying the Council makes rules and the Government makes regulations.
The words rules and regulations sound alike.
Fix: Remember: Council makes regulations (Section 39); Central Government makes rules (Section 38A). Regulations also need Government approval.
Forgetting that regulations need previous publication and Central Government approval.
Students stop at Gazette notification.
Fix: Write every condition each time: Gazette notification under Section 39(1), and under Section 39(3) previous publication and Central Government approval.
Holding every director or officer automatically guilty when a company commits an offence.
Section 28 is read as strict liability for all.
Fix: Under Section 28(1) only persons in charge of and responsible for the business are deemed guilty, and they can prove no knowledge or due diligence. Under Section 28(2) other officers are guilty only if consent, connivance or neglect is proved.
Quoting fines and jail terms from memory.
Students try to sound precise.
Fix: State the nature of the punishment as given in your study material. A wrong figure loses marks; a correct rule with accurate facts earns them.
Treating Section 39(2) as a closed list of regulation-making matters.
The list is long and looks complete.
Fix: Note that it is stated to be without prejudice to the general power in Section 39(1), so it is illustrative.
Applying the Companies Act meaning of company inside Section 28.
Habit from other papers.
Fix: Use the Explanation to Section 28: company includes any body corporate, firm or association of individuals, and director means partner for a firm.

Worked examples

Example 1

Sharma & Associates, a firm, is found to have committed an offence under the Company Secretaries Act, 1980. Mr Sharma is the managing partner in charge of the firm's business. Ms Iyer is a partner who looks after only branch administration and had no role in the offence. Examine the liability.

Show the solution

Provision: Section 28(1) makes the company, and every person in charge of and responsible for its conduct of business at the time, deemed guilty. Under the Explanation to Section 28, company includes a firm, and director, in relation to a firm, means a partner.
Applying the Explanation: the firm is treated as a company, and each partner, including Ms Iyer, is treated as a director. The firm is therefore liable under Section 28(1).
Mr Sharma is in charge of and responsible for the business, so he is deemed guilty unless he proves the offence was without his knowledge or that he exercised all due diligence to prevent it.
Ms Iyer is not in charge of the conduct of the business, so she is not liable under Section 28(1).
Section 28(2) applies to a director (here, a partner) only if it is proved that the offence was committed with her consent or connivance, or is attributable to her neglect. The facts show no role and no such proof, so she is not liable under Section 28(2).

Answer: The firm and Mr Sharma are liable, Mr Sharma having the defence of no knowledge or due diligence. Ms Iyer, a partner treated as a director under the Explanation, is not liable under Section 28(1) or 28(2), because no consent, connivance or neglect on her part is shown.

Exam tips

Write the section numbers you are sure of: 1, 7, 21D, 22, 28, 31, 35, 38A and 39. Do not invent numbers for the penalty sections.
In company offence questions, address the company, the person in charge, and other officers separately, and always mention the defence.
Keep a one-line contrast ready: Council makes regulations, Central Government makes rules, and Government can direct the Council.
Memorise the conditions for a valid regulation: notification in the Gazette (Section 39(1)), plus previous publication and Central Government approval (Section 39(3)). Also memorise the two limbs of Section 28.
Finish with a practical point, such as keeping evidence of due diligence or following the Gazette and approval steps.

Practice questions from Legal Framework Governing Company Secretaries

Penalties, Offences and Miscellaneous Provisions in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Penalties, Offences and Miscellaneous Provisions: frequently asked questions

Who makes regulations under the Company Secretaries Act, 1980?

The Council of the Institute makes them under Section 39, by notification in the Gazette of India. They are subject to previous publication and the approval of the Central Government.

What is the difference between rules and regulations under the Act?

Rules are made by the Central Government under Section 38A, for matters like Council elections and the procedure for complaints and disciplinary bodies. Regulations are made by the Council under Section 39, and they need previous publication and Central Government approval.

Who is liable when a company commits an offence under the Act?

Under Section 28(1) the company and every person in charge of and responsible for its business at that time are deemed guilty. A person can avoid liability by proving no knowledge or that all due diligence was used. Under Section 28(2), directors, managers, secretaries and other officers are also liable if consent, connivance or neglect is proved.

Can the Central Government control the Council?

Yes. Under Section 35 it can issue directions that the Council must follow, including directions to make, amend or revoke regulations. For persistent default it can dissolve the Council after giving it an opportunity to state its case.