CMA Intermediate · Corporate Accounting and Auditing · Secretarial Audit
A company that is neither a small company nor a start-up contravenes section 204. Under the text of section 204(4), what is the penalty on the company, and on a company secretary in practice in default?
Under section 204(4), the company, every officer in default, or the company secretary in practice in default is liable to a penalty of two lakh rupees. The professional is expressly covered, so the penalty is not limited to the company.
- APenalty of two lakh rupees on the company and on each officer or the company secretary in practice who is in defaultCorrect
- BPenalty of two lakh rupees on the company only, with no penalty on the professional
- CPenalty of one lakh rupees on the company and fifty thousand on the officer
- DPenalty of five lakh rupees on the company and one lakh on the professional
Explanation
Section 204(4) states that the company, every officer in default or the company secretary in practice who is in default is liable to a penalty of two lakh rupees. The professional is expressly covered, so the option excluding him is wrong.
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