CS Professional · Compliance Management, Audit and Due Diligence · Due Diligence
A director of Lotus Textiles Ltd is found to have breached the duties in section 166 without any specific undue gain. What punishment does the section prescribe for the contravention?
The director is punishable with a fine of not less than Rs 1 lakh, which may extend to Rs 5 lakh. Section 166(7) prescribes only this fine for contravention of the directors' duties, without imprisonment or automatic disqualification.
- AImprisonment up to one year only
- BFine not less than Rs 1 lakh but which may extend to Rs 5 lakhCorrect
- CFine not less than Rs 25,000 but up to Rs 1 lakh
- DDisqualification for five years automatically
Explanation
Section 166(7) provides that a director contravening the section is punishable with fine of not less than one lakh rupees, extending to five lakh rupees. No imprisonment or automatic disqualification is stated in it.
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