CMA Intermediate · Corporate Accounting and Auditing · Secretarial Audit
A listed company, its officer in default and the secretarial auditor all contravene section 204. As per the text of the section, what is the consequence?
Under section 204(4), the company, every officer in default and the company secretary in practice in default are each liable to a penalty of two lakh rupees. The penalty is not limited to the company and is not imprisonment or removal from the register.
- AOnly the company is liable to a penalty of two lakh rupees
- BThe company, every officer in default and the company secretary in practice in default are each liable to a penalty of two lakh rupeesCorrect
- COnly the officers in default are liable to imprisonment
- DThe company secretary in practice is liable only to removal from the register
Explanation
Section 204(4) states that if a company or any officer, or the company secretary in practice, contravenes the section, the company, every officer who is in default, or the company secretary in practice who is in default, shall be liable to a penalty of two lakh rupees. The penalty therefore extends to each defaulting party, not just the company. The section prescribes a penalty, not imprisonment.
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