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CMA Final · Corporate and Economic Laws · Inspection, Inquiry and Investigation

During an inspection of a company's books of account, a director refuses to follow the direction of the Registrar to produce the documents. Under the Companies Act, 2013, which consequence applies if the director is convicted of this offence?

On conviction for disobeying the Registrar's or inspector's direction during inspection, the director is deemed to have vacated office from the date of conviction and is disqualified from holding an office in any company. No separate Tribunal or Central Government order is needed.

  1. AThe director is deemed to have vacated office from the date of conviction and is disqualified from holding office in any companyCorrect
  2. BThe director continues in office until the Tribunal removes him
  3. CThe director is disqualified only from the company under inspection, for one year
  4. DThe director vacates office only after the Central Government passes a separate order

Explanation

Under section 207(4), disobeying a direction of the Registrar or inspector is punishable with imprisonment up to one year and fine of Rs 25,000 to Rs 1 lakh. On conviction, the director is deemed to have vacated office from the date of conviction and is disqualified from holding office in any company. The other options add steps or limits that the section does not provide.

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