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CS Professional · Compliance Management, Audit and Due Diligence · Secretarial Audit

Kaveri Foods Ltd, a listed company, did not annex a secretarial audit report to its Board's report. Under the Companies Act, 2013, what is the consequence for the company and its officers in default?

The company and every officer in default are each liable to a penalty of two lakh rupees under the secretarial audit provision. The same penalty applies to a company secretary in practice who contravenes the section. The provision prescribes a penalty only, not imprisonment, and it is not limited to the company.

  1. AEach is liable to a penalty of two lakh rupeesCorrect
  2. BOnly the company is liable, to a penalty of one lakh rupees
  3. COnly the secretarial auditor is liable to a penalty
  4. DThe company and every officer in default face imprisonment of six months

Explanation

Section 204(4) provides that where the section is contravened, the company, every officer of the company, or the company secretary in practice who is in default is liable to a penalty of two lakh rupees. The penalty is not limited to the company and no imprisonment is prescribed there.

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