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

Meera Industries Ltd, a listed company, did not annex any secretarial audit report to its Board's report. Its company secretary in practice had been engaged but refused access to records was never alleged. Which consequence follows under section 204(4)?

Under section 204(4), the company and every officer who is in default are liable to a penalty of two lakh rupees for failing to annex the report. It is not limited to the company, and it does not require the practising secretary to default as well.

  1. AOnly the company is liable to a penalty of two lakh rupees; officers are not
  2. BThe company and every officer of the company who is in default are liable to a penalty of two lakh rupeesCorrect
  3. COnly the Managing Director is liable, to imprisonment
  4. DNo penalty applies unless the company secretary in practice also defaults

Explanation

Section 204(4) provides that if a company or any officer contravenes the section, the company and every officer in default are liable to a penalty of two lakh rupees. The penalty is not confined to the company, and it is a penalty, not imprisonment. Liability does not depend on the professional's default.

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