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

Mehta Components Ltd, a listed company, defaulted in complying with section 134 as its Board's report omitted mandatory contents. The company secretary and the CFO are officers in default. Under section 134(8), the consequence is:

The company is liable to a penalty of three lakh rupees and every officer in default to a penalty of fifty thousand rupees under section 134(8). The amounts are not reversed, and the provision prescribes penalties rather than imprisonment.

  1. APenalty of Rs 3 lakh on the company and Rs 50,000 on every officer in defaultCorrect
  2. BPenalty of Rs 50,000 on the company and Rs 3 lakh on every officer in default
  3. CImprisonment of officers in default for up to one year
  4. DPenalty of Rs 3 lakh on the company only, with no liability for officers

Explanation

Section 134(8) as substituted in 2020 imposes a penalty of three lakh rupees on the company and fifty thousand rupees on every officer in default. The second option swaps the amounts, and the statute prescribes a penalty, not imprisonment, nor does it spare officers.

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