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CMA Final · Corporate and Economic Laws · Investment and Loans

Meridian Ltd contravenes Section 186 by investing through three layers of investment companies. Which consequence is correct under sub-section (13)?

Under Section 186(13), the company faces a fine between twenty-five thousand and five lakh rupees, while every officer in default may be imprisoned for up to two years and fined between twenty-five thousand and one lakh rupees. Both the company and its officers are therefore exposed.

  1. AOnly a fine of up to five lakh rupees on the company, with no action against officers
  2. BThe company is punishable with fine of not less than twenty-five thousand rupees extending to five lakh rupees, and officers in default face imprisonment up to two years and fineCorrect
  3. COnly imprisonment of officers up to two years, with no fine on the company
  4. DThe company is punishable with fine of up to one lakh rupees only

Explanation

Section 186(13) provides a fine of twenty-five thousand to five lakh rupees for the company. Officers in default face imprisonment up to two years and a fine of twenty-five thousand to one lakh rupees. The other options omit one of these limbs.

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