CS Executive · Company Law and Practice · Directors
Mr. Kiran Desai knows that his office as director of Himalaya Pharma Ltd became vacant because a court disqualified him, yet he continues to sign Board resolutions as a director. What penalty applies under section 167(2)?
He is punishable with a fine of not less than one lakh rupees, extending to five lakh rupees. Section 167(2), as amended in 2020, no longer provides imprisonment for functioning as a director after knowing the office has become vacant.
- AImprisonment up to one year, or fine, or both
- BFine of not less than one lakh rupees, extendable to five lakh rupeesCorrect
- CFine of not less than five lakh rupees, extendable to ten lakh rupees
- DFine up to fifty thousand rupees only
Explanation
Section 167(2) punishes a person who functions as a director knowing his office has become vacant. After the 2020 amendment, imprisonment was removed and the penalty is a fine of at least one lakh rupees, extendable to five lakh rupees. The imprisonment option reflects the earlier, omitted wording.
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