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

Nila Tech Pvt Ltd is a recognised start-up company. A provision of the Companies Act, 2013 it contravened prescribes a penalty of rupees six lakh on the company and rupees three lakh on its officer in default. What is the maximum penalty on the company and on the officer under the lesser-penalty provision?

The maximum is two lakh rupees for the company and one lakh rupees for the officer. A start-up is liable to not more than half the specified penalty, but subject to caps of two lakh for a company and one lakh for an officer, and both caps bind here.

  1. ACompany 2 lakh rupees; officer 1 lakh rupeesCorrect
  2. BCompany 3 lakh rupees; officer 1.5 lakh rupees
  3. CCompany 3 lakh rupees; officer 1 lakh rupees
  4. DCompany 2 lakh rupees; officer 1.5 lakh rupees

Explanation

Penalty cannot exceed one-half of the specified penalty, subject to maximums of two lakh for a company and one lakh for an officer. Company: half of 6 lakh is 3 lakh, capped at 2 lakh. Officer: half of 3 lakh is 1.5 lakh, capped at 1 lakh. Options showing 3 lakh or 1.5 lakh ignore the caps.

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