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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Board Disclosures and Website Disclosures

Nirmaan Start Pvt Ltd is a recognised start-up company. Its sole officer in default under Section 134 is its managing director. What is the maximum penalty on that officer under Section 446B read with Section 134(8)?

The maximum penalty is Rs 25,000. Section 446B covers start-up companies and limits an officer's penalty to one-half of the specified amount, subject to Rs 1 lakh. Half of Rs 50,000 is Rs 25,000, so that is the ceiling.

  1. ARs 25,000Correct
  2. BRs 50,000
  3. CRs 1,00,000
  4. DRs 2,00,000

Explanation

The officer's specified penalty is Rs 50,000. Section 446B allows not more than one-half of it, i.e. Rs 25,000, subject to a cap of Rs 1 lakh for an officer. Rs 25,000 is below the cap, so it governs. Rs 50,000 ignores the reduction for start-up companies.

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