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

Orion Steels Ltd is a listed company. Its practising company secretary completes the audit but the company fails to annex any secretarial audit report to the Board's report. Considering section 204(4), who may face the penalty and in what amount?

Under section 204(4), the company and every officer of the company who is in default are liable to a penalty of two lakh rupees for failing to annex the report. The practising company secretary is liable only if he himself defaults.

  1. AThe company and every officer in default, each liable to a penalty of two lakh rupeesCorrect
  2. BOnly the company secretary in practice, liable to a penalty of two lakh rupees
  3. COnly the managing director, with a penalty of two lakh rupees
  4. DNo penalty, since section 204 prescribes none for non-annexation

Explanation

Section 204(4) provides that if the company or any officer, or the company secretary in practice, contravenes the section, the company, every officer of the company or the company secretary in practice who is in default is liable to a penalty of two lakh rupees. Here the default is the company's and its officers', not the auditor's.

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