CS Professional · Compliance Management, Audit and Due Diligence · Secretarial Audit
Rohan Pharma Ltd, a listed company, obtained its secretarial audit report from a practising company secretary but the Board did not annex it to its Board's report. Later the company secretary in practice who was appointed is found to have not done the audit properly in contravention of section 204. Which statement about the penalty under section 204(4) is correct?
Section 204(4) makes the company, every officer of the company in default, and the company secretary in practice in default each liable to a penalty of two lakh rupees. It is a monetary penalty and does not fall on the company alone or the auditor alone.
- AOnly the company is liable, not its officers or the company secretary in practice
- BOnly the company secretary in practice is liable
- CThe company, every officer in default and the company secretary in practice who is in default are each liable to a penalty of two lakh rupeesCorrect
- DThe penalty is imprisonment for the officers in default
Explanation
Section 204(4) says that if the company, any officer, or the company secretary in practice contravenes the section, the company, every officer in default or the company secretary in practice in default is liable to a penalty of two lakh rupees. The penalty is not confined to one party and is not imprisonment.
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