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CS Executive · Company Law and Practice · Key Managerial Personnel and their Remuneration

Under section 102(5) of the Companies Act, 2013, a KMP defaults in the disclosure statement and he or his relative gains Rs 20,000 benefit. What is the penalty on the KMP in default?

The penalty is Rs 50,000 or five times the benefit accruing to the KMP or relatives, whichever is higher. Here five times Rs 20,000 is Rs 1,00,000, so the higher amount applies, and this is without prejudice to the trust and compensation liability.

  1. ARs 50,000 or five times the benefit, whichever is lower
  2. BRs 50,000 or five times the benefit, whichever is higherCorrect
  3. CRs 5 lakh fixed
  4. DOnly imprisonment with no fine

Explanation

Five times Rs 20,000 is Rs 1,00,000, which exceeds Rs 50,000. The section prescribes the higher amount, so the penalty is Rs 1,00,000; the lower-of option reverses the rule.

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