Skip to content

CS Executive · Setting Up of Business, Industrial and Labour Laws · Corporate Entities - Companies

Under the Companies Act, 2013, a small company, One Person Company, start-up or Producer Company defaults and the provision prescribes a penalty of Rs 5,00,000 on the company and Rs 3,00,000 on its officer in default. What is the maximum penalty payable by the company and by the officer under Section 446B?

The company pays at most Rs 2,00,000 and the officer at most Rs 1,00,000. Section 446B limits the penalty to one-half of the specified amount, but also imposes absolute ceilings of Rs 2 lakh for a company and Rs 1 lakh for an officer, which bind here.

  1. ACompany Rs 2,50,000; officer Rs 1,50,000
  2. BCompany Rs 2,00,000; officer Rs 1,00,000Correct
  3. CCompany Rs 2,00,000; officer Rs 1,50,000
  4. DCompany Rs 5,00,000; officer Rs 3,00,000

Explanation

Section 446B caps the penalty at one-half of the specified penalty, subject to a maximum of Rs 2 lakh for a company and Rs 1 lakh for an officer in default. Half of 5,00,000 is 2,50,000, capped at 2,00,000; half of 3,00,000 is 1,50,000, capped at 1,00,000. Option one ignores the cap.

Did you get it right without looking?

One question tells you little. A timed set on Corporate Entities - Companies shows your real accuracy, how long you take and where you lose marks.

Practise Corporate Entities - CompaniesFree diagnostic mock

More Corporate Entities - Companies questions