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

Vihaan Steels Ltd defaults in complying with Section 203 by not appointing a required whole-time KMP. As the Act now stands, what is the penalty on the company?

The company is liable to a penalty of five lakh rupees. Fifty thousand rupees applies to each director and KMP in default, with a further one thousand rupees per day for continuing default, subject to a ceiling of five lakh rupees.

  1. AFive lakh rupeesCorrect
  2. BFifty thousand rupees
  3. COne lakh rupees
  4. DFive lakh rupees per day of default

Explanation

Section 203(5), as substituted with effect from 2-11-2018, makes the company liable to a penalty of five lakh rupees. Fifty thousand rupees is the penalty on each director and KMP in default, not on the company. Continuing defaults attract a further Rs 1,000 per day, capped at five lakh rupees.

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