The Companies Act, 2013, contains various provisions to ensure compliance and penalize non-compliance with the law. Below are the key criminal offences specified under the Act:
1. Fraudulent Activities (Section 447)
Nature of Offence: Any act of fraud, misrepresentation, or concealment of material facts that harm the company, its shareholders, or creditors.
Penalty:
- Imprisonment: 6 months to 10 years.
- Fine: Equal to the amount involved in the fraud (minimum) but may extend to 3 times the amount involved.
2. Furnishing False Information or Suppression of Facts (Section 448)
Nature of Offence: Making false statements, suppressing material facts in financial statements, reports, or returns.
Penalty:
- Imprisonment: Up to 10 years.
- Fine: Up to ₹25 Lakhs.
3. Non-Compliance with Tribunal Orders (Section 450)
Nature of Offence: Failure to comply with orders or directions issued by the National Company Law Tribunal (NCLT).
Penalty:
- Fine: ₹1 Lakh for companies.
- Additional fine: ₹5,000 per day for continued default.
4. Fraudulent Incorporation of Companies (Section 7(5) and 7(6))
Nature of Offence: Incorporation of a company by furnishing false or incorrect information.
Penalty:
- Imprisonment: 6 months to 10 years.
- Fine: Up to ₹10 Lakhs.
5. Insider Trading (Section 195)
Nature of Offence: Directors or employees using confidential company information for personal benefit in the stock market.
Penalty:
- Imprisonment: Up to 5 years.
- Fine: ₹5 Lakhs to ₹25 Crores or 3 times the profit made, whichever is higher.
6. Non-Maintenance of Books of Accounts (Section 128)
Nature of Offence: Failure to maintain proper books of accounts for the specified period (8 years).
Penalty:
- Fine: ₹50,000 to ₹5 Lakhs.
7. Default in Payment of Dividend (Section 127)
Nature of Offence: Not transferring declared dividends to the shareholders within 30 days.
Penalty:
- Fine: ₹1,000 per day.
- Imprisonment: Up to 2 years (for officers).
8. Failure to File Annual Returns (Section 92(5))
Nature of Offence: Failure to file annual returns within the stipulated period.
Penalty:
- Fine: ₹50,000 to ₹5 Lakhs.
- Additional fine: ₹100 per day of default.
9. Mismanagement or Oppression (Section 241)
Nature of Offence: Activities prejudicial to the interest of the company, shareholders, or public.
Penalty: As per the discretion of the NCLT.
10. Unlawful Reduction of Share Capital (Section 66)
Nature of Offence: Reducing share capital without NCLT approval.
Penalty:
- Imprisonment: Up to 6 months.
- Fine: Up to ₹5 Lakhs.