Officer in Default 2(60) Under Companies Act 2013 – StartupChoice

Officer in Default 2(60) Under Companies Act 2013 – StartupChoice

The Companies Act, 2013 has increased monetary penalties and imprisonment. The civil and criminal liabilities are not just on directors but also include “Officers In Default”. There is heightened corporate governance requirements even for startups and unlisted companies, even though there is no public money invested.

With a view of making provisions of the Companies Act, 2013 more stringent and for making key officials of the companies more responsible, the definition of the term officer in default has been amended and now includes certain authorized persons of the company.

Officer who is in default”, for the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any penalty or punishment by way of imprisonment, fine or otherwise.

Following Officers are Included:

  • whole-time director;
  • key managerial personnel;
  • Where there are no key managerial personnel, directors specifically appointed.
  • any person charged with the specific responsibility or any Key managerial personnel, is charged with any responsibility including maintenance, filing or distribution of accounts or records, authorizes, actively participates in, knowingly permits, or knowingly fails to take active steps to prevent, any default;
  • any person as per whose advice, directions or instructions the BOD acts,;
  • every director, in respect of a contravention of any of the provisions of this Act, who is aware of such contravention by virtue of the receipt by him any proceedings of the Board or participation in such proceedings without objecting to the same, or where such contravention had taken place with his consent or connivance;
  • in respect of the issue or transfer of any shares of a company, the Share transfer agents, registrars and merchant bankers to the issue or transfer;

(As per Section 149 (12) an independent director, notwithstanding anything contained in the Act shall be held liable only in respect of such acts of omission or commission by company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently.

Diligence not defined in the Act, hence dictionary meaning. It means the application of due care and caution, conscientiousness.

Director under clause (vi) includes MD and WTD also. No exemption available to KMPs.)


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