COMPOUNDING OF OFFENCE

“Compounding” means a way to settle the case down as mutually decided by the parties involved wherein the complainant agrees to take back the complaint filed against the accused and agrees not to act against the accused. The accused and the complainant then make a joint application to the Tribunal/ Regional Director/ Court as the case may be that the parties have mutually come to the terms and the case may not be proceeded with.

The term “offence” is not defined under Companies Act, 2013. It has been defined under Section 3(38) of General Clauses Act, 1897, “Offence” shall mean any act or omission made punishable by any law for the time being in force.

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    What is Compoundable Offence ?

    Any offence which has been committed whether by a Company or any officer thereof punishable with fine only or with fine or imprisonment or both under the Companies Act, 2013.

    It is further bifurcated into following classes:

    1. Compounding without the permission of the Court– Examples of these offences include adultery, causing hurt, defamation criminal trespass.
    2. Court permission is required before compounding – Examples of such offences are theft, voluntarily causing grievous hurt, assault on a woman with intention to outrage her modesty, dishonest misappropriation of property amongst others, criminal breach of trust.

    What is Non Compoundable Offence ?

    Any offence which has been committed whether by a Company or any officer thereof punishable with imprisonment only or fine and imprisonment both under the Companies Act, 2013.

    Compounding of Offence

    Section 441 of the Companies Act, 2013 deals with compounding of certain offences:

    • Offences punishable with fine only; or
    • Offences punishable with imprisonment or fine.

    The compounding of offence can be done only after payment of the penalty as imposed under the Companies Act, 2013. The compounding amount shall not exceed the maximum amount of fine that may be imposed for the offence. Compounding can be done by-

    • National Company Law Tribunal (NCLT)
    • Regional Director or any officer authorised by the Central Government
    • Special Court

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    Procedural aspect for application for Compounding:

    The application of compounding shall be made to the Registrar of Companies along with its comments and also forward the same to the Tribunal or Regional Director or any officer authorised by the Central Government, as the case may be.

    Intimation in respect of any offence which is compounded under this section whether before or after institution of any prosecution shall be given by the Company to the Registrar within a period of 7 days from the date on which the offence is so compounded.

    No prosecution shall be instituted in relation to any offence either by the Registrar or shareholder or any person authorised by Central Government against the offender which has been compounded before institution of any prosecution

    Circumstances where compounding not possible:

    • Any offence punishable under this Act with imprisonment only or with imprisonment and fine both shall not be compoundable
    • The offence shall not be compounded, in case if any investigation has been initiated or pending against the Company.
    • Any offence shall not be compounded, in case if any similar offence has been committed and has been compounded and a period of 3 years has not been elapsed.

    Penalty for non-Compliance in filing of order:

    If any officer or employee of the Company fails to comply with any order under this Section either by the Tribunal, Regional Director or any other officer authorised by the Central Government punishable with fine not exceeding One lakh rupees or imprisonment maximum for 6 months, or with both.

    Hence, it would always advisable to the Company to make the compliance on time and remains fully compliant with the provisions of the Act.

    How SmartBizGuru will help you in it ?

    Smartbizguru also helps in posting compliance of the Company like appointing a Auditor, Preparing Finance of the Company, Filing of GST Returns and Other Returns to Government Authority, Registrar of Company (ROC) Compliances, and Consultation on Digital Market solutions. 

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