Miscellaneous
Section 447. Punishment for fraud
447.
If any person is found guilty of committing fraud involving at least ₹10 lakh or 1% of the company’s turnover (whichever is lower), they can face severe punishment.
Imprisonment: The person must be imprisoned for a minimum of 6 months, and it can go up to 10 years.
Fine: The person must also pay a fine not less than the amount involved in the fraud, and it can go up to three times that amount.
If public interest is involved: The punishment becomes stricter and at least 3 years of imprisonment is mandatory.
Smaller frauds:
If the fraud involves less than ₹10 lakh or less than 1% of turnover, and does not involve public interest, the punishment is lighter:
Imprisonment may extend up to 5 years, or
Fine up to ₹50 lakh, or
Both imprisonment and fine.
Fraud means any act or omission done to deceive, hide facts, abuse one’s position, or gain unfair advantage, with the intent to cause wrongful gain or loss to anyone connected with the company.
It does not matter whether the person actually got the gain or caused the loss, only the intention and act are enough.
Wrongful gain - When someone gets property or benefit through unlawful means to which they are not legally entitled.
Wrongful loss - When someone loses property or benefit through unlawful means, even though they were legally entitled to it.
448. Punishment for false statement
If any person knowingly provides false information or hides important facts in any official document required under the Act, they will face punishment for fraud under Section 447.
If someone makes a statement that is false in any important detail, knowing that it is false; or
If someone leaves out or hides a material (important) fact, knowing that the omission could mislead others, then that person will be treated as having committed fraud.
This applies to all kinds of company documents like returns, reports, certificates, financial statements, and prospectuses that are required under the Companies Act or its rules.
449. Punishment for false evidence
It states that if a person intentionally lies or provides false information under oath or solemn affirmation, they will face criminal punishment.
This applies in two situations:
(a). When the false evidence is given during any examination on oath or solemn affirmation that is authorised under the Act.
(b). When the false evidence is given in an affidavit, deposition, or solemn affirmation in connection with the winding up of a company or any other matter
under the Companies Act.
If someone does this knowingly and deliberately, they will face:
Imprisonment for at least three years, which may extend up to seven years, and
A fine up to ten lakh rupees.
Section 450. Punishment where no specific penalty or punishment is provided
This section acts as a “general penalty” clause under the Companies Act, 2013.
It applies when a company or its officers violate any provision of the Act or its rules for which no specific punishment is mentioned elsewhere.
It says that if:
A company,
Any officer of the company, or
Any other person contravenes (i.e., breaks or fails to follow) any rule, direction, approval, sanction, or condition under this Act, and there is no separate penalty provided for that particular offence, then this general provision will apply.
The penalties are as follows:
A basic penalty of ₹10,000, and
If the contravention continues after the first day, there will be an additional penalty of ₹1,000 per day for each day the violation continues.
However, there is a cap on the penalty amount:
Maximum of ₹2,00,000 for the company, and
Maximum of ₹50,000 for an officer in default or any other person.
451. Punishment in case of repeated default
It states that if a company or any of its officers commits the same offence again within three years of a previous conviction for that offence, the punishment will be stricter.
Specifically:
When an offence is punishable with fine or imprisonment, and
The same offence is committed again within three years, then both the company and the officer in default will face double the fine prescribed for that offence.
In addition to this, if the offence also carries imprisonment, that punishment will still apply as provided for the original offence.
452. Punishment for wrongful withholding of property
452(1).
If any officer or employee of a company:
(a). Wrongfully takes possession of any company property (including cash), or
(b). Keeps company property in their possession and either refuses to return it or uses it for unauthorised purposes then:
Based on a complaint made by the company itself or by any of its members, creditors, or contributories, such a person can be fined.
The fine will be at least ₹1 lakh, but it can go up to ₹5 lakh.
452(2).
In addition to the fine, the Court handling the case can also:
Order the person to return or refund the property or money wrongfully held or misused,
Within a specific time decided by the Court, and
If the person fails to comply, they may be imprisoned for up to 2 years
However, the Court cannot order imprisonment for wrongful possession or withholding of a dwelling unit (house) if it finds that the company has not paid that employee any amount relating to:
Provident fund, pension fund, gratuity, or other employee welfare funds, or
Compensation under the Workmen’s Compensation Act, 1923 for death or disability.
Section 453. Punishment for improper use of “Limited” or “Private Limited”
If any individual or group of people conduct business using a name that ends with Limited or Private Limited without being legally registered as such a company, they are committing an offence.
So only a properly incorporated company registered under the Companies Act with limited liability has the legal right to use Limited (for public companies) or Private Limited (for private companies) in its name.
If anyone uses these terms without incorporation:
They can be fined at least ₹500.
The fine can go up to ₹2,000 for each day the name is used improperly.
Section 454. Adjudication of penalties
454(1).
The Central Government may, through an order published in the Official Gazette, appoint as many officers of the Central Government, not below the rank of Registrar, as adjudicating officers for the purpose of adjudging penalties under the Companies Act.
These appointments empower (give them power) such officers to determine and impose penalties for non-compliance or contraventions in the manner prescribed by rules framed under the Act.
454(2).
While appointing adjudicating officers under 454(1), the Central Government must specify their jurisdiction in the order itself.
This jurisdictional specification ensures clarity regarding the scope and territorial or subject-matter authority of each adjudicating officer.
454(3).
The adjudicating officer may, by passing an order, impose penalties on the company, its officer in default, or any other person, as the case may be.
The order must clearly state the nature of non-compliance or default under the relevant provisions of the Act.
The adjudicating officer may also direct the company, the officer, or the person concerned to rectify the default wherever considered appropriate.
When the default is about not filing:
The annual return under section 92(4.
The financial statements under section 137(1) or 137(2).
If the company or officer fixes (rectifies) this mistake, that is if they file the pending documents either before the adjudicating officer sends a notice, or within 30 days after receiving that notice,
Then, no penalty will be imposed for that default.
Once the default is rectified within this time, all proceedings for that default are considered closed and nothing further will be done against the company or officer for that lapse.
454(4).
Before imposing any penalty, the adjudicating officer must provide the company, the officer in default, or any other person concerned with a reasonable opportunity of being heard.
454(5).
Any person aggrieved by an order made by the adjudicating officer under 454(3) has the right to prefer an appeal to the Regional Director who has jurisdiction in the matter.
454(6).
An appeal under 454(5) must be filed within sixty days from the date on which a copy of the adjudicating officer’s order is received by the aggrieved person.
The appeal should be made in the prescribed form, follow the prescribed procedure, and be accompanied by the required fee as specified in the rules.
454(7).
The Regional Director, after providing both parties to the appeal with an opportunity of being heard, may pass such orders as deemed appropriate. The Regional Director may confirm, modify, or set aside the order appealed against. This ensures a structured appellate review of adjudication decisions.
454(8).
(i).
If a company does not comply with an order issued under Section 454(3) or Section 454(7) within 90 days from the date it receives the order, it faces penalties.
The company becomes liable for a fine of at least ₹25,000, which can go up to ₹5,00,000.
(ii).
If an officer of the company or any other person in default does not comply with an order issued under Section 454(3) or 454(7) within 90 days of receiving it, they face personal penalties.
The punishment may include:
Imprisonment for up to six months.
A fine of at least ₹25,000, which may go up to ₹1,00,000.
Both imprisonment and fine.
Section 454A. Penalty for repeated default
If a company, its officer, or any other person has already been penalized under any provision of the Companies Act, and
Commits the same default again within three years from the date of the earlier penalty order
(whether the order was passed by the Adjudicating Officer or the Regional Director), then:
the law treats this as a repeated default and imposes a stricter (higher) penalty for the second violation.
Specifically, the penalty for the second or any subsequent default will be twice the amount of the penalty that is prescribed for that particular default.
So , if you repeat the same mistake within three years of being penalized the first time, you’ll have to pay double the original penalty.
Section 455. Dormant company
455(1).
This subsection explains when and how a company can obtain the status of a dormant company.
A company may apply to the Registrar to be classified as dormant if it is:
Formed for a future project.
Established to hold an asset or intellectual property.
Has no significant accounting transactions.
The section also defines key terms:
An inactive company is one that:
Has not carried on any business or operations.
Has not made any significant accounting transaction in the last two financial years.
Has not filed its financial statements and annual returns for the same period.
A significant accounting transaction is any transaction other than the following routine actions:
(a). Paying fees to the Registrar.
(b). Payments made to comply with the Companies Act or any other law.
(c). Allotment of shares to meet legal requirements.
(d). Payments made for maintaining the company’s office or records.
Essentially, this allows companies that are not yet operational or only holding assets to be recognized as dormant, reducing their compliance burden until they become active.
455(2).
Once an eligible company submits an application in the prescribed manner, the Registrar of Companies may grant the dormant company status.
The status is granted after due consideration.
The Registrar then issues a certificate of dormancy in the prescribed format.
This certificate formally confirms the company’s dormant status.
455(3).
The Registrar is required to maintain an official register of dormant companies.
This register serves as a record of all companies that have been granted dormant status under the Act.
455(4).
If a company has failed to file its financial statements or annual returns for two consecutive financial years, the Registrar may, on his own:
Issue a notice to that company and record its name in the register of dormant companies.
So. a company can be marked dormant even without its own application if it remains inactive for too long.
455(5).
A dormant company must continue to comply with certain minimal requirements to retain its status.
It must:
Maintain a minimum number of directors.
File the necessary documents with the Registrar.
Pay a prescribed annual fee.
If a dormant company later decides to resume operations, it can apply to the Registrar to restore active company status, by submitting the required documents and paying the prescribed fee.
455(6).
If a dormant company fails to comply with the requirements mentioned above—such as maintaining directors, filing documents, or paying fees then:
The Registrar has the authority to strike off the name of that company from the register of dormant companies.
Section 456. Protection of action taken in good faith
No lawsuit, criminal prosecution, or other legal proceedings can be initiated against the Central Government, any Government officer, or any other individual for actions they have carried out honestly and with due intention under the Act, its rules, or any orders issued under it.
This protection also extends to the publication of any report, paper, or proceedings made or authorized by the Government or its officers under the Act.
This is done so, government officials and other authorized persons can perform their duties under the Companies Act without fear of personal legal consequences, as long as their actions are genuine and not driven by bad intent.
Section 457. Non-disclosure of information in certain cases
Even if any other law requires disclosure, the Registrar of Companies, any Government officer, or any other person cannot be forced by a court, Tribunal, or any authority to reveal where or from whom they obtained certain information, if that information:
(a).
Led the Central Government to order an investigation under Section 210.
Section 210 deals with the Government’s power to investigate the affairs of a company.
(b)
Was material or relevant in connection with such an investigation.
Section 458. Delegation by Central Government of its powers and functions
458(1).
The Central Government is empowered to delegate its powers or functions under the Companies Act, 2013, to another authority or officer, through an official notification.
However, this delegation is subject to any conditions, limitations, or restrictions specified in that notification.
Importantly, the power to make rules under the Act cannot be delegated and that authority remains exclusively with the Central Government.
458(2).
After issuing such a notification under 458(1), the Central Government must ensure that a copy of the notification is made publicly available typically through publication or other official means as soon as possible after it is issued.
Section 459. Powers of Central Government of Tribunal to accord approval, etc., subject to conditions and to prescribe fees on applications
459(1).
The Central Government or the Tribunal the authority to attach conditions, limitations, or restrictions when granting certain approvals, permissions, or exemptions under the Companies Act, 2013.
Specifically, whenever the Act requires or authorizes the Central Government or the Tribunal to:
(a). Grant approval, sanction, consent, confirmation, or recognition in relation to any matter.
(b). Issue directions concerning any matter.
(c). Provide exemptions regarding any matter, these authorities may do so subject to specific terms or conditions they consider appropriate.
Additionally, if the company or individual violates any such imposed condition, the Government or Tribunal has the right to rescind (cancel) or withdraw the approval, sanction, or exemption that was granted earlier.
459(2).
Unless otherwise specified in the Act, every application made to the Central Government or the Tribunal for any of the following purposes must be accompanied by a prescribed fee:
(a). To seek approval, sanction, consent, confirmation, or recognition.
(b). To request a direction or exemption from the Government or Tribunal.
(c). To address any other related matter under the Companies Act.
The fee amount will be set by rules prescribed under the Act, and it may vary depending on the nature of the application or the class of company submitting it.
Section 460. Condonation of delay in certain cases
460(a).
The Central Government has the power to condone (forgive or overlook) delays in submitting applications that are required to be made under the Companies Act, even if the application was not filed within the time limit specified by the law.
If a company or individual fails to submit such an application on time, the Central Government may, for valid reasons recorded in writing, allow the delay to be excused.
460(b).
Similarly the Central Government is also allowed to condone delays in filing documents that are required to be submitted to the ROC within a prescribed time under the Act.
If a company fails to file a document such as annual returns, financial statements, or any statutory form within the specified period, the Central Government may, after recording its reasons in writing, excuse the delay.
Section 461. Annual report by Central Government
The Central Government must prepare an annual report detailing the working and administration of the Companies Act.
The report should include information about how the Act has been implemented, key developments, compliance statistics, enforcement actions, and any other relevant administrative details for that year.
Once prepared, the Central Government is required to lay this report before both Houses of Parliament the Lok Sabha and the Rajya Sabha within one year from the end of the financial year to which the report pertains.
Section 462. Power to exempt class or classes of companies from provisions of this Act
462(1).
The Central Government is empowered to exempt certain class or classes of companies from the application of specific provisions of the Companies Act, 2013.
Such exemptions can be granted in the public interest, and may take two forms:
The provisions of the Act may not apply at all to a particular class of companies.
The provisions may apply with certain exceptions, modifications, or adaptations, as specified in the government’s notification.
462(2).
Before issuing such a notification, the Central Government must first present a draft of it before both Houses of Parliament, the Lok Sabha and the Rajya Sabha while they are in session.
The draft must remain before Parliament for a total of thirty days.
If both Houses disapprove the notification, it cannot be issued.
If both Houses suggest modifications, the notification may be issued only in the modified form agreed upon by both.
462(3).
When calculating the thirty-day period, any time during which either House is prorogued (formally ended) or adjourned for more than four consecutive days will not be counted.
462(4).
After a notification is finally issued, copies must be laid before both Houses of Parliament as soon as possible.
Section 463. Power of court to grant relief in certain cases
463(1).
The court has the power to grant relief to an officer of a company who is facing legal proceedings for negligence, default, breach of duty, misfeasance, or breach of trust.
If, during the proceedings, the court finds that:
The officer may be technically liable for the act in question,
But he acted honestly and reasonably, and
Considering all the circumstances including his position, responsibilities, and the situation under which the act occurred and it would be fair to excuse him,then the court may partially or completely relieve him from liability.
This relief can be given on such terms as the court deems fit, such as payment of partial damages or compliance conditions.
However, If the case is a criminal proceeding, the court cannot use this power to grant relief from any civil liability that may arise from the same act.
In other words, relief under this section is limited and cannot override civil consequences of a criminal act.
463(2).
An officer is allowed to proactively seek relief before any proceedings are actually initiated.
If an officer anticipates that proceedings might be brought against him for negligence, default, breach of duty, misfeasance, or breach of trust, he can apply to the High Court for relief.
The High Court has the same powers to grant relief under this subsection as any court would have had during a regular proceeding under sub-section (1).
463(3).
No court can grant relief under 463(1) or 463(2) unless it has:
Served notice to the Registrar of Companies (ROC), and
Given an opportunity to any other relevant person (as the court considers necessary) to show cause why such relief should not be granted.
Section 464. Prohibition of association or partnership of persons exceeding certain number
464(1).
There is a limit on the number of people who can come together to form an association or partnership for carrying on a business with the intention of earning profit.
No association or partnership having more than the prescribed number of persons can be formed unless it is registered as a company under the Companies Act or formed under any other valid law.
The maximum limit of members that can be prescribed under this rule cannot exceed 100.
464(2).
There are exceptions to the above rule.
The restriction in 464(1) does not apply to:
(a).
A Hindu Undivided Family (HUF) carrying on any business since an HUF is not considered an association or partnership in the legal sense.
(b).
An association or partnership of professionals who are governed by special Acts, such as the Chartered Accountants Act, Advocates Act, or Doctors under the Medical Council Act.
These professional bodies have their own regulatory framework, so they are exempt from the general restriction.
464(3)
Under circumstances 464(1) is violated , then the penalty is as follows:
If any association or partnership is formed with more members than permitted without being registered as a company or under another law, then:
Each member involved in the association or partnership is punishable with a fine that may extend up to ₹1,00,000.
They are personally liable for all liabilities incurred in the business.
Section 465. Repeal of certain enactments and savings
465(1).
This section repeals the Companies Act, 1956 and the Registration of Companies (Sikkim) Act, 1961.
However, it allows the provisions of the 1956 Act to continue temporarily until the Central Government notifies a date for transferring all pending matters to the Tribunal under Section 434(1).
Similarly, certain provisions of the 1956 Act will also continue to apply to Limited Liability Partnerships (LLPs) until corresponding provisions under this Act are notified.
465(2).
Despite the repeal, several protections (called “savings”) ensure continuity and validity of actions taken under the old laws:
(a). Anything done such as rules, notifications, orders, appointments, or penalties under the old Acts will remain valid, as long as it doesn’t conflict with the new Companies Act, 2013.
(b). All rules, notifications, agreements, resolutions, and directions that were in force when this Act began will continue to remain effective as if made under the 2013 Act.
(c). Existing legal principles, customs, court practices, and procedures remain unaffected even if they were based on the repealed Acts.
(d). Officers appointed under the repealed Acts are deemed to have been appointed under this Act.
(e). Any rights or privileges that had ceased to exist before this Act came into force will not be revived.
(f). Existing company registration offices will continue and be treated as established under the new Act.
(g). All companies registered under the repealed Acts will be treated as registered under the 2013 Act.
(h). All registers and funds established under the old Acts will be considered as made under this Act.
(i). Any prosecution pending before the commencement of this Act will continue under the same court.
(j). Any inspection, inquiry, or investigation ordered under the 1956 Act will continue as if ordered under this Act.
(k). Any matter already filed with the Registrar, Regional Director, or Central Government under the 1956 Act will be completed under that Act, despite its repeal.
465(3).
The above savings are in addition to the general protections given under Section 6 of the General Clauses Act, 1897, which applies to repeals.
It also treats the Registration of Companies (Sikkim) Act, 1961 as a Central Act for this purpose.
Section 466. Dissolution of Company Law Board and consequential provisions
466(1).
This section provides for the dissolution of the Company Law Board (CLB) once the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) are constituted.
The Company Law Board (created under the Companies Act, 1956) will automatically stand dissolved upon the constitution of these new bodies.
However, until the Tribunal and Appellate Tribunal are actually set up, the Chairman, Vice-Chairman, and Members of the CLB who meet the eligibility criteria for appointment under this Act will continue functioning as the President, Chairperson, or Members of the new Tribunal or Appellate Tribunal.
Additional provisions for officers and employees:
(i).
Officers or employees appointed on deputation to the CLB will:
Become officers/employees of the NCLT or NCLAT if they meet the required qualifications.
Return to their parent department if they do not..
(ii).
Employees appointed on a regular basis by the CLB will automatically become employees of the NCLT or NCLAT with the same rights and benefits as before.
They will continue in service unless lawfully removed or their terms are modified.
(iii).
Such employees cannot claim any compensation for transfer or termination under the Industrial Disputes Act, 1947 or any other law.
(iv).
Any funds such as provident fund, pension, or welfare fund maintained by the CLB will be transferred to the NCLT or NCLAT, and these tribunals will manage those funds as prescribed.
466(2).
Any person who was serving as Chairman, Vice-Chairman, Member, officer, or employee of the CLB and is not covered by the above provisions will vacate their office once the Tribunal and Appellate Tribunal are constituted.
They cannot claim compensation for early termination of their term or employment contract.
Section 467. Power of Central Government to amend Schedules
467(1).
The Central Government has the power to make changes or amendments to the Schedules of the Companies Act, 2013.
The government can, through a notification, alter any regulations, rules, Tables, forms, or other provisions that are contained in the Schedules of the Act.
467(2).
Any alteration made and notified by the Central Government under 467(1) will be treated as if it were part of the Act itself.
It will take effect immediately from the date of notification, unless the notification specifies a different date for it to come into force.
However, if the government later changes or updates Table F which is the model set of Articles of Association meant for companies limited by shares , then those new changes will not automatically apply to companies that were already registered before the change was made.
467(3).
To maintain Parliamentary oversight, every alteration made by the Central Government must be placed before both Houses of Parliament as soon as possible after it is made.
The notification must remain before Parliament for a total period of 30 days, which can span one or more sessions.
If, before the end of the session immediately following this period, both Houses agree either:
To modify the alteration, or
To disapprove it entirely, then the alteration will only take effect in the modified form or will become ineffective, as the case may be.
However, such modification or annulment will not affect the validity of any actions or decisions that were lawfully taken before the alteration was modified or annulled.
Section 468. Power of Central Government to make rules relating to winding up
468(1).
The Central Government has the authority to make rules concerning the winding up of companies (i.e., the process of closing a company and settling its affairs).
These rules must be consistent with the Code of Civil Procedure, 1908, ensuring fairness and proper legal process.
The Central Government can frame rules for all matters related to winding up that are required to be prescribed under the Companies Act.
468(2).
This clause elaborates on what kinds of specific matters the Central Government can make rules about.
Without limiting the general power, the rules may cover things like:
The procedure for winding up - How Tribunal proceedings for winding up should be conducted.
Meetings of creditors and members - How meetings should be held for arrangements or compromises under Section 230.
Reduction of share capital - Steps to implement provisions related to capital reduction.
Applications to the Tribunal - Procedures for all types of applications made under the Act.
Meetings of creditors/contributories - How to conduct meetings to determine their opinions or decisions.
List of contributories - How to prepare and correct the list of people liable to contribute to the company’s assets and how to collect and distribute assets.
Transfer of company property - Rules for transferring or delivering company money, property, books, and records to the liquidator.
Making of calls - The process by which the liquidator can call on contributories to pay amounts due.
Time limits for proving debts and claims - The time frame within which creditors must prove their debts or claims.
468(3).
Before the Companies Act, 2013 came into force, the Supreme Court had already made rules on matters related to winding up under the previous Companies Act, 1956.
These existing rules will continue to apply temporarily until the Central Government issues new rules under this section.
However, in those old rules, any reference to the High Court must now be read as a reference to the National Company Law Tribunal (NCLT), which is the new authority handling such matters.
Section 469. Power of Central Government to make rules
469(1).
While the Act lays down the broad principles and legal framework, the detailed procedures and operational requirements are to be defined through rules made by the Central Government via official notification.
469(2).
This clause further clarifies the scope of the rule-making power.
It states that, without limiting the general authority under 469(1), the Central Government may make rules regarding any specific matter that:
The Act requires to be prescribed by rules, or
The Act allows to be prescribed by rules.
In other words, whenever the Act says something “shall be prescribed,” or “may be prescribed,” it refers to rules that the Central Government can issue under this power.
469(3).
If any person contravenes a rule, they may be punished with a fine up to ₹5,000.
If the contravention continues after the first offence, an additional fine up to ₹500 per day can be imposed for every day the violation continues.
469(4).
This sub-section introduces Parliamentary oversight over the rules and regulations made under the Act.
It mandates that every rule made by the Central Government, and every regulation made by the Securities and Exchange Board of India (SEBI) under this Act, must be laid before both Houses of Parliament (Lok Sabha and Rajya Sabha).
The rule or regulation must be presented for a total of 30 days, which can be spread across one or more sessions.
If, before the end of the session following this period, both Houses agree to modify or disapprove the rule/regulation, then it will either take effect in the modified form or cease to have effect, depending on Parliament’s decision.
However, any actions already taken under the rule or regulation before its modification or annulment remain valid.
Section 470. Power to remove difficulties
470(1).
Central Government has the authority to address and resolve any practical difficulties that may arise in implementing or giving effect to the provisions of the Companies Act, 2013.
If such a difficulty occurs, the Central Government may issue an order, published in the Official Gazette, to make such provisions as it considers necessary or expedient for removing the difficulty.
However, there are two key limitations:
The order must not be inconsistent with the provisions of the Act. This means the Government cannot override or alter the intent of the law.
Additionally, the power to issue such orders is time-bound and no order can be made after five years from the commencement of section 1 of the Act.
Therefore, the power to remove difficulties is only a temporary measure to smoothen the transition and implementation process after the Act comes into force, and not an ongoing legislative power.
470(2).
The Parliamentary has an oversight over the exercise of this power.
Every order made under 470(1) must be laid before both Houses of Parliament (Lok Sabha and Rajya Sabha) as soon as possible after it is issued.
