Composition of offences - Scope of provision - Companies Law - Circular : No. 5 of 1993,

Circular : No. 5 of 1993, dated 28-4-1993. Subject:- Composition of offences - Scope of provision Under section 621A of the Companies Act, 1956, inserted by the Companies (Amendment) Act, 1988, with effect from 31st May, 1991, offences under the Companies Act, which are not punishable with compulsory imprisonment are compoundable by the Regional Director, where the maximum amount of fine is up to Rs. 5,000 or by the Company Law Board, where the maximum amount of fine exceeds Rs. 5,000. The salient features of these provisions of law are indicated below for the benefit of your constituent member-companies and their directors : (a) The offences punishable with imprisonment only or with imprisonment and also with fine are not compoundable. Offences which are punishable with fine or imprisonment or both are, however, compoundable. (b) As per procedure, an application for compounding is to be made by the delinquent company and/or its officers in default to the Registrar of Companies concerned, who shall forward the same together with his comments thereon to the Company Law Board or Regional Director, as the case may be. (c) When a particular offence is so compounded, no prosecution shall be filed thereafter in relation to such an offence. (d) In case prosecution is pending before the Court, it is open to the company and officers in default being prosecuted to make an application for compounding and after the offence is so compounded, the Court shall discharge the company/its officers, as the case may be. (e) While compounding the offence, the Company Law Board/Regional Director, may direct any officer of the company to file a return or other document(s) in question within such time, as may be specified in the order and non-compliance of the order shall be a punishable offence. (f) Compounding of an offence does not amount to conviction by a Court of law and the prohibition contained in paragraph 1(a) in Schedule XIII to the Act does not apply. (g) It is open to the Company Law Board/Regional Director to compound more than one offence under one charging section at a time and from the date of such compounding, a similar offence committed subsequent to the date of compounding of this first offence, cannot be compounded within a period of three years from that date. (h) In the case of the company, the composition fee shall be paid from its funds. Directors/Officers in default shall pay the composition fee from their personal funds.