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TMI BlogProsecution of Directors – RegardingX X X X Extracts X X X X X X X X Extracts X X X X ..... ficer in default and the Directors are also liable for compliance of various provisions of the Act. 2. It is noticed that penal actions are also initiated against certain Directors who are not charge with the responsibility, particularly in following cases : -- (a) For listed companies Securities and Exchange Board of India (SEBI) requires nomination of certain Directors designated as Independent Directors. (b) For public sector undertakings, respective Government nominates Directors on behalf of the respective Government. (c) Various public sector financial institutions having participation in equity of a company also nominate Directors to the Board of such companies. (d) Directors nominated by the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her documents of the company, available with Registrar, the same should be cross checked with the Annual Report filed by the company; (c) The timing of the commission of offence is also material to identify the director s responsibility; and Form 1AB should also be checked in case any person has been charged by the Board under Section 5(f) with the responsibility of complying with some particular provision or in case any director has been specified by the Board under Section 5(g) of the Act. (d) Special Directors appointed by BIFR under section 16 (6)(b) of SICA 1985, shall not incur any obligation or liability for anything done or omitted to be done in good faith and in discharge of duties. Hence they shall be excluded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly or not. (f) Where prosecution is required to be filed against any Government company, its directors/officers and Member of Parliament and Member of Legislator under the Companies Act, 1956, Registrar of Companies should seek prior authorization of Central Government in terms of Section 621 of the Act 5. There should be proper application of mind on the part of Registrar of Companies in deciding whether a person to be implicated is an officer in default by examining the Annual Return, Form 32(s) and DIN database available in the Registry. The guidelines issued herein above should be applied and wrongful prosecution should be avoided. Wherever the Registrar of Companies have doubt as to whether director/officer can be held l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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