Penalties for Non explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Here's something most directors of small private companies don't know.
Almost every penalty provision in the Companies Act reads "the company and every officer in default". If your company has no key managerial personnel — and most private companies don't — and your Board has never passed a resolution naming who the officer in default is, then the answer is: all of you. Every director, personally, on every penalty.
Fixing that takes one agenda item at one board meeting. Most companies have never done it.
Most defaults are now penalties, not prosecutions — imposed by the ROC administratively under Section 454, with no court and no criminal record, but also no discretion to waive. Continuing defaults run per day. Small companies get half under Section 446B, capped. The thing that outlives every penalty is director disqualification under Section 164(2) — automatic, five years, across every board you sit on.
Who actually pays — the company or you?
Section 2(60) defines "officer in default", and it's broader than most people assume. It covers:
- every whole-time director;
- every key managerial person;
- where there's no KMP — the director or directors the Board has specified and who've consented in writing, or all the directors if none is specified;
- anyone charged by the Board or a KMP with responsibility for accounts or records, who authorised, participated in, knowingly permitted, or knowingly failed to prevent the default;
- anyone on whose advice or instructions the Board is accustomed to act (professionals acting professionally are excluded);
- every director who knew of the contravention through Board papers or participated without objecting, or where it happened with their consent or connivance;
- for share issues and transfers, the transfer agent, registrar and merchant banker.
The third limb is the one that bites. No KMP, no Board resolution specifying a director, no written consent from that director — and the default position is that every single director is an officer in default.
So do this: pass a Board resolution under Section 2(60)(iii) naming the director who'll be the officer in default, get their written consent, and minute it. Five minutes. It changes the personal exposure of everyone else on the board.
Independent and non-executive directors already have statutory protection under the proviso to Section 149(12) — they're liable only for what happened with their knowledge, attributable through Board processes, with their consent or connivance, or where they didn't act diligently.
What changed when penalties were decriminalised?
Between 2018 and 2020, a long list of defaults stopped being offences — prosecuted in a criminal court, punishable with fine or imprisonment — and became penalties, imposed administratively by the Registrar.
The good news: no court, no summons, no criminal record.
The bad news: there's no discretion to let it go. A prosecutor can decline to prosecute. An adjudicating officer applies the section. And because continuing defaults accrue per day, a forgotten filing compounds quietly in the background until somebody finally looks.
The section-wise chart
Amounts below are the statutory positions. Section 446B relief comes on top for small companies, OPCs and start-ups.
Incorporation and registered office
| Default | Section | Penalty |
|---|---|---|
| Commencing business without filing the declaration | 10A(2) | Company ₹50,000; officer in default ₹1,000/day up to ₹1,00,000 |
| No registered office / Section 12 not complied with | 12(8) | Company and every officer ₹1,000/day up to ₹1,00,000 |
| False information at incorporation | 7(5), 7(6) | Fraud liability under Section 447 |
Shares, securities and deposits
| Default | Section | Penalty |
|---|---|---|
| Allotment defaults under Section 39 | 39(5) | ₹1,000/day up to ₹1,00,000 |
| Private placement contravention | 42(10) | Company, promoters and directors: amount raised or ₹2 crore, whichever is lower — plus refund with interest in 30 days |
| Share certificates not issued | 56(6) | Company ₹50,000; every officer ₹50,000 |
| Deposit contravention | 76A | Company: minimum ₹1 crore or twice the deposits, whichever is lower, up to ₹10 crore. Officer: imprisonment up to 7 years and ₹25 lakh to ₹2 crore |
Read that last row again. Section 76A keeps its criminal limb and carries a floor higher than most private companies' net worth. Deposits — which includes director loans without the right paperwork — is not an area to improvise in.
Meetings, minutes and registers
| Default | Section | Penalty |
|---|---|---|
| Section 88 registers not maintained | 88(5) | Company and every officer, as prescribed |
| Annual return not filed | 92(5) | ₹10,000 + ₹100/day; max ₹2,00,000 company, ₹50,000 officer |
| Inspection or copies refused | 94(4) | ₹1,000/day up to ₹1,00,000 |
| AGM not held | 99 | Up to ₹1,00,000, plus ₹5,000/day continuing |
| Minutes not maintained | 118(11) | Company ₹25,000; every officer ₹5,000 |
| Tampering with minutes | 118(12) | Imprisonment up to 2 years and ₹25,000 to ₹1,00,000 |
| Board meetings / notice not given | 173(4) | Officer whose duty it was: ₹25,000 |
Accounts and audit
| Default | Section | Penalty |
|---|---|---|
| Books of account not maintained | 128(6) | MD, WTD (finance), CFO or person charged: ₹50,000 |
| Financial statements not Section 129 compliant | 129(7) | Same officers: ₹50,000 |
| Board's Report defaults | 134(8) | Company ₹3,00,000; every officer ₹50,000 |
| CSR unspent amount not transferred | 135(7) | Company: twice the unspent amount or ₹1 crore, whichever is less. Officer: one-tenth or ₹2 lakh, whichever is less |
| Financial statements not filed | 137(3) | Company ₹10,000 + ₹100/day up to ₹2,00,000. MD/CFO, else directors charged, else all directors: ₹10,000 + ₹100/day up to ₹50,000 |
| Auditor not appointed | 147(1) | Company ₹25,000–₹5,00,000; every officer ₹10,000–₹1,00,000 |
| Auditor's contraventions | 147(2) | Auditor ₹25,000–₹5,00,000 or 4× remuneration, whichever is less |
Directors and related parties
| Default | Section | Penalty |
|---|---|---|
| Failure to vacate office when required | 167(2) | Imprisonment up to 1 year, or ₹1,00,000–₹5,00,000, or both |
| Register of directors not maintained | 172 | ₹50,000 + ₹500/day up to ₹3,00,000 |
| Interest not disclosed under Section 184 | 184(4) | Director: ₹1,00,000 |
| Loans to directors | 185(4) | Company ₹5,00,000–₹25,00,000. Officer and the recipient: imprisonment up to 6 months, or the same fine range, or both |
| Section 186 contravention | 186(13) | Company ₹25,000–₹5,00,000; every officer imprisonment up to 2 years and ₹25,000–₹1,00,000 |
| Related party transaction breach | 188(5) | Director or employee concerned: ₹5,00,000 for an unlisted company |
Significant beneficial ownership
| Default | Section | Penalty |
|---|---|---|
| SBO doesn't declare | 90(10) | ₹50,000 + ₹1,000/day up to ₹2,00,000 |
| Company doesn't keep the register or file the return | 90(11) | ₹1,00,000 + ₹500/day; max ₹5,00,000 company, ₹2,00,000 officer |
| False declaration | 90(12) | Fraud liability under Section 447 |
What if the section doesn't state a penalty?
Then Section 450 fills the gap. It's the catch-all:
₹10,000 on the company and every officer in default, plus ₹1,000 for each day the contravention continues after the first — capped at ₹2,00,000 for a company and ₹50,000 for an officer.
So there's no such thing as a breach with no consequence. If you can't find a penalty attached to the section you've breached, look at 450. More on Section 450 →
Does being a small company halve it?
Mostly, yes — but read the limits.
Section 446B says that a One Person Company, small company, start-up or Producer Company, its officers in default, or any other person in respect of such a company, is liable to not more than one-half of the specified penalty, subject to a maximum of:
- ₹2,00,000 for the company, and
- ₹1,00,000 for an officer in default or any other person.
Two catches:
It only applies to penalties. Not to provisions punishable with fine or imprisonment. So Section 185, Section 186(13) and Section 76A keep their criminal limbs intact — 446B does nothing for those.
You have to actually qualify. A small company under Section 2(85) means paid-up capital of ₹4 crore or less and turnover of ₹40 crore or less — and you must not be a holding company, a subsidiary, a Section 8 company, or governed by a special Act. Being a subsidiary alone knocks you out, whatever your size. Small company thresholds explained →
How does a penalty actually get imposed?
It's adjudicated, not prosecuted. The sequence under Section 454:
- The Central Government appoints adjudicating officers — in practice, Registrars of Companies.
- The officer issues a show-cause notice to the company and the officers in default, giving between 15 and 30 days to reply.
- You may make a written representation and ask for a personal hearing.
- The officer passes an order imposing the penalty and directing you to rectify the default.
- Payment within 90 days of the order.
- Appeal to the Regional Director within 60 days, in Form ADJ. The RD can confirm, modify or set aside.
- Don't pay, and Section 454(8) adds a fine of ₹25,000–₹5,00,000 on the company and ₹25,000–₹1,00,000, or up to six months' imprisonment, or both, on the officer.
One thing to know before you decide how to respond: adjudication orders are published on the MCA website. They're public, searchable, and they turn up in diligence years later. How adjudication works →
Can you settle an old default?
Sometimes. Compounding under Section 441 lets you settle an offence by paying a sum, without prosecution:
- by the Regional Director where the maximum fine doesn't exceed ₹25 lakh;
- by the NCLT in any other case.
But an offence punishable with imprisonment only, or with imprisonment and fine, can't be compounded. And you can't compound the same offence again within three years of compounding a similar one.
Compounding is the standard route for legacy defaults that surface during diligence or a change of control. It's voluntary, it's disclosed, and it ends the exposure — which is usually what a buyer wants to see.
The one consequence money can't fix
Every penalty above is finite. You pay it and it's over.
Director disqualification isn't.
Under Section 164(2)(a), anyone who is or has been a director of a company that hasn't filed its financial statements or annual returns for three continuous financial years is ineligible to be appointed or re-appointed as a director — of that company or any other company — for five years.
Under 164(2)(b), the same follows where the company has failed to repay deposits, redeem debentures, pay interest or pay a declared dividend, and the failure has continued for a year or more.
It's automatic. There's no order, no notice, no adjudication. And it attaches to the individual, across every directorship they hold.
This is why a dormant, unfiled shell company sitting in a founder's history blocks their appointment to a completely unrelated board years later.
Then Section 167(1)(a) kicks in: the office of a director becomes vacant on incurring a Section 164 disqualification — and continuing to act after that is punishable under 167(2), which includes imprisonment.
Key takeaways
- With no KMP and no Board resolution, every director is an officer in default. Pass the resolution.
- Penalties aren't prosecutions — but there's no discretion to waive them either.
- Continuing defaults run per day. ₹100/day on the annual return and financial statements; ₹5,000/day for not holding an AGM.
- Section 450 is the catch-all — ₹10,000 plus ₹1,000/day where no specific penalty exists.
- Section 446B halves penalties for small companies, capped at ₹2 lakh / ₹1 lakh — but does nothing for fines or imprisonment.
- Adjudication orders are published on the MCA site and show up in diligence.
- Three years of missed annual filings disqualifies every director for five years, automatically, everywhere.
Read next
- Compliance Checklist for a Private Limited Company
- Annual Compliance Calendar for Private Companies
- Statutory Registers a Private Company Must Maintain
- Section 450: The General Penalty Provision
- Section 454: Adjudication of Penalties by the ROC
- Section 446B: Lesser Penalties for Small Companies and OPCs
- MCA Additional Fees for Late Filing
Disclaimer: Penalty amounts stated as on 4 September 2026 and subject to amendment. The Act has been amended repeatedly to decriminalise and recalibrate penalties — always check the current text of the section before relying on an amount. General information, not legal advice.