There are defaults under Companies Act, 2013 which provides for certain liabilities and accordingly, the Registrar has the power to initiate prosecution against the company and its directors and other officers in accordance with the provisions of the law. Whenever the default occurs or the provision is violated, the Directors may, apply to get the offence compounded, if the offence in question is a compoundable offence. Compounding of an offence is a settlement mechanism, by which, the offender is given an option to pay money in lieu of his prosecution, thereby avoiding a prolonged litigation.

Meaning: Compounding refers to the process of voluntarily admitting the contravention, pleading guilty and seeking redressal by way of paying money in lieu of prosecution.

Section 441 of the Companies Act, 2013 deals with the provisions related to Compounding of offences by Companies. Offences are divided under two categories for this purpose:

Compoundable offences

Non-compoundable offences

Any offence which is punishable with fine or penalty only under the specific section of the Companies Act, 2013

Offence punishable with imprisonment only, or punishable with imprisonment and fine

JURISDICTION OF COMPOUNDING

REGIONAL DIRECTOR

NCLT

Where the maximum amount of fine which may be imposed for such offence does not exceed twenty-five lakh rupees

PROCESS OF COMPOUNDING

Calculate the amount of offence involved to decide the jurisdiction of Compounding authority.
An application shall be filed to the ROC in E-Form GNL – 1 for compounding who shall forward the same, together with his comments thereon to the NCLT/Regional Director as applicable.
NCLT/Regional Director will provide the opportunity of personal hearing and then pass an order giving justification.
Where the offence is compounded, an intimation thereof shall be given by the Company to the ROC within seven days from the date on which the order is made available to the petitioner/applicant.

LIST OF OFFENCES COMPOUNDABLE UNDER THE COMPANIES ACT, 2013

Section 56 (6) – non-compliance relating to transfer and transmission of securities;
Section 64(2) – Failure to give Notice to registrar for alteration of share capital;
Section 99 – default in holding of Annual General Meeting;
Section 102(5) – Not enclosing the explanatory statement to notice;
Section 117(2) – failure in filing of resolutions and agreements with the Registrar of Companies;
Section 203(5) – Failure to appoint Key Managerial Personnel; etc.

(The list is inclusive not exhaustive.)

SERVICES PROVIDED BY US

To prepare the petition of Compounding
Filing of petition to the ROC in Form GNL – 1
Attend the hearing before Regional Director/NCLT
Any other assistance that may be required for the purpose of Compounding.

THE J&P ADVANTAGE

Our CS Team at J&P handles the whole process with utmost due diligence. From documents compiling to receipt of final order our team works with utmost care leaving no potential loopholes. Our team will provide complete assistance in the matter under consideration. J&P is known for keeping its clients in a constant loop of the forth coming action of any kind so that the potential client is aware about its standing in the corporate sector.