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May 2011

Prosecution of Directors.

By Sejal Vasa | Company Secretary
Reading Time 2 mins
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The Ministry of Corporate Affairs has issued a General Circular No. 2/13/2003/CL-V regarding the prosecution of independent directors of listed companies, nominee directors of the Central Govt. or of the public financial institutions. The circular states that the Registrar of Companies should take extra care in examining the cases where above directors are identified as officer in default.

Such directors should not be held liable for any act of omission or commission by the company or by any officers of the company which constitute a breach or violation of any provision of the Companies Act, 1956, and which occurred without their knowledge and without their consent or connivance or where they have acted diligently in the Board process. The Board process includes meeting of any committee of the Board and any information which the director was authorised to receive as a director of the Board as per the decision of the Board.

The Circular also specifies compliances to be verified by the Registrar of Companies before taking penal action against directors.

Also the list of persons who can be treated as Officers in default has been listed for prosecution u/s.209(5), 209(6), 211 and 212 is given.

For the complete text of the Circular visit

http://www.mca.gov.in/Ministry/pdf/Circular_08-2011 _25mar2011.pdf

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