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Procedure for Non-Compliance in holding Board Meetings

Under the Companies Act, 2013, no punishment is prescribed for non-compliance with Section 173(1) in holding at least four Board Meetings in a year, in such a manner that not more than 120 days shall intervene between two consecutive meetings of the Board. Since, no express provision has been laid down, to be followed in case of such failure, the inclusive and residuary provision of Section 450, Companies Act, 2013 shall be deem to be applicable.

Section 450 clearly states that:

“In case of any default or failure for which no express provision is stated elsewhere in the Act, the company, or every officer in default shall be punishable with fine which may extend to ten thousand rupees, and where a contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues”.

The detailed procedure for the payment of such punishment, levied under Section 441, is channelized through the route of compounding. Section 441 of the Companies Act, 2013 provides a detailed procedure for compounding of any offence, the penalty for which is fine only and the fine does not exceed Rs.5 Lakh, and it does not pertain to contravention of offences committed before three years of making such application.

There are certain offences, the list of which is provided under the section itself, which can be compounded by Tribunal or by the regional directors. But there are other offences as well which can be compounded, other than mentioned in the list. Thus, the failure to comply with Section 173(1) can also be compounded under Section 441 because the section is not mentioned in the list of offences which cannot be compounded. Moreover, the offences, the punishment for which does not exceed Rs. 5 Lakh, can be compounded only by the Regional Director or any officer authorized by the Central Government. But every application for compounding shall be addressed to the Registrar and who shall decide upon forwarding of such application, along with his comments, to either Tribunal or Regional Director, or any other person authorized by the Central Government, as the case may be. Tribunal or Regional Director or any other person so authorized then adjudicate upon the amount to be paid as penalty, which is then ultimately is required to be paid to the Central Government.

Short Glimpse of Procedure stated above:-
1). File a compounding application with the Registrar; Submitted electronically in e-form GNL-1.
2). Registrar shall forward the application, to either Tribunal or Regional Director (if the fine for the offence does not exceed Rs.5 Lakh, on such calculation), with their comments;
3). Tribunal or Regional Director or any other person authorized by the Central Government decides the amount to be paid as penalty;
4).Ultimately the penalty is to be paid to the Central Government.

Failure in complying with the order of the Tribunal or Regional Director, or any other authorized by the Central Government would invite an additional imprisonment for a term which may extend to six months or with fine not exceeding one lakh, or with both.


In case of Compounding of offence, the detailed application should contain the following details:-

1. Detailed application; Submitted electronically in e-form GNL-1, in which provide the following details: 

  • General Public Profile and history of company containing details such as name, date of incorporation, main objects of company;
  • Facts of the case mentioning nature of offence and period of default;
  •  Whether the offence is made good, if yes then how and when (i.e. the date where applicable; 
  • Prayer to Compounding authority for Compounding of offence.
2. The compounding fees shall be paid in appropriate account by way of payment through challan.









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