Question

Upon failure to hold Statutory Meeting, the penalty for the defaulting Company shall be:

• A. Rs. 500 per day of default
• B. Wound up
• C. Rs. 1000 per day of default
• D. None of these

Hint:

Compliance with statutory meetings is crucial for corporate governance. Non-compliance can lead to heavy penalties or even winding-up actions if persistent.

Answer 1

The Correct Option is C

Step 1: Understanding Statutory Meetings:
Under the Companies Act, every public company limited by shares must hold a statutory meeting after incorporation and deliver a statutory report to the Registrar. This meeting allows shareholders to review the company’s progress and ensure compliance with the statutory requirements.
Step 2: Legal Provision for Default:
Failure to hold a statutory meeting is a violation of the Companies Act. Section 165 of the Companies Act (old provision) stipulates that the company and every officer in default shall be liable to a fine of Rs. 1000 per day during which the default continues. In severe cases, the company may also face potential winding-up proceedings, but the primary penalty is monetary.
Step 3: Analysis of Options:
- (A) Rs. 500 per day of default: Incorrect, as the penalty prescribed is Rs. 1000 per day.
- (B) Wound up: Not necessarily — while failure may lead to winding up, the immediate penalty is monetary.
- (C) Rs. 1000 per day of default: Correct, as this is clearly stated under the Companies Act.
- (D) None of these: Incorrect, since option (C) is correct.
Step 4: Final Conclusion:
The correct answer is (C) Rs. 1000 per day of default, which serves as a deterrent for companies failing to comply with statutory meeting requirements.