Description:
It is not each and every director who would be liable to be prosecuted and punished, only those director(s) who is (are) in charge of activities of the company and responsible for conduct of company’s business would be liable to be prosecuted and punished for any default regarding compliance of provisions of Companies Act, 1956. Key criteria for deciding as to “who is the person responsible for conducting the company’s business” is who controls the day-to-day business of company.–– Vide State of Karnataka v.Pratap Chand (1981) 51 Comp Cas 198 (SC).
Source:
1. www.tpcc.in
2. The Tax Referencer .Volume121. Issue No.4, 26 Sept. 2011, Page No.126.
Our Comment:
Only the directors who controlled and/ or managed the affairs of the company are liable for prosecution, punishment.
