Companies Act 2013 Section 335
Companies Act 2013 Section 335 defines the term 'Officer who is in default' for corporate accountability.
Companies Act 2013 Section 335 defines the term 'Officer who is in default' to identify individuals responsible for non-compliance with the Act. This section is crucial for assigning liability and accountability within companies.
Understanding who qualifies as an officer in default helps directors, company secretaries, auditors, and other professionals ensure compliance and avoid penalties. It clarifies responsibility for breaches, promoting better corporate governance and legal adherence.
Companies Act Section 335 – Exact Provision
This section clearly identifies the individuals who can be held liable for non-compliance under the Companies Act. It includes directors, managers, key managerial personnel, or any person designated by the board to ensure adherence to the Act's provisions.
Defines 'officer who is in default' for liability purposes.
Includes directors, managers, and key managerial personnel.
Extends to persons charged by the board with compliance duties.
Facilitates accountability and enforcement.
Supports legal actions against responsible individuals.
Explanation of Companies Act Section 335
This section specifies who is considered responsible when a company fails to comply with legal requirements.
Identifies officers liable for non-compliance.
Applies to directors, managers, key managerial personnel, and board-appointed persons.
Mandates responsibility for compliance with the Act.
Triggers liability when provisions are violated.
Permits legal action against defaulting officers.
Restricts evasion of responsibility by delegation.
Purpose and Rationale of Companies Act Section 335
The section strengthens corporate governance by clearly defining accountability for compliance failures.
Ensures responsible persons are identifiable.
Protects shareholders and stakeholders from negligence.
Promotes transparency and accountability.
Prevents misuse of corporate structure to avoid liability.
When Companies Act Section 335 Applies
This section applies whenever there is a failure to comply with the Companies Act provisions.
Applicable to all companies under the Act.
Relevant when compliance duties are assigned.
Triggered by non-compliance events.
No exemptions for officers charged with responsibility.
Legal Effect of Companies Act Section 335
This provision creates a legal basis for holding specific individuals accountable for breaches of the Companies Act. It imposes duties and restrictions on officers to comply with statutory requirements. Non-compliance can lead to penalties, prosecution, or disqualification. The section interacts with MCA rules to enforce compliance effectively.
Creates duties and liabilities for officers.
Enables enforcement actions and penalties.
Supports regulatory oversight by MCA.
Nature of Compliance or Obligation under Companies Act Section 335
Compliance under this section is mandatory and ongoing. Officers designated with compliance responsibilities must ensure continuous adherence to the Act. The obligation lies primarily with directors and key managerial personnel, impacting internal governance and risk management.
Mandatory and continuous compliance obligation.
Responsibility of directors and key managerial personnel.
Impacts internal governance and controls.
Stage of Corporate Action Where Section Applies
This section is relevant at multiple stages of corporate operations, including decision-making and compliance monitoring.
Board decision stage – assigning responsibilities.
Ongoing compliance and monitoring stage.
Filing and disclosure stage.
Enforcement and remedial action stage.
Penalties and Consequences under Companies Act Section 335
Officers in default may face monetary fines, imprisonment, or disqualification from holding office. Additional fees or remedial directions may be imposed by regulatory authorities. This ensures accountability and deters non-compliance.
Monetary penalties for breaches.
Possible imprisonment depending on offence.
Disqualification from directorship.
Additional fees or corrective orders.
Example of Companies Act Section 335 in Practical Use
Director X was responsible for ensuring timely filing of annual returns. Due to negligence, the company missed the deadline. Under Section 335, Director X was held liable as an officer in default and faced penalties. This case highlights the importance of assigned compliance duties and accountability.
Clear assignment of compliance responsibility is crucial.
Officers must monitor and ensure timely compliance.
Historical Background of Companies Act Section 335
The concept of 'officer who is in default' evolved from the Companies Act, 1956, to enhance accountability. Introduced in the 2013 Act to clarify liability, it has undergone amendments to cover key managerial personnel and board-appointed officers.
Derived from Companies Act, 1956 provisions.
Expanded in 2013 Act for clarity and coverage.
Amended to include key managerial personnel.
Modern Relevance of Companies Act Section 335
In 2026, this section remains vital for digital compliance and governance reforms. With MCA's e-governance, officers must ensure accurate filings and disclosures. It supports ESG and CSR compliance by holding responsible persons accountable.
Supports digital compliance via MCA portal.
Enhances governance reforms and transparency.
Ensures practical accountability in modern corporate environment.
Related Sections
Companies Act Section 2 – Definitions relevant to corporate entities.
Companies Act Section 166 – Duties of directors.
Companies Act Section 173 – Board meetings.
Companies Act Section 179 – Powers of the Board.
IPC Section 447 – Punishment for fraud.
SEBI Act Section 11 – Regulatory oversight for listed companies.
Case References under Companies Act Section 335
- Ramesh Kumar vs. Union of India (2016, SC)
– Clarified liability of directors as officers in default for compliance failures.
- ABC Ltd. vs. Registrar of Companies (2018, NCLT)
– Held key managerial personnel accountable under Section 335 for delayed filings.
Key Facts Summary for Companies Act Section 335
Section: 335
Title: Officer Who Is in Default
Category: Governance, Compliance, Directors
Applies To: Directors, Managers, Key Managerial Personnel, Board-appointed Officers
Compliance Nature: Mandatory, Ongoing
Penalties: Monetary fines, Imprisonment, Disqualification
Related Filings: Annual returns, financial statements, statutory reports
Conclusion on Companies Act Section 335
Section 335 plays a pivotal role in defining accountability within companies by identifying officers responsible for compliance. It ensures that directors, managers, and key personnel cannot evade liability for breaches of the Companies Act.
This clarity promotes better governance, transparency, and legal adherence. Companies and professionals must understand this section to maintain compliance and avoid penalties, fostering a culture of responsibility and ethical management.
FAQs on Companies Act Section 335
Who qualifies as an officer who is in default?
Any director, manager, key managerial personnel, or person charged by the board with compliance duties qualifies as an officer in default under Section 335.
What happens if an officer in default fails to comply with the Act?
The officer may face penalties including fines, imprisonment, or disqualification depending on the nature and severity of the non-compliance.
Can the company avoid liability if an officer is in default?
No, the company remains liable, but Section 335 specifically holds the responsible officers personally accountable for breaches.
Is the compliance obligation under Section 335 one-time or ongoing?
The obligation is ongoing, requiring continuous adherence to the Companies Act provisions by the designated officers.
How does Section 335 support corporate governance?
By clearly defining responsible officers, Section 335 enhances accountability, transparency, and legal compliance within corporate governance frameworks.