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MI am a non-active director in a company. The active directors haven’t filed annual returns for the last 2-3 years. And now the overall penalty is somewhere upwards of 2 lakhs.
I really want advice on how to navigate now? I don’t have enough money and also don’t want to pay the whole amount due to their negligence. Is the fine avoidable if yes please let me know how to proceed I am even willing to pay consultation fees.
How do I legally safeguard myself from penalties?
PLS ADVISE🙏🏻 -
BLawyer based in Delhi here.
Even though you were not involved in the day-to-day affairs of the company, since you are listed as a director on record, you are liable for the failure to file. To protect yourself from further penalties in the future, you should first send a formal notice to the company and the other directors, recording that you were not managing the company’s affairs and had no role in the non-compliance. If the company continues to remain non-compliant, you should also consider resigning and filing your resignation with the RoC directly to avoid further liability.
You should also *promptly* apply under the adjudication mechanism or for compounding to seek reduction of the penalty. The authorities do consider role, conduct, and evidence when deciding the quantum of penalty.
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