Section 30 of The National Company Limited (Acquisition and Transfer of Undertakings) Act, 1980
Offences by companies.
- (1)Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
- (2)Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.--For the purposes of this section--
- (a)"company" means any body corporate and includes a firm or other association of individuals; and
- (b)"director", in relation to a firm, means a partner in the firm.
Summary
- If a business entity commits a crime under this Act, both the entity itself and the people in charge of running it are considered guilty.
- A person in charge can avoid punishment if they can prove they did not know about the crime or that they tried their hardest to prevent it.
- If it is proven that a director, manager, or secretary agreed to the crime, helped it happen, or let it happen through neglect, they are personally guilty.
- In this section, the word company includes partnerships and other groups, and the word director includes a partner in a firm.
Practical examples
FAQ
1. If my company breaks the rules in this Act, can I be personally punished?
Yes, if you were in charge of the business at the time, you are deemed guilty alongside the company.
2. How can a manager defend themselves if their company commits an offence?
They must prove that the offence happened without their knowledge or that they exercised all due diligence to prevent it.
3. Does this rule only apply to registered corporations?
No, for this section, a company includes a firm or other association of individuals.
Test yourself
Q1.Under Section 30 of The National Company Limited (Acquisition and Transfer of Undertakings) Act, 1980, who is initially deemed guilty when a company commits an offence?
Q2.Under Section 30 of The National Company Limited (Acquisition and Transfer of Undertakings) Act, 1980, how can a person in charge of a company avoid punishment for an offence committed by the company?
Q3.Under Section 30 of The National Company Limited (Acquisition and Transfer of Undertakings) Act, 1980, what happens if an offence by a company is proved to be attributable to neglect on the part of a secretary?
Q4.Under Section 30 of The National Company Limited (Acquisition and Transfer of Undertakings) Act, 1980, how is the term director interpreted when the offending entity is a firm?