Prosecution of Directors – Regarding

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...., defines officer in default and the Directors are also liable for compliance of various provisions of the Act. 2. It is noticed that penal actions are also initiated against certain Directors who are not charge with the responsibility, particularly in following cases : --      (a) For listed companies Securities and Exchange Board of India (SEBI) requires nomination of certain Directors designated as Independent Directors.      (b) For public sector undertakings, respective Government nominates Directors on behalf of the respective Government.      (c) Various public sector financial institutions having participation in equity of a company also nominate Directors to th....

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....sp; (b) In case the status of a director, i.e. whether he is a nominee director or not, is not reflected in the Annual Return or other documents of the company, available with Registrar, the same should be cross checked with the Annual Report filed by the company;      (c) The timing of the commission of offence is also material to identify the director's responsibility; and Form 1AB should also be checked in case any person has been charged by the Board under Section 5(f) with the responsibility of complying with some particular provision or in case any director has been specified by the Board under Section 5(g) of the Act.      (d) Special Directors appointed by BIFR under section 16 (6)(b) of....

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....ing in the list of officers in default for a particular violation of the Companies Act, it should be examined whether the violation has taken place with his knowledge attributable through board process, with his consent or connivance and whether he acted diligently or not.      (f) Where prosecution is required to be filed against any Government company, its directors/officers and Member of Parliament and Member of Legislator under the Companies Act, 1956, Registrar of Companies should seek prior authorization of Central Government in terms of Section 621 of the Act 5. There should be proper application of mind on the part of Registrar of Companies in deciding whether a person to be implicated is an 'officer in def....