Section 206 of the Companies Act, 2013
Section 206 of the Companies Act, 2013 – Power to Call for Information, Inspect Books and Conduct Inquiries
Purpose:
Section 206 empowers the Registrar of Companies (RoC) to seek information, inspect books, and conduct inquiries into a company’s affairs if something appears suspicious or non-compliant.
Key Provisions:
1. Section 206(1) – Call for Information:
The Registrar can, by written notice, ask a company to furnish any information or explanation related to its affairs.
2. Section 206(2) – Scrutiny of Documents:
If after receiving the information or explanation, the Registrar believes it’s inadequate or unsatisfactory, or the company fails to respond, the Registrar can ask for the books of account and other documents.
3. Section 206(3) – Inquiry by the Registrar:
If the Registrar finds:
The business is not being conducted in accordance with the law, or
There are fraudulent or unlawful practices, or
The investors' or public interest is being harmed,
4. Section 206(4) – Duty to Cooperate:
The company and its officers are legally bound to produce documents and provide assistance during such inquiry.
5. Section 206(5) – Penalty for Non-Compliance:
If the company fails to furnish information or does not cooperate, it is punishable with a fine of ₹1 lakh, and in case of continuing default, ₹500 per day, subject to a maximum of ₹5 lakh.
Summary:
Section 206 gives the Registrar of Companies strong powers to investigate and seek accountability from companies when there is suspicion of wrongdoing or non-compliance, protecting shareholders and public interest.
RELATED Blog
0 comments