Companies Act Section 2(60) Officer Who Is In Default

Officer Who is in Default Section 2 (60) 

Under Section 2(60) of the Companies Act, 2013, an "Officer Who is in Default" includes any officer of the company who is in default for the purpose of any provision in the Act which refers to an officer who is in default.

Key Points:

1. Scope of Application:

The term is used in various sections of the Companies Act where specific duties, responsibilities, or liabilities are imposed on officers of the company.

It typically includes directors, managers, key managerial personnel (KMP), and any other officer of the company responsible for compliance with statutory obligations.

2. Responsibilities and Duties:

Officers Who are in Default are individuals who fail to comply with legal requirements, statutory duties, or obligations prescribed under the Companies Act, 2013.

They may be held liable for violations related to financial reporting, corporate governance norms, disclosure requirements, filing of returns, maintenance of records, or any other provisions under the Act.

3. Liability and Consequences:

Officers Who are in Default may face legal consequences, penalties, fines, or disqualification from holding office as directors or KMPs if found guilty of non-compliance or default.

The Act imposes stringent measures to ensure accountability, transparency, and responsible conduct among officers to protect shareholder interests and uphold corporate governance standards.

4. Role in Corporate Governance:

Officers Who are in Default play a critical role in ensuring adherence to legal and regulatory frameworks, maintaining integrity in corporate practices, and safeguarding the company’s reputation and financial health.

They are expected to exercise due diligence, act in good faith, and fulfill their fiduciary duties to act in the best interests of the company and its stakeholders.

Legal Framework and Enforcement:

1. Companies Act, 2013:

The Act specifies provisions related to default by officers, outlining penalties, sanctions, and regulatory actions for non-compliance with statutory obligations.

It empowers regulatory authorities such as the Ministry of Corporate Affairs (MCA) and National Company Law Tribunal (NCLT) to investigate, prosecute, and impose penalties on officers found to be in default.

2. Compliance and Corporate Responsibility:

Companies are responsible for appointing competent officers, ensuring their adherence to legal requirements, providing necessary training and support, and maintaining robust internal controls to mitigate risks of default.

Compliance with corporate governance norms and regulatory requirements is essential to promote transparency, accountability, and sustainable business practices within the corporate sector.