Companies Act, 2013

Section 189

Liability of directors and promoters for fraudulently trading

⚡ Quick Answer Reference: Section 189 Companies Act

Provision: Section 189 of Companies Act
Act: Companies Act, 2013
Classification: corporate
Jurisdiction: India
Liability / Punishment: Imprisonment for a term which may extend to 5 years, or with fine which shall not be less than twenty-five thousand rupees but which may extend to two lakh rupees, or with both.

Statutory Content

What does Section 189 of Companies Act say?

If any director or promoter of a company has been guilty of any fraud or misfeasance in relation to the company, or has been guilty of any breach of duty in relation to the company, he shall be liable to make good the loss or damage caused to the company.

Indian StandardSection 189, Companies Act, 2013

Bluebook (21st ed.)Companies Act, 2013, § 189 (India)

Court Pleading StandardSection 189 of the Companies Act, 2013

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Source: Gazette of India (Official Publication)Verify egazette.gov.in ↗

Criminal Liability

Punishment under Section 189 Companies Act

Imprisonment for a term which may extend to 5 years, or with fine which shall not be less than twenty-five thousand rupees but which may extend to two lakh rupees, or with both.

Common Questions about Section 189 Companies Act

What is Section 189 of Companies Act?

Section 189 of the Companies Act, 2013 (Companies Act) defines and regulates "Liability of directors and promoters for fraudulently trading". The section states: If any director or promoter of a company has been guilty of any fraud or misfeasance in relation to the company, or has been guilty of any breach of duty in relation to the company...

What is the punishment under Section 189 of Companies Act?

Under Section 189 of Companies Act, the prescribed liability/punishment is: Imprisonment for a term which may extend to 5 years, or with fine which shall not be less than twenty-five thousand rupees but which may extend to two lakh rupees, or with both.

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