The liability of operators can be divided into three parts
(A) Liabilities towards Outsiders Operators act on behalf of the company as an agent of the company. In such a situation, he cannot be held personally liable to outside parties, as long as he acts within his rights. Therefore, directors will be personally liable to third parties only under the following circumstances (1) Liability for acting outside rights – When they act outside their rights,
But if he reveals to others that the work done by him comes under his rights, then in such a case he is liable to other parties. (2) Misstatement in the prospectus – For the loss of shareholders in case of misstatement in the prospectus
Director will be responsible. (3) Agreement in your own name
Directors are held accountable. In the name of the company in place of the company in its name, in contravention of the rules of allotment, willfully non-compliance with the rules of allotment.
On doing so, the directors will be held liable to the shareholders.
(5) Refund in case of non-allotment – If the allotment has not been made within 30 days from the date of issue of prospectus, then the amount received should be returned within next 15 days, otherwise the directors will be jointly responsible for the refund. Will be (B) Liabilities towards Company
It includes the following responsibilities
(1) Liability for Negligence- If there is any loss due to the negligence of the operator, the operator shall be liable. (2) Liability for fraud If the operator willfully commits any error, it shall be called fraud for which he shall be held liable.
(3) Breach of duty- If the director does not perform his duty and the company
If any damage occurs, he will be held responsible for the same. For example, without minimum
Allotment of subscribed shares, obtaining certificate of commencement of business by fraud
There are cases of breach of duty, willfully allotment of shares to a minor, etc.
(4) The liability for breach of trust is the same as that of the director trustee, who will be liable for loss if he does not comply with the rules of the trust. For example, if an operator makes a secret profit, it has to be returned. (5) Liability for act outside rights- If the director acts outside his rights
If so, he will have to indemnify the company. (C) Criminal Liability Under the Act
The main rules of liability for criminal acts are as follows: (1) Imprisonment up to two years or fine of ₹ 50,000 or both in case of false statement in the statement.
(2) Imprisonment up to five years or fine up to ₹ 1,00,000 or both for fraudulently encouraging investment in the company
(3) If the details of the allotment of shares of the company are not furnished to the Registrar within 30 days on the furnishing of the allotment details, thereafter fine up to ₹5,000 per day till the error continues.
(4) If the share certificates are not produced, if the share certificates are not produced within the prescribed period, then a fine of up to five thousand per day during the period of error.