While Zerodha AMC has been slapped with a penalty of Rs 5 lakh, Kamath has been handed a fine of Rs 4.08 lakh. Meanwhile, penalties of Rs 1.5 lakh, Rs 3.45 lakh, Rs 5 lakh, Rs 1.5 lakh and Rs 3.45 lakh have been imposed on Zerodha AMC personnel Nithya Easwaran, Vishal Virendra Jain, Rajanna Bhuvanesh, Tushar Mahajan and Shikha Singh respectively.
They have been directed to make the payment within 90 days of the receipt of the order.
In response, Zerodha Asset Management Private Limited’s CEO Vishal Jain issued a statement saying that this order was post incorporation and prior to commencement of business operations. “The company has made an application to address the unintentional delay in appointing a CFO within 6 months post incorporation,” Jain said adding that the ROC order was issued in response to the suo-moto application filed by the company.
The Company is contesting the order, and an appeal has already been filed with Regional Director, Hyderabad on July 16, 2024.Zerodha filed a suo-motu application on January 9, 2024, admitting that it had violated Section 203 of the Companies Act 2013 in not appointing a Chief Financial Officer within the prescribed time period.According to the MCA order of May 5, 2024, which was published by the MCA on July 31, Section 203(1) of the Act mandates that companies in the ‘deemed public company’ category must have whole-time key managerial personnel including company secretary.
Zerodha AMC belongs to this category.
“If any company makes any default in complying with the provisions of this section, such company shall be liable to a penalty of five lakh rupees and every director and key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees and where the default is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such default continues but no exceeding five lakh rupees,” the order said.
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