Chapter XXVIII - Special Courts
Section 446B
Section 446B: lesser penalties for certain companies
Section 446B reduces any penalty payable for non-compliance by a One Person Company, small company, start-up company or Producer Company, by any of its officers in default, or by any other person in respect of such a company.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
Notwithstanding anything contained in this Act, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be. Explanation.—For the purposes of this section,—(a) “Producer Company” means a company as defined in clause (l) of section 378A; (b) “start-up company” means a private company incorporated under this Act or under the Companies Act, 1956 and recognised as start-up in accordance with the notification issued by the Central Government in the Department for Promotion of Industry and Internal Trade.
Introduction
The penalty cannot exceed one-half of the penalty specified in the relevant provision, subject to a maximum of two lakh rupees for the company and one lakh rupees for an officer in default or any other person. A start-up company is a private company recognised as a start-up under the notification issued by the Central Government in the Department for Promotion of Industry and Internal Trade; a Producer Company has the meaning in section 378A(l).
The section was inserted by the Companies (Amendment) Act, 2017 (in force from 9 February 2018), amended by the Companies (Amendment) Act, 2019 (deemed from 2 November 2018), and substituted in its current form by the Companies (Amendment) Act, 2020 from 22 January 2021 under S.O. 325(E).
Key takeaways
Four kinds of company
One Person Companies, small companies, start-up companies and Producer Companies.
Half, with caps
Not more than half the specified penalty, capped at two lakh rupees for the company and one lakh rupees for an officer or other person.
Penalties, not fines
The section speaks of a penalty payable for non-compliance; it does not mention fines imposed on conviction for offences.
Who benefits
The section applies where a penalty is payable for non-compliance with any provision of the Act by a One Person Company, small company, start-up company or Producer Company, by any of its officers in default, or by any other person in respect of such a company. For start-up companies, the company must be a private company incorporated under this Act or the Companies Act, 1956 and recognised as a start-up under the Department for Promotion of Industry and Internal Trade notification.
- India Code — consolidated Companies Act, 2013, section 446B
- eGazette — Companies (Amendment) Act, 2017 (No. 1 of 2018)
- eGazette — MCA notification S.O. 630(E) (2017 Amendment Act provisions in force 9 February 2018)
- eGazette — Companies (Amendment) Act, 2019 (No. 22 of 2019)
- eGazette — Companies (Amendment) Act, 2020 (No. 29 of 2020)
- eGazette — MCA notification S.O. 325(E) (2020 Amendment Act provisions in force 22 January 2021)
How the reduction works
Notwithstanding anything else in the Act, the company, officer in default or other person is liable to a penalty of not more than one-half of the penalty specified in the provision breached. The result is further capped at two lakh rupees for the company and one lakh rupees for an officer in default or any other person.
History of the section
As first inserted from 9 February 2018, the section halved the fine or imprisonment for a One Person Company or small company, and its officers in default, that failed to comply with section 92(5), section 117(2) or section 137(3). The 2019 amendment, deemed in force from 2 November 2018, changed it to a penalty of not more than one-half of the specified penalty. The current text, substituted from 22 January 2021, extends it to start-up companies and Producer Companies and to any penalty under the Act, with the caps above.
Practical preparation
Keep evidence of the company’s status: One Person Company registration, small company classification under section 2(85), DPIIT start-up recognition, or Producer Company registration; when a penalty notice is received, check whether the provision imposes a penalty rather than a fine; ask the adjudicating officer to apply section 446B.
Practical checklist
Do
- Raise section 446B before the adjudicating officer when the company qualifies.
- Keep DPIIT recognition records current for start-up companies.
Avoid
- Do not assume a public company can be a start-up company under the Explanation; it must be a private company.
- Do not assume the reduction applies to fines imposed by a court for offences; the section speaks only of penalties.
Illustrative example
Hypothetical: penalty notice to a small company
A small company receives a notice from the adjudicating officer for a default that carries a civil penalty under the Act.
Status
The company shows that it is a small company under section 2(85).
Computation
The adjudicating officer limits the penalty to half the specified amount.
Cap
The result is capped at two lakh rupees for the company and one lakh rupees for each officer in default.
Outcome
- The company pays the reduced penalty and rectifies the default.
Glossary
- Start-up company
- A private company incorporated under this Act or the Companies Act, 1956 and recognised as a start-up under the DPIIT notification.
- Producer Company
- A company as defined in clause (l) of section 378A.
Frequently asked questions
What is the maximum penalty for a qualifying company?
Half of the penalty specified in the provision breached, but not more than two lakh rupees for the company and one lakh rupees for an officer in default or other person.
Does a DPIIT-recognised public company qualify as a start-up company?
No. The Explanation defines a start-up company as a private company recognised under the DPIIT notification.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026