Compounding of Offence

When a company or its officers miss a compliance deadline or violate a provision of the Companies Act, the MCA can impose penalties or even start prosecution. Compounding is the process of settling these offences by paying a prescribed amount and closing the matter without lengthy legal proceedings. It’s a practical way to regularise past non-compliances and avoid prosecution.

We manage the entire compounding process so the issue is resolved quickly and cleanly.

What we do

Review the offence and determine eligibility for compounding
Prepare application, documents, and detailed submissions
Draft board resolutions and support letters
File the compounding application with ROC or Regional Director
Represent the company during hearings
Track the order, pay compounding fees, and complete closure filings

Why this matters

Compounding avoids prosecution and brings the company back into full compliance. A well-prepared application reduces penalties and ensures the matter is settled without unnecessary delays or scrutiny.

Frequently Asked Questions

1. What is compounding of offence?

It’s a process where a company settles an offence under the Companies Act by paying a compounding fee instead of undergoing prosecution.

2. When is compounding applicable?

For offences punishable with fine only or fine + imprisonment (where imprisonment is not mandatory).

3. Who has the authority to compound?

ROC for offences with penalties up to ₹5 lakh
Regional Director for higher penalties
NCLT for serious cases (rare)

4. What types of offences can be compounded?

Common cases include delay in filings, non-maintenance of records, missed disclosures, and lapses in compliance by directors.

5. What documents are required?

Application for compounding, board resolution, detailed facts of the offence, past compliance record, and supporting filings.