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      Question

      Consider the following statements regarding violations

      and penalties under the Companies Act, 2013: Statement 1: Violation of director duties under Section 166 attracts criminal penalties only if fraud is involved. Statement 2: Failure to file financial statements and annual returns can result in both civil and criminal penalties. Statement 3: A director who causes the company to default in performing statutory duties can be held liable up to Rs. 5 lakhs or imprisonment up to 5 years. Statement 4: The company can be held liable separately from its directors for violations of the Act. Which statements are correct?
      A Statements 1 and 2 only Correct Answer Incorrect Answer
      B Statements 2, 3, and 4 only Correct Answer Incorrect Answer
      C Statements 1, 2, and 3 only Correct Answer Incorrect Answer
      D Statements 2 and 4 only Correct Answer Incorrect Answer
      E All statements are correct Correct Answer Incorrect Answer

      Solution

      Sections 447-467 prescribe penalties. Statement 1 is incorrect—violations can attract criminal penalties even without fraud; penalties depend on the violation's nature. Statement 2 is correct—filing failures can attract both civil fines and criminal penalties. Statement 3 is correct—various sections provide for significant penalties and imprisonment for director violations. Statement 4 is correct—companies and directors can be held separately liable as per the Act. Statements 2, 3, and 4 are correct.

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