Section 446B of Companies Act 2013: Lesser Penalties for Certain Companies
Updated: 17 September 2026
Section 446B of the Companies Act, 2013 gives a statutory concession in monetary penalties to specified classes of companies. The provision currently covers a One Person Company, small company, start-up company and Producer Company, together with an officer in default or another person in respect of such company, where a penalty is payable for non-compliance with the Act.
Current Provision of Section 446B
Lesser penalties for certain companies. Section 446B operates notwithstanding anything contained in the Companies Act, 2013. 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, or by its officer in default or another person in respect of that company, the applicable penalty cannot exceed one-half of the penalty specified for that non-compliance.
The reduced penalty is further subject to a maximum of Rs. 2,00,000 in the case of the company and Rs. 1,00,000 in the case of an officer in default or any other person.
The official text may be checked in the Companies Act, 2013 on India Code and through the Ministry of Corporate Affairs.
How the Lesser Penalty Works
| Point | Effect of Section 446B |
|---|---|
| Nature of relief | Penalty is capped at not more than one-half of the penalty otherwise specified for the relevant non-compliance. |
| Maximum for company | Rs. 2,00,000. |
| Maximum for officer or other person | Rs. 1,00,000. |
| Scope | Applies where a monetary penalty is payable for non-compliance with a provision of the Companies Act, 2013 and the person or company falls within Section 446B. |
For example, if the ordinary penalty under a provision is Rs. 1,00,000, the Section 446B ceiling would be not more than Rs. 50,000, subject to the terms of the relevant provision. If one-half of the ordinary penalty would exceed the separate statutory maximum under Section 446B, the Section 446B maximum applies.
Important: Section 446B refers to a penalty payable for non-compliance. Eligibility should therefore be examined together with the exact charging provision, the status of the company on the relevant date and the applicable adjudication provisions.
Which Companies Are Covered?
1. One Person Company
A One Person Company, commonly called an OPC, is defined in Section 2(62) of the Companies Act, 2013 as a company which has only one person as a member.
2. Small Company
Section 2(85) defines a small company, subject to the statutory exclusions in that clause. Under the Companies (Specification of Definition Details) Rules, 2014 as amended in 2022, the prescribed thresholds are paid-up capital not exceeding Rs. 4 crore and turnover not exceeding Rs. 40 crore. The exclusions under Section 2(85) must also be checked before claiming small-company status.
See the MCA notification G.S.R. 700(E), dated 15 September 2022.
3. Start-up Company
For Section 446B, a start-up company means a private company incorporated under the Companies Act, 2013 or the Companies Act, 1956 and recognised as a start-up in accordance with the notification issued by the Central Government in the Department for Promotion of Industry and Internal Trade.
DPIIT issued G.S.R. 108(E), dated 4 February 2026, superseding its 2019 start-up notification. The current DPIIT framework should therefore be checked when determining recognition. The statutory wording of Section 446B continues to refer specifically to a private company for the purpose of the expression "start-up company". See the DPIIT notification dated 4 February 2026.
4. Producer Company
The Explanation to Section 446B provides that "Producer Company" means a company as defined in Section 378A(l) of the Companies Act, 2013.
Other Relevant Definitions
Officer who is in default: Section 2(60) identifies the categories of officers who may be treated as officers in default for contraventions for which an officer of the company is liable.
Penalty: Section 446B does not create the underlying default. It modifies the monetary consequence where another provision of the Companies Act makes a penalty payable and the conditions of Section 446B are satisfied.
Amendment History and Current 2026 Position
Section 446B was inserted by the Companies (Amendment) Act, 2017. It was later substituted by Section 62 of the Companies (Amendment) Act, 2020 with effect from 22 January 2021. The substituted provision expanded the benefit beyond specified filing defaults and extended it to start-up companies and Producer Companies, while introducing the present monetary caps.
The Corporate Laws (Amendment) Bill, 2026 proposes further changes to the Companies Act, including an amendment affecting Section 446B. As of 17 September 2026, the Bill remains pending and has not replaced the existing statutory text. Accordingly, this page states the law presently in force and does not treat the Bill's proposal as enacted law.
Official Legal Resources
For current statutory text, notifications, rules and filing-related updates, refer to the Ministry of Corporate Affairs, India Code and the Department for Promotion of Industry and Internal Trade.
This article is a general legal reference. For a particular default, verify the provision creating the penalty, the company's legal status during the relevant period, applicable rules and current MCA notifications.