The Ministry of Corporate Affairs (MCA) has fined Zerodha Asset Management Company (AMC) and its management, including founder Nithin Kamath for a delay in appointing a Chief Financial Officer (CFO), which is a violation of rules.
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How much is the fine imposed on Nithin Kamath and other Zerodha executives?
Zerodha AMC’s penalty is ₹5 lakh and Kamath’s penalty is ₹4.08 lakh. Zerodha AMC’s top management including Nithya Easwaran, Vishal Virendra Jain, Rajanna Bhuvanesh, Tushar Mahajan and Shikha Singh have been fined ₹1.5 lakh, ₹3.45 lakh, ₹5 lakh, ₹1.5 lakh and ₹3.45 lakh respectively, and they all have to pay the fine within 90 days.
However, Zerodha Asset Management Private Limited’s CEO Vishal Jain issued a statement saying that the order came after incorporation of the company and before operations commenced.
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“The company has made an application to address the unintentional delay in appointing a CFO within 6 months post incorporation,” Jain said.
The ROC order was issued in response to the suo-moto application filed by the company, he added. Zerodha had filed a suo-moto application on January 9, 2024, admitting on its own that it violated Section 203 of the Companies Act 2013 by not appointing a CFO within the specified time period.
Zerodha AMC has now filed an appeal contesting the order with the Regional Director, Hyderabad on July 16, 2024.
the MCA order dated May 5, 2024, published by the MCA on July 31 says, “If any company makes any default in complying with the provisions of this section (Section 203(1)), 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 not exceeding five lakh rupees.”