Part XXII of the Companies Act 1997 does not state a penalty in each section. Instead, sections throughout the Act refer to section 413 or section 414, and those sections point to the seven Parts of Schedule 13.
Sections 413 and 414 — the penalty tiers
| Provision | Schedule 13 | Who | Maximum penalty |
|---|---|---|---|
| s 413(1) | Part 1 | Any person | Fine not exceeding K5,000 |
| s 413(2) | Part 2 | Any person | Fine not exceeding K10,000 |
| s 413(3) | Part 3 | Any person | Fine not exceeding K50,000, or imprisonment up to two years, or both |
| s 413(4) | Part 4 | Any person | Fine not exceeding K200,000, or imprisonment up to five years, or both |
| s 414(1) | Part 5 | A director | Fine not exceeding K5,000 |
| s 414(2) | Part 6 | Any person | Fine not exceeding K10,000 |
| s 414(3) | Part 7 | A director | Fine not exceeding K100,000 |
When a section says a person “is liable on conviction to the penalty set out in section 413(2)”, it means that section is listed in Part 2 of Schedule 13, and the maximum is K10,000.
Sections 413 and 414 divide by who is liable. Section 413 applies to any person — commonly the company itself, a receiver or a liquidator. Section 414 is the director-facing set, used where the Act imposes a duty on the board or the company and makes every director liable for the failure.
Imprisonment is available only under section 413(3) and (4) — the tiers used for the serious offences: false statements, fraudulent use or destruction of property and falsification of records, carrying on business fraudulently, and the prohibited conduct in a liquidation under section 321.
Section 415 — the additional pecuniary penalty
Where the Court is satisfied that a person (a) committed an offence against this Act with the intention of deriving benefits; (b) derived benefits from committing it; and (c) has been convicted, the Court may order that person to pay an additional pecuniary penalty.
The Court shall have regard to (a) the value of the benefits derived; (b) any pecuniary penalty already imposed for the offence; and (c) any non-pecuniary penalty imposed — but the additional penalty shall in no case exceed the value of the benefits derived.
Value is assessed on evidence about (a) money or the value of property that came into the possession or control of the offender or of another person at the offender’s request or direction; (b) the value of any other benefit so provided; and (c) the value of the offender’s property before and after the offence.
Expenses are ignored. Under section 415(4), any expenses or outgoings incurred in connection with committing the offence are disregarded in calculating the benefit. The penalty is measured on gross benefit, not profit.
Property under effective control counts. Under section 415(5) the Court may treat as a person’s property anything subject to their effective control, whether or not they have any legal or equitable interest or any right, power or privilege in it — and, on the request of the Public Prosecutor or the Registrar, declare that property available to satisfy the penalty. Assets parked in a spouse’s or a nominee company’s name are reachable.
Section 416 — the general penalty provision
(1) A person who (a) does a thing the Act prohibits, (b) does not do a thing the Act requires or directs, or (c) otherwise contravenes a provision of the Act, is guilty of an offence by virtue of this subsection — unless that or another provision provides that the person is, or is not, guilty of an offence.
(2) Such a person is punishable by a penalty not exceeding the penalty applicable to the offence.
(3) Where a provision specifies a penalty, that is the applicable penalty.
(4) Otherwise, the person is liable on conviction to a fine not exceeding K5,000.
So every obligation in the Act is backed by an offence, even where the section creating it says nothing about penalties. The default is K5,000.
Section 417 — how offences are tried
(1) Offences under section 413(1), (2) and (3), section 414(1) and (2), and those to which section 416(4) applies, are triable summarily.
(2) Offences under section 413(4) and section 414(3) are triable on indictment.
(3) Notwithstanding anything to the contrary in any other Act, an information may be laid at any time within seven years after the commission of the offence.
(4) Nothing in sections 420 to 423 affects liability under any other Act, but no person shall be convicted of an offence against any of those sections and a provision of any other Act in respect of the same conduct.
Subsection (3) overrides the ordinary limitation periods for summary offences. A failure to file, a false statement, or a falsified record can be prosecuted up to seven years after the event — which is why the Act’s seven-year record retention requirements in sections 188, 272(2) and 306(1)(b) are set at the same period.
Subsection (4) prevents double punishment: conduct that is both an offence under sections 420 to 423 and an offence under the Criminal Code may be charged under either, but not convicted under both.
Section 418 — prosecutions
(1) The Registrar, or a person with the written consent of the Registrar, may prosecute any offence against this Act.
(2) In any action brought by or against the Registrar, the Court may award costs against any party other than the Registrar, recoverable by the Registrar as a debt.
(3) Any fine or penalty resulting from an action brought by the Registrar shall be paid to the Registrar, who may also recover it as a debt due to the Registrar.
Subsection (1) allows a person other than the Registrar to prosecute — but only with the Registrar’s written consent. A creditor or shareholder who uncovers an offence should report it to the Registrar rather than commence proceedings unaided.
Note the asymmetry in subsection (2): costs may be awarded against other parties but not against the Registrar. That is a real consideration for anyone contesting enforcement action.
The defences available to a director charged under these provisions are set out in section 419.
Sources
- Companies Act 1997 — ss 188, 272, 306, 321, 413–423; Schedule 13
- Criminal Code Act (Chapter 262)
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.