According to media reports, the Ministry of Corporate Affairs (MCA) has imposed a maximum penalty of Rs 5 lakh on Zerodha Asset Management and its key directors, including founder Nithin Kamath. The Centre fined the company for delaying the appointment of a Chief Financial Officer (CFO) within the stipulated timeframe set by the MCA.
Admitting its fault, Zerodha Asset Management filed a suo-moto application on July 9, acknowledging its violation of Section 203 of the Companies Act, 2013, as per media reports. The section mandates that companies like Zerodha, deemed public companies with a paid-up share capital exceeding Rs 10 crore, should have a full-time key managerial personnel, including a CFO.
As per media reports, Section 203(1) of the Companies Act requires companies of certain sizes to have full-time key managerial personnel, including a CFO and company secretary. Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, specifies compliance for any public company with a paid-up share capital of Rs 10 crore or more.
The firm reportedly did not adhere to this rule until March 24, 2023, when Chintan Bhatt was appointed as CFO. This delay of 459 days led to the ministry’s decision to impose significant penalties. Media sources indicate that the company violated relevant provisions of the Act from December 20, 2021, to March 23, 2023.
According to reports, the Ministry of Corporate Affairs has levied individual penalties on Zerodha’s key personnel. Founder and Director Nithin Kamath, director Rajanna Bhuvanesh, and CEO Vishal Virendra Jain were fined Rs 4.08 lakh, Rs 5 lakh, and Rs 3.45 lakh, respectively. Additionally, the company’s secretary, Shikha Singh, was penalized with Rs 3.45 lakh, while directors Nithya Easwaran and Tushar Mahajan were fined Rs 1.50 lakh each.
