Section 27 of The Payment and Settlement Systems Act, 2007
- (1)Where a person committing a contravention of any of the provisions of this Act or any regulation, direction or order made thereunder is a company, every person who, at the time of the contravention, was in-charge of, and was responsible to, the company for the conduct of business of the company, as well as the company, shall be guilty of the contravention and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.
- (2)Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any regulation, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. Explanation.--For the purposes of this section,--
- (a)"company" means any body corporate and includes a firm or other association of individuals; and
- (b)"director", in relation to a firm, means a partner in the firm.
Summary
- If a company breaks any rules of this Act, the company itself is considered guilty.
- The person in charge of the company at that time is also held responsible and guilty.
- A person in charge is not punished if they prove they didn't know about the crime.
- They are also not punished if they can prove they worked hard (due diligence) to prevent it.
- If a director or manager helped commit the crime or was lazy, they are also personally guilty.
- For this law, a "company" includes firms and other groups of people.
Practical examples
FAQ
1. Who is blamed when a corporation breaks the law?
Both the company and the person who was in charge of its business at the time.
2. Can a Director go to jail for something the company did?
Yes, if they were in charge or if the crime happened because they were neglectful or helped it happen.
3. What does "due diligence" mean here?
It means taking all necessary and reasonable steps to make sure the rules were being followed.
4. Does this apply to a small family business?
Yes, the term "company" includes any body corporate, firm, or association of individuals.
5. What if I am a partner in a firm?
Under this section, the word "director" in relation to a firm means a partner.
Test yourself
Q1.Under Section 27 of The Payment and Settlement Systems Act, 2007, who is liable when a company commits an offence?
Q2.According to Section 27 of The Payment and Settlement Systems Act, 2007, a person in charge can avoid punishment if they prove what?
Q3.Under Section 27 of The Payment and Settlement Systems Act, 2007, what happens if a director's "neglect" leads to a violation?
Q4.Under Section 27 of The Payment and Settlement Systems Act, 2007, how is the word "director" defined for a partnership firm?