Directors to be responsible in the case of loss of net worth of company

Directors to be responsible in the case of loss of net worth of company

(1) If the net worth of a public company is reduced to half the paid-up capital or less than that the directors shall prepare an appropriate strategy for the interest of the company and shareholders, as well, within thirty-five days of the knowledge of this matter, and present a separate resolution thereon at the general meeting toe held immediately after the knowledge of such matter.

            Provided, however, that where approval of the general meeting is required to implement such strategy, the extraordinary general meeting shall be called promptly.

(2) The directors of the company who fails to prepare strategy or to present a resolution at the general meeting pursuant to Sub-section (1) or who knowingly permit the existence of the situation where such meeting is not called shall be liable to punishment under this Act.

(3) If it is held that the net worth of company has been reduced as mentioned in Sub-section (1) as a result of mala fide intention or malicious recklessness of any director, the director who commits such act shall also be liable to pay compensation for the same.