Section 453- Punishment For Improper Use Of "Limited" Or "Private Limited"
Updated: Oct 20, 2022
Section 453 of the Companies Act, 2013 describes the improper use of the words “Limited” and “Private Limited” by any company.
According to Section 453 of the Act, the word “Limited” can be used by only those companies whose members have limited liability, or where the liability of such a company is limited.
In addition to this, the section also states that the words “Private Limited” can only be used by those companies which are incorporated as private companies having limited liability under the laws.
In case of any contravention with the use of the above-stated words, i.e. “Limited” or “Private Limited”, any person or persons who are found guilty would be liable to punishment with a fine of Rs. 500. This fine can extend up to Rs. 2,000 only.
Under Section 453 of the Companies Act, 2013, the fine will be for every day for which the title or the name has been used.
Illustration- A company, Xyz Ltd., has been incorporated as a public company and for one of its businesses, one member mentioned the name of the company as Xyz Pvt. Ltd. Because of his carelessness.
Now, after some time this irregularity came into the knowledge of the third party that was dealing with Xyz Ltd. When a case was filed against the company, the person who was responsible for the mistake was punished under Section 453 of the Companies Act, 2013 with a fine of Rs. 1,000 for every day for which he used the words “Private Limited”.