Compounding of offences is a settlement mechanism, by which, the offender is given an option to pay money in lieu of his prosecution. Any offence punishable under the Companies Act (whether committed by a company or any officer thereof) not being an offence punishable with imprisonment only, or punishable with imprisonment and also with fine, may, either before or after the institution of any prosecution, be compoundable. In following cases, compounding shall not be allowed:
1. Offence punishable with “imprisonment only”; or
2. Offence punishable with “imprisonment and fine”; or
3. Where an investigation has been initiated or is pending against the company; or
4. Where a similar offence has been compounded within the last three years.
