What do you mean by compounding of offences ? Which offences can be compounded under the Companies Act, 2013 and which cannot ?

Answer 3A(iii) Compounding is not defined in Companies Act, 2013 or Foreign Exchange Management Act, 1999 or SEBI laws. As per the Black's Law Dictionary, to 'Compound' means "to settle a matter by a money payment, in lieu of other liability." As per this definition Compounding is akin to a Settlement Mechanism, a settlement by paying the penalty in lieu of facing the prosecution for the offence committed. By looking into the provisions of the Corporate Laws which contain provision for compounding, it will be noted that compounding is an admission of guilt either voluntarily or on receipt of notice of default or initiation of prosecution. The defaulters agree to pay penalty which may be ordered by the Compounding authority to be paid. Types of Compounding To compound an offence, it is necessary to know the type of offence. Offence on a topic of compounding can be of two types: Compoundable offence; and Non-compoundable offence. If the offence is compoundable, the same can be compounded as per the procedure prescribed and it is not possible to compound a non- compoundable offence. As per Section 441 of the Companies Act, 2013: Compoundable offence Any offence punishable under that Act (whether committed by a company or any officer thereof) not being an offence punishable with imprisonment only or imprisonment and also with fine may be compounded. Thus, if the offence is punishable with fine only or imprisonment or fine or with fine alone can be compounded. Non-compoundable offence Any offence punishable under this Act (whether committed by a company or any officer thereof) being an offence punishable with imprisonment only or imprisonment and also with fine cannot be compounded. Any offence otherwise compoundable cannot also be compounded if the investigation against such company has been initiated or is pending under this Act. An offence committed by a company or its officer within a period of three years from the date on which a similar offence committed by it or him was compounded under this section. If the offence is not similar, this restriction to compound will not apply. It may be noted that any second or subsequent offence committed after the expiry of a period of three years from the date on which the offence was previously compounded, shall be deemed to be a first offence and is eligible to be compounded.