Nithin Kamath, co-founder and CEO of Zerodha, known for his fitness, recently found himself on the receiving end of a fine alongside other key directors of Zerodha Asset Management Private Limited. The Ministry of Corporate Affairs (MCA) penalized the company for failing to appoint a Chief Financial Officer (CFO) within the stipulated timeframe, as reported by MoneyControl. This lapse constitutes a violation of Section 203 of the Companies Act, 2013, which requires companies like Zerodha, classified as public companies with a paid-up share capital exceeding Rs 10 crore, to have full-time key managerial personnel, including a CFO.
The penalties levied on the individuals include Rs 4.08 lakh for Kamath, the highest penalty of Rs 5 lakh for Director Rajanna Bhuvanesh, followed by CEO Vishal Virendra Jain (Rs 3.45 lakh), Company Secretary Shikha Singh (Rs 3.45 lakh), Director Nithya Easwaran (Rs 1.50 lakh), and Director Tushar Mahajan (Rs 1.50 lakh).
On January 9, 2024, Zerodha Asset Management filed a suo-moto application acknowledging their failure to appoint a CFO, thereby admitting to the breach of the law. The company remained non-compliant with the rule until March 24, 2023, when Chintan Bhatt was finally appointed as the CFO. This delay in fulfilling the legal requirement resulted in the Ministry’s decision to impose substantial penalties.
However, Vishal Jain, CEO of Zerodha Asset Management Private Limited, clarified that the order pertains to the period after the company’s incorporation but before its commencement of operations.
