Nithin Kamath, the 44-year-old co-founder and CEO of Zerodha, Bengaluru-based stock broking company, recently showcased his commitment to fitness by joining his colleagues for a workout session in the office. A video of the session quickly went viral, highlighting Kamath’s dedication to staying active.
However, Zerodha and its top executives, including Kamath, have faced a setback in the business realm. The Ministry of Corporate Affairs (MCA) has imposed a fine on Zerodha Asset Management Private Limited and its key directors for failing to appoint a Chief Financial Officer (CFO) within the required timeframe, according to a report by MoneyControl.
The failure to appoint a CFO by Zerodha Asset Management Private Limited has resulted in a violation of Section 203 of the Companies Act, 2013. This section mandates that companies with a paid-up share capital of over INR 10 crore, like Zerodha, must have a full-time CFO as part of their key managerial personnel, thereby classifying them as public companies.
Nithin Kamath has been fined INR 4.08 lakh by the Ministry of Corporate Affairs. However, Director Rajanna Bhuvanesh received the maximum penalty of INR 5 lakh for the violation.
Other individuals who received fines include CEO Vishal Virendra Jain and Company Secretary Shikha Singh, who were both fined INR 3.45 lakh. Directors Nithya Easwaran and Tushar Mahajan each received a fine of INR 1.50 lakh.
Zerodha Asset Management acknowledged its non-compliance with the law by filing a suo-moto application on January 9, 2024, admitting to not having a CFO in place. This violation persisted until March 24, 2023, when Chintan Bhatt was finally appointed as the CFO.
The MCA imposed significant penalties due to this delay. However, Vishal Jain clarified that the order pertains to the period after the company’s incorporation but before it commenced operations, attempting to provide context to the situation.
