The Ministry of Corporate Affairs (MCA) has fined Zerodha Asset Management Private Limited, its directors, and CEO Nithin Kamath Rs 5 lakh for failing to appoint a Chief Financial Officer (CFO) within the required timeframe, thereby violating the law. Zerodha admitted to this violation on January 9 of this year, stating that they did not appoint a CFO, which is mandatory for public companies with a share capital exceeding Rs 10 crores.

According to Section 203(1) of the Act, big-sized companies must have full-time key managerial personnel, such as a CFO and a company secretary. Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 states that any public company with a paid-up share capital of Rs 10 crore or more must adhere to this requirement.

The order added that the company failed to comply with this rule until March 24, when Chintan Bhatt was finally appointed, leading to the ministry’s decision to impose significant penalties.

Vishal Jain, CEO of Zerodha Asset Management Private Limited, clarified that the MCA’s order applies to the period after the company’s incorporation but before it began operations. 

The company is contesting the order and has filed an appeal with the Regional Director, Hyderabad. The MCA has fined the company Rs 5 lakh.

Social Media Reaction:

Internet users are reacting negatively to Zerodha’s CEO, accusing the company of hypocrisy and mocking the constant glitches in the trading app.

One user wrote, “Before giving Gyan to the world they need to do their pending work first like the above one and so many technical glitches in the system.”

Another user commented, “Isse zyada toh glitches ki wajah se losses ho jaate hain logon ke”

A third user replied, “They should have fined zerodha for continuous glitch….rather than blood boiling reforms like increased margins for options sellers….”

A fourth user wrote, “What about glitches. Very often zerodha gets hang always at important time. What about compensation. U should be fined heavily for such mistakes.”