Article · Directors & KMP Advisory
For Directors · Personal Liability, Asset Risk & Fiduciary Blindspots
The "Officer in Default" Matrix
Liability does not attach to every director equally. A written responsibility matrix decides who answers for what.
2 min read
Liability for a company's default does not automatically attach to every director in the same way. Section 2(60) identifies categories of "officer who is in default", including specified officers, persons charged with responsibility, and persons whose knowledge, consent, connivance, or lack of diligence is connected with the contravention.
The relevant question is usually who owned the compliance obligation, who had the necessary information and authority, and who approved or allowed the lapse. The answer may depend on the statute, delegations, reporting lines, Board records, committee processes, and facts of the particular breach.
Maintain a written responsibility matrix allocating material compliance areas to named functions and senior owners. This should cover secretarial filings, financial reporting, tax, labour law, SEBI disclosures, insider-trading controls, data protection, related-party approvals, sector licences, and borrowing covenants.
The matrix should be supported by authority, access to information, escalation paths, compliance calendars, and Board reporting. It cannot protect a person who knowingly participates in wrongdoing, but it can help establish who was actually responsible when a regulator examines a failure.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Boards should consult qualified legal counsel for company-specific guidance.