Section 11: Offences by Companies and Corporate Liability

Overview

Section 11 of the Promotion and Regulation of Online Gaming Bill, 2025, clarifies that if a company breaks the rules set out in this law, the people running the company can be held responsible. However, it also provides a way for those individuals to defend themselves by proving they weren’t aware of the wrongdoing or did everything possible to prevent it. This section aims to ensure accountability within companies involved in online gaming.

Key Provisions

• Corporate Liability: If a company commits an offence under the Act, individuals 'in charge of and responsible' for the company’s business are deemed guilty.
• Due Diligence Defence: Individuals can avoid liability if they prove the offence occurred without their knowledge and they took all reasonable steps to prevent it.
• Consent, Connivance, or Neglect: Directors, managers, secretaries, or other officers are also liable if the offence happened with their permission, knowledge (connivance), or because they weren’t careful enough (neglect).
• Protection for Non-Executive Directors: The section generally protects directors not involved in daily operations, unless there’s proof of their consent, connivance, or neglect.

Practical Impact

This section significantly impacts companies operating in the online gaming space. It places a strong emphasis on corporate governance and risk management. Companies must implement robust compliance programs and ensure those in leadership positions are actively involved in preventing violations of the Act. Individuals within these companies, particularly those in management roles, need to be aware of their potential liability and take proactive steps to ensure compliance. Government authorities will likely focus on investigating the roles of key personnel when offences are reported.

Examples

• Example 1: A small online gaming company’s marketing team runs an advertisement that violates the Act’s rules on responsible gaming. The CEO, who was unaware of the specific ad content and had a clear policy against misleading advertising, can likely use the ‘due diligence’ defence.
• Example 2: A director of a large online gaming company knows that the company is offering games to users in a state where online gaming is prohibited, but does nothing to stop it. Even if they weren’t directly involved in the day-to-day operations, they could be held liable due to their consent or neglect.