Ensuring legal compliance, upholding corporate governance standards, supporting the board of directors, promoting transparency, and providing expert advice to the management team are all crucial aspects of appointing a Company Secretary under the Companies Act, 2013. Their role significantly contributes to the smooth functioning and responsible conduct of the company. In this article, we will explore a case where a company faced penalties due to its failure to appoint a Company Secretary as mandated by the law.
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According to the available records on the MCA Portal, the paid-up capital of the company is Rs. 12,20,51,310/-. However, the company has failed to appoint a whole-time Company Secretary as a Key Managerial Personnel (KMP) since August 1, 2016, following the vacancy that occurred after the previous whole-time Company Secretary ceased their position on July 31, 2016. This failure to appoint a new Company Secretary within the stipulated six-month timeframe from the date of vacancy is in violation of the provisions outlined in the Companies Act, 2013.
Moreover, the Registrar of Companies (ROC) has issued an Adjudication Notice to the company and its officers who are in default. This notice offered an opportunity to be heard, but neither the company nor any of its directors attended the hearing, and no response was submitted in this regard.
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πππππ’π¨π§ 203 (ππ©π©π¨π’π§ππ¦ππ§π π¨π πππ² πππ§ππ ππ«π’ππ₯ πππ«π¬π¨π§π§ππ₯)
(1) Every Company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel,
(i) Managing Director or Chief Executive Officer or manager and in their absence, a whole-time director.
(ii) Company Secretary and
(iii) Chief Financial Officer.
(2) If the office of any whole-time key managerial personnel is vacated or if the company becomes liable for appointment of whole-time company secretary by virtue of Section 203 read with Rule 8A of the (Appointment & Remuneration of Managerial Personnel Amendment Rules, 2014 and 2020, the company is liable to fill the vacancy after approving it in the meeting of the Board within a period of six months from the date of such vacancy.
(3) “If any company makes any default in complying with the provisions of this section, such company shall be liable to a penalty of five lakh rupees and every director and key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees and where the default is continuing one, with a further penalty of one thousand rupees for each day after the first during which such default continues but not exceeding five lakh rupees”.
RULE 8 (APPOINTMENT & REMUNERATION OF MANAGERIAL PERSONNEL AMENDMENT RULES, 2014 (W.E.F 09.06.2014)
Appointment of Key Managerial Personnel under Rule 8. “Every listed company and every other public company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel”
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GTZ Securities Limited’s failure to appoint a Company Secretary within the stipulated timeframe resulted in penalties. According to Section 203(4) of the Companies Act, 2013, the company faced a penalty of Rs. 5,00,000/-, while each of its three directors incurred a penalty of Rs. 5,00,000/-. The cumulative penalty amounted to Rs. 20,00,000/-.
Source- https://www.mca.gov.in/bin/dms/getdocument?mds=amB6KwR3p%252FqnOAb5wm%252BCtA%253D%253D&type=open
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