Default in Appointment of Whole-Time Company Secretary: MCA Imposes Penalty

The Ministry of Corporate Affairs (MCA) imposed penalty on the company, Apex Traders and Exporters Ltd, that has defaulted the appointment of whole-time company secretary

The applicant company and its officers, who have defaulted the provisions of section 203(1) r/w 203(5) of the Act for non-appointment of Whole- Time Company Secretary are liable for penalties under section 203(5) of the Companies Act, 2013.

The Company is listed at Calcutta Stock Exchange. However, the Company did not have any turnover during the intervention period (including period of Covid-19. Thus, the Company could not appoint a Company Secretary.

Whereas section 203(1) of the Companies Act 2013, read with Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rule 2014, 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

iii) Chief Financial Officer:

Provided that an individual shall not be appointed or reappointed as the chairperson of the company, in pursuance of the articles of the company, as well as the managing director or chief financial officer of the company at the same time after the date of commencement of the Act unless,-

(a) The article of such a company provides otherwise, or

(b) The company does not carry multiple businesses:

Provided further that nothing contained in the first proviso shall apply to such class of companies engaged in multiple businesses and which has appointed one or more Chief Executive Officers for each such business as may be notified by the Central Government.

AK Sethi, ICLS, Adjudicating Officer and Registrar of Companies observed that “I do hereby impose the penalty of Total Rupees Ten Lakh Fifty Eight Thousand only) i.e., Rupees Five Lakh only on the Company and Rupees One Lakh Eighty Six Thousand only on each of its 3 (three) officers-in-default pursuant to Rule 30 2) of Companies (Adjudication Of Penalties) Rules, 2014 and the proviso of the said Rule and Rule 3(13) of Companies (Adjudication Of Penalties) Rules.”

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates