SHORT SUMMARY
Section 203 of the Company Act of 2013, as amended by Rule 8 (Appointment and Remuneration of Managerial Personnel) Rule of 2014.
Every firm that belongs to the class or classes of companies specified in section 203(1) of the firm Act 2013 must have the following full-time key personnel:
(i) Managing Director, or Chief Executive Officer or Manager, and a full-time director in their absence;
(ii) Company Secretary; and
(iii) Chief Financial Officer
However, there are many companies registered with the Ministry of Corporate Affairs that have not adhered with the aforementioned regulations.
Every listed Company and other company with a paid-up share capital of ten crore rupees or more must have full-time Company Secretary.
Appreciating Move by Hon’ble ROC Kolkata:
According to MCA ROC Kolkata data, adjudication orders have been given to companies registered in Kolkata for the non-appointment of a full-time Company Secretary.
One of those orders will be discussed in this editorial:
“Adjudication Order in the Matter of
Ambica Shipping & Industries Limited”
FACTS OF THE CASE:
According to the information provided, the "Ambica Shipping & Industries Limited" Company is a Listed Company. It was also noted that the company has not appointed a Company Secretary since its incorporation.
As a result, the Adjudication Officer has issued an adjudication notice to the Company and the officials in default for violating the aforementioned provisions.
The corporation and all current directors have responded to the adjudication notification. As stated in the response,
- the default is not intentional as company faces financial losses and
- the net worth of the company is negative and
- the company generates no revenue from operations, making it difficult to appoint a Company secretary and meet other compliance requirements.
Mr. Abhijeet Jain, a Practicing company secretary, attended the physical hearing as the authorized representative of the firm and all the directors and submitted all essential information relating to noncompliance.
Because the PCS submission was unacceptable, the ROC issued the following order.
ORDER:
As per the section 203(5) 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 a 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,
According to the facts stated above, the Registrar of the Company imposed a penalty on the Company and the Officers in Default in accordance with the provision of the Company Act of 2013.
A positive proactive step performed by the company's Registrar to maintain positive Governance.
|
Name of Applicant
|
No. of days
|
First Default
|
Continuation Default
|
Total Maximum Penalty (Rs.)
|
|
Company
|
649 Days
|
5,00,000
|
5,00,000
|
5,00,000
|
|
Each Director (3)
|
649 Days for each Director
|
5,00,000
|
649*1,000=6,49,000
|
5,00,000
|
|
TOTAL PENALTY
|
2,000,000
|
Finding out about the Order:
It is imperative that all businesses with access to the Company Secretary provisions immediately appoint a CS. Noncompliance with regard to the appointment of the Company Secretary must be reported in the Company's MGT-7 and MGT-8 forms.
One can opine that, Non-compliance with Section 92 of the Companies Act, 2013 may also be asserted against a company secretary in practice if they fail to draw attention to the issue in MGT-7 and MGT-8.
Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).
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