Can a company run without a whole time Company Secretary under Section 203?

Can a company run without a whole time Company Secretary under Section 203?. In this article, we will take you through the provisions of Section 203 of the Companies Act, 2013, which deals with the appointment of key managerial personnel, including the requirement for companies to appoint a whole-time Company Secretary, Managing Director, or Chief Executive Officer. The section aims to ensure proper corporate governance and compliance with regulatory standards by mandating the presence of qualified professionals in key roles.
Applicable Provisions
The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties. The relevant rules include the Companies (Adjudication of Penalties) Rules, 2014. The matter was brought before the Regional Director (WR), Hyderabad, for consideration.
Facts of the Case with ROC and RD
Amara Raja Media Private Limited, a company, was found to be in default of Section 203 of the Companies Act 2013. The appellants have filed the appeal under section 454 (4) of the Companies Act, 2013 against the RD adjudication order dated 22.03.2024 passes by the ROC for violation of section 203 of the companies Act 2013 as the company and its managing director had admitted that there was a non-compliance of provisions of above-mentioned section.
ROC observed that the company has not appointed the whole-Time company secretary as required under section 203 (1) of the companies Act 203 (1) of the companies Act 2013 r/w Rule 8A of the companies (Appointment and Remuneration) Rules 2014 for the period of 26.09.2020 to 21.11.2021.
ROC while imposing penalty stated that appellant company has submitted the application under section 66 of the companies Act 2013 for the reduction of share capital of the company vide dated 10.10.2023. In this connection while processing the above said application, it was observed that appointed company secretary had resigned on 26.03.2020 and other CS were appointed as on 22.11.2021 with a delay of 1 year 7 months 26 days.
The Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD). The hearing was attended by the company's representative, a Practicing Company Secretary and contended that are:

During the period between 26th September 2020 to 21st November 2021, the entire nation was suffering from the COVID -19 pandemic, and the appellant company was no exception.
The government of India during the aforementioned period ordered a nationwide lockdown for limiting the movement of the entire population of India.
During the noncompliance period, COVID-19 pandemic has affected the Media & Entertainment Industry enormously.
The appellant company post pandemic was able to balance its functioning and operations had started the process of appointment of CS and has finally appointed whole time Company Secretary as on 22.11.2021.

Imposed Penalty
The ROC after considering the fact and circumstances of the case levied penalties. The penalty amount was determined based on the company's failure to comply with the relevant legal requirements. The details of the penalty, are as follows
For non-appointment of Company Secretary:

On Company: Rs, 9,21,000

On Managing Director: Rs. 4,71,000

Reduction in Penalty
Upon hearing the appeal, the RD reviewed the circumstances surrounding the non-compliance. The company’s arguments, including mitigating factors and potential rectifications, were considered. Consequently, the RD exercised its discretion to reduce the penalty amount to Rs. 1,50,000 for the company and by 10% of the penalty on all other individuals.
For non-appointment of Company Secretary:

On Company: Rs, 1,00,000

On Managing Director: Rs. 50,000

Any Benefit of Section 446B of Companies Act
Section 446B of the Companies Act, 2013, provides for lesser penalties in cases involving small companies and startups. However, in Tethys Properties Private Limited, concerned RD has already reduce the amount of penalties after considering all the facts and circumstances up to a great extent.
My observations:
The case of Amara Raja Media Private Limited highlights the procedural aspects of penalty adjudication under the Companies Act, 2013. While the ROC initially imposed penalties for non-compliance, the RD provided a reconsideration platform, leading to a reduction in the penalty. This highlights the importance of timely appeals and the discretion available under the law to mitigate financial liabilities in justified cases. Companies must ensure adherence to statutory requirements to avoid penalties while also leveraging available legal remedies for relief when necessary.
Download MCA Adjudication Order

In this article, we will take you through the provisions of Section 203 of the Companies Act, 2013, which deals with the appointment of key managerial personnel, including the requirement for companies to appoint a whole-time Company Secretary, Managing Director, or Chief Executive Officer. The section aims to ensure proper corporate governance and compliance with regulatory standards by mandating the presence of qualified professionals in key roles.

Applicable Provisions

The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties. The relevant rules include the Companies (Adjudication of Penalties) Rules, 2014. The matter was brought before the Regional Director (WR), Hyderabad, for consideration.

Facts of the Case with ROC and RD

Amara Raja Media Private Limited, a company, was found to be in default of Section 203 of the Companies Act 2013. The appellants have filed the appeal under section 454 (4) of the Companies Act, 2013 against the RD adjudication order dated 22.03.2024 passes by the ROC for violation of section 203 of the companies Act 2013 as the company and its managing director had admitted that there was a non-compliance of provisions of above-mentioned section.

ROC observed that the company has not appointed the whole-Time company secretary as required under section 203 (1) of the companies Act 203 (1) of the companies Act 2013 r/w Rule 8A of the companies (Appointment and Remuneration) Rules 2014 for the period of 26.09.2020 to 21.11.2021.

ROC while imposing penalty stated that appellant company has submitted the application under section 66 of the companies Act 2013 for the reduction of share capital of the company vide dated 10.10.2023. In this connection while processing the above said application, it was observed that appointed company secretary had resigned on 26.03.2020 and other CS were appointed as on 22.11.2021 with a delay of 1 year 7 months 26 days.

The Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD). The hearing was attended by the company's representative, a Practicing Company Secretary and contended that are:

During the period between 26th September 2020 to 21st November 2021, the entire nation was suffering from the COVID -19 pandemic, and the appellant company was no exception.
The government of India during the aforementioned period ordered a nationwide lockdown for limiting the movement of the entire population of India.
During the noncompliance period, COVID-19 pandemic has affected the Media & Entertainment Industry enormously.
The appellant company post pandemic was able to balance its functioning and operations had started the process of appointment of CS and has finally appointed whole time Company Secretary as on 22.11.2021.

Imposed Penalty

The ROC after considering the fact and circumstances of the case levied penalties. The penalty amount was determined based on the company's failure to comply with the relevant legal requirements. The details of the penalty, are as follows

For non-appointment of Company Secretary:

On Company: Rs, 9,21,000
On Managing Director: Rs. 4,71,000

Reduction in Penalty

Upon hearing the appeal, the RD reviewed the circumstances surrounding the non-compliance. The company’s arguments, including mitigating factors and potential rectifications, were considered. Consequently, the RD exercised its discretion to reduce the penalty amount to Rs. 1,50,000 for the company and by 10% of the penalty on all other individuals.

For non-appointment of Company Secretary:

On Company: Rs, 1,00,000
On Managing Director: Rs. 50,000

Any Benefit of Section 446B of Companies Act

Section 446B of the Companies Act, 2013, provides for lesser penalties in cases involving small companies and startups. However, in Tethys Properties Private Limited, concerned RD has already reduce the amount of penalties after considering all the facts and circumstances up to a great extent.

My observations:

The case of Amara Raja Media Private Limited highlights the procedural aspects of penalty adjudication under the Companies Act, 2013. While the ROC initially imposed penalties for non-compliance, the RD provided a reconsideration platform, leading to a reduction in the penalty. This highlights the importance of timely appeals and the discretion available under the law to mitigate financial liabilities in justified cases. Companies must ensure adherence to statutory requirements to avoid penalties while also leveraging available legal remedies for relief when necessary.