Adjudication Order u/s 454 for violating Sec. 203 against Webex Communications by ROC-Hyderabad

Adjudication Order u/s 454 for violating Sec. 203 against Webex Communications by ROC-Hyderabad. In this article, we will take you through the mandatory provisions under Section 203 of the Companies Act, 2013. According to this section, 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 
Failure to comply with these requirements may result in penalties for both the company and the officers in default, as specified under Section 450 of the Companies Act, 2013. Therefore, it is essential to adhere to these provisions to avoid any legal consequences. 
Applicable Provisions: - 
As per section 203(1) of Companies Act 2013, 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 
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 Executive Officer of the company at the same time after the date of commencement of this Act unless, — 
(a) The articles of such a company provide otherwise; or 
(b) The company does not carry multiple businesses: 
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. 
Facts of the case: - 
Registrar of Companies in his order of adjudication has stated that the company has failed to appoint the appoint the Wholetime Company Secretary i.e., violation of section 203 of the Act. Registrar of Companies in Hyderabad has imposed a substantial penalty of 21.47 lakh rupees on Webex Communications (India) Private Limited for a delay spanning 1116 days in the appointment of a company secretary. This adjudication, conducted under Section 454 of the Companies Act, 2013, has raised 
The company and its former directors filed an appeal, because they couldn't meet compliance requirements for some reasons. The company has put all kits efforts into appointing the Company Secretary but could not do so during the lock down and covid 19 pandemic period and the delay was inadvertent and unintentional. 
Considering their efforts and the impact of the Covid pandemic, the Regional Director decided to reduce the penalties significantly. The final penalty was cut to 25% of the original amount, totaling Rs. 5,36,750 which was a major reduction reflecting the company’s proactive measures and the global crisis. 
Penalty Imposed by Registrar of Companies on Company and Officers in Default 
Taking into consideration the facts of the appeal and submissions made by the authorized representative, the penalty imposed by Registrar of Companies is reduced to 25%.

Violation of section

Penalty imposed on company/ directors

Penalty imposed by ROC

Revised penalty imposed by RD

Sec. 203 of the Companies Act, 2013

Company

5,00,000

1,25,000

Director-1

5,00,000

1,25,000

Director-2

5,00,000

1,25,000

Director-3

4,38,000

1,09,500

Director-4

2,09,000

52,250

Total

21,47,000

5,36,750

Reduction in penalty 
The ground stated for the reduction of penalty are as follows:

That there is no availability of suitable qualified Company Secretary during the lock down and covid 19 pandemic period and the delay was inadvertent and unintentional.

Exemption to Startup/ Small Company/OPC under section 446B:  
As per sec. 446B of the Companies Act, 2013, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be. 
In this case, Section 446B does not apply, as the company does not meet the criteria. 
Conclusion 
The MCA's decision to support Webex Communications (INDIA)in India is a clear example of how regulators can adapt to unusual situations. It highlights the need for regulatory bodies to take into account global issues like the COVID-19 pandemic when evaluating how businesses manage their operations and follow rules. 
This case sets a new standard for how violations are judged, showing that the importance of complying with all legal provisions, as failure to do so led to significant penalties. 
Download MCA adjudication order

In this article, we will take you through the mandatory provisions under Section 203 of the Companies Act, 2013. According to this section, 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

Failure to comply with these requirements may result in penalties for both the company and the officers in default, as specified under Section 450 of the Companies Act, 2013. Therefore, it is essential to adhere to these provisions to avoid any legal consequences.

Applicable Provisions: -

As per section 203(1) of Companies Act 2013, 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

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 Executive Officer of the company at the same time after the date of commencement of this Act unless, —

(a) The articles of such a company provide otherwise; or

(b) The company does not carry multiple businesses:

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.

Facts of the case: -

Registrar of Companies in his order of adjudication has stated that the company has failed to appoint the appoint the Wholetime Company Secretary i.e., violation of section 203 of the Act. Registrar of Companies in Hyderabad has imposed a substantial penalty of 21.47 lakh rupees on Webex Communications (India) Private Limited for a delay spanning 1116 days in the appointment of a company secretary. This adjudication, conducted under Section 454 of the Companies Act, 2013, has raised

The company and its former directors filed an appeal, because they couldn't meet compliance requirements for some reasons. The company has put all kits efforts into appointing the Company Secretary but could not do so during the lock down and covid 19 pandemic period and the delay was inadvertent and unintentional.

Considering their efforts and the impact of the Covid pandemic, the Regional Director decided to reduce the penalties significantly. The final penalty was cut to 25% of the original amount, totaling Rs. 5,36,750 which was a major reduction reflecting the company’s proactive measures and the global crisis.

Penalty Imposed by Registrar of Companies on Company and Officers in Default

Taking into consideration the facts of the appeal and submissions made by the authorized representative, the penalty imposed by Registrar of Companies is reduced to 25%.

Violation of section	Penalty imposed on company/ directors	Penalty imposed by ROC	Revised penalty imposed by RD
Sec. 203 of the Companies Act, 2013	Company	5,00,000	1,25,000
	Director-1	5,00,000	1,25,000
	Director-2	5,00,000	1,25,000
	Director-3	4,38,000	1,09,500
	Director-4	2,09,000	52,250
	Total	21,47,000	5,36,750

Reduction in penalty

The ground stated for the reduction of penalty are as follows:

That there is no availability of suitable qualified Company Secretary during the lock down and covid 19 pandemic period and the delay was inadvertent and unintentional.

Exemption to Startup/ Small Company/OPC under section 446B:

As per sec. 446B of the Companies Act, 2013, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be.

In this case, Section 446B does not apply, as the company does not meet the criteria.

Conclusion

The MCA's decision to support Webex Communications (INDIA)in India is a clear example of how regulators can adapt to unusual situations. It highlights the need for regulatory bodies to take into account global issues like the COVID-19 pandemic when evaluating how businesses manage their operations and follow rules.

This case sets a new standard for how violations are judged, showing that the importance of complying with all legal provisions, as failure to do so led to significant penalties.