Section 203: Which company is required to Appoint a whole time Company Secretary

Section 203: Which company is required to Appoint a whole time Company Secretary.  
As per the provision of Sub-section (1) of Section. 203 of the 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 –

Managing director, or Chief Executive Officer or manager and in their absence, a whole-time director.

Company Secretary; and

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, —

the articles of such a company provide otherwise; or

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.
Applicable Provisions
The MCA adjudication order 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 (ER), Guwahati, for consideration.
Facts of the Case with ROC and RD
In Aura Hotels & Resorts Private Limited, appellants being an unlisted private limited company failed to appoint a full time Company Secretary as required under the provisions of Sub-section of Section. 203 of the Companies Act, 2013 read with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personals) Rules, 2014.
The appellant company had a paid-up capital of Rs. 19,71,00,000/- as on 01.04.2014 i.e. on the date of commencement of the Companies Act, 2013 which came into effect w.e.f. from 1st April 2014 and thereby, there was a default for non-compliance of the provisions of Section 203 of the Companies Act, 2013 read with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Considering the fact and circumstances of the case, Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD) and an opportunity of being heard was given by the RD to appellants on 29/05/2024.The authorised representative stated that :
1. The Company did not have any commercial activity during the defaulting period. There was no revenue generation and Company was incurring constant losses and had negative net worth during the defaulting period.
2. Protests and disruptions of life and business due to anti Citizenship Amendment Bill (CAB) protests/ COVID-19 pandemic and genuine scarcity of Company Secretaries in state of Meghalaya.
3. The Company in question is a Private limited Company with four members only. There was no public injury because of default, the default was made good and there was no repetition of default, there was no loss caused to any investor or group of investors or creditors because of the default.
4. The default was made good by filing DIR -12 for appointment of Mrs. Manisha Kedia as a whole time Company Secretary from 01.02.2021 vide SRN T07926031 dated 04.03.2021 with a delay of 3227 days (730 days under Companies Act, 1956 and 2497 days
Imposed Penalty
Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty on companies and officers in default as follows:

Nature of Default
Violation of Section of the Companies Act, 2013
Company/Officers to whom penalty imposed
No. of Delays in Default
Total Penalty (Minimum)
Maximum Penalty for Defaults (Rs.) as per Section 203(5) of the Act
Penalty Imposed

Non-Appointment of Whole Time Company Secretary
Section 203(1)
Company
3227
Rs. 5,00,000 + Rs. 1,000/day for 3227 days
Rs. 5,00,000
Rs. 5,00,000

Vikas Agarwal
3227
Rs. 50,000 + Rs. 1,000/day for 3227 days
Rs. 5,00,000
Rs. 5,00,000

Lesly Shylla
3227
Rs. 50,000 + Rs. 1,000/day for 3227 days
Rs. 5,00,000
Rs. 5,00,000

Confirming ROC Order
Taking into consideration the adjudication order of the ROC submission made by the appellants in their application and oral submission of the authorised representative and ROC during the hearing, RD is of view that, there is merit in the reasons given by the appellants for delay in appointment of Company Secretary and therefore, there is a ground in interfering with the impugned adjudication order of the Registrar of Companies, Guwahati to the extent of reducing the quantum of penalty.
Accordingly, the penalties imposed are reduced from Rs. 5,00,000/(Rupees Five Lacs) to Rs. 1,10,000/- (Rupees One Lakh Ten Thousand) for the Company and Rs. 5,00,000/-(Rupees Five Lacs) to Rs 60,000/- (Rupees Sixty Thousand) on each of the appellant Director(s) of the Company. The Appellants shall pay the penalty in 15 days from the date of this order.
Any Benefit of Section 446B of Companies Act
Section 446B of the Companies Act, 2013 provides a significant relief mechanism for small companies and start-ups by reducing the penalty burden for certain non-compliances. Under this provision, if a small company or a start-up commits a default for which a penalty is prescribed under the Act, the penalty imposed shall not be more than half of the specified penalty, subject to a maximum limit. In adjudication matter of Aura Hotels & Resorts Private Limited does not fall under the criteria of section 446B of the companies Act 2013. However, after considering the matter RD has already reduce the penalty amount up to some extent.
CCL Observations:
The findings of the adjudication proceedings against Aura Hotels & Resorts Private Limited highlight a clear violation of Section 203 of the Companies Act, 2013, due to the company's failure to appoint Company Secretary within the prescribed time. After considering the facts, circumstances and submissions made by the appellant company RD reduce the penalty amount for both company and its officers in default up to some extent.
Download MCA Adjudication Order

As per the provision of Sub-section (1) of Section. 203 of the 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 –

Managing director, or Chief Executive Officer or manager and in their absence, a whole-time director.
Company Secretary; and
Chief Financial Officer.

the articles of such a company provide otherwise; or
the company does not carry multiple businesses:

Applicable Provisions

The MCA adjudication order 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 (ER), Guwahati, for consideration.

Facts of the Case with ROC and RD

In Aura Hotels & Resorts Private Limited, appellants being an unlisted private limited company failed to appoint a full time Company Secretary as required under the provisions of Sub-section of Section. 203 of the Companies Act, 2013 read with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personals) Rules, 2014.

The appellant company had a paid-up capital of Rs. 19,71,00,000/- as on 01.04.2014 i.e. on the date of commencement of the Companies Act, 2013 which came into effect w.e.f. from 1st April 2014 and thereby, there was a default for non-compliance of the provisions of Section 203 of the Companies Act, 2013 read with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Considering the fact and circumstances of the case, Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD) and an opportunity of being heard was given by the RD to appellants on 29/05/2024.The authorised representative stated that :

1. The Company did not have any commercial activity during the defaulting period. There was no revenue generation and Company was incurring constant losses and had negative net worth during the defaulting period.

2. Protests and disruptions of life and business due to anti Citizenship Amendment Bill (CAB) protests/ COVID-19 pandemic and genuine scarcity of Company Secretaries in state of Meghalaya.

3. The Company in question is a Private limited Company with four members only. There was no public injury because of default, the default was made good and there was no repetition of default, there was no loss caused to any investor or group of investors or creditors because of the default.

4. The default was made good by filing DIR -12 for appointment of Mrs. Manisha Kedia as a whole time Company Secretary from 01.02.2021 vide SRN T07926031 dated 04.03.2021 with a delay of 3227 days (730 days under Companies Act, 1956 and 2497 days

Imposed Penalty

Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty on companies and officers in default as follows:

Nature of Default	Violation of Section of the Companies Act, 2013	Company/Officers to whom penalty imposed	No. of Delays in Default	Total Penalty (Minimum)	Maximum Penalty for Defaults (Rs.) as per Section 203(5) of the Act	Penalty Imposed
Non-Appointment of Whole Time Company Secretary	Section 203(1)	Company	3227	Rs. 5,00,000 + Rs. 1,000/day for 3227 days	Rs. 5,00,000	Rs. 5,00,000
		Vikas Agarwal	3227	Rs. 50,000 + Rs. 1,000/day for 3227 days	Rs. 5,00,000	Rs. 5,00,000
		Lesly Shylla	3227	Rs. 50,000 + Rs. 1,000/day for 3227 days	Rs. 5,00,000	Rs. 5,00,000

Confirming ROC Order

Taking into consideration the adjudication order of the ROC submission made by the appellants in their application and oral submission of the authorised representative and ROC during the hearing, RD is of view that, there is merit in the reasons given by the appellants for delay in appointment of Company Secretary and therefore, there is a ground in interfering with the impugned adjudication order of the Registrar of Companies, Guwahati to the extent of reducing the quantum of penalty.

Accordingly, the penalties imposed are reduced from Rs. 5,00,000/(Rupees Five Lacs) to Rs. 1,10,000/- (Rupees One Lakh Ten Thousand) for the Company and Rs. 5,00,000/-(Rupees Five Lacs) to Rs 60,000/- (Rupees Sixty Thousand) on each of the appellant Director(s) of the Company. The Appellants shall pay the penalty in 15 days from the date of this order.

Any Benefit of Section 446B of Companies Act

Section 446B of the Companies Act, 2013 provides a significant relief mechanism for small companies and start-ups by reducing the penalty burden for certain non-compliances. Under this provision, if a small company or a start-up commits a default for which a penalty is prescribed under the Act, the penalty imposed shall not be more than half of the specified penalty, subject to a maximum limit. In adjudication matter of Aura Hotels & Resorts Private Limited does not fall under the criteria of section 446B of the companies Act 2013. However, after considering the matter RD has already reduce the penalty amount up to some extent.

CCL Observations:

The findings of the adjudication proceedings against Aura Hotels & Resorts Private Limited highlight a clear violation of Section 203 of the Companies Act, 2013, due to the company's failure to appoint Company Secretary within the prescribed time. After considering the facts, circumstances and submissions made by the appellant company RD reduce the penalty amount for both company and its officers in default up to some extent.