Failure To Appoint Company Secretary: RoC Imposes Penalty Of Rs. 30 Lakhs On Standard Glass Lining Technology
The Registrar of Companies, Hyderabad has imposed a penalty of Rs. 30 Lakhs on M/s Standard Glass Lining Technology Limited and its directors for failure to appoint a company secretary and with a delay of five years and five months.
Section 203(1) of the Companies Act, 2013 mandates that every company belonging to certain 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.
- Chief Financial Officer.
Brief Facts:
M/s Standard Glass Lining Technology Limited suo moto applied for adjudication and stated that its paid-up capital increased from Rs. 3,57,14,290 to Rs. 6,02,00,000. Consequently, the company was required to appoint a company secretary within six months from April 30, 2014, which meant by October 31, 2014. Despite taking all possible steps, the company failed to meet this requirement within the stipulated time.
According to a notification dated January 3, 2020, Rule 84 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 was amended which raised the threshold limit of paid-up capital for appointing a Company Secretary to Rs. 10,00,00,000, effective from April 1, 2020. Nevertheless, the company only appointed a Company Secretary on October 1, 2021 which resulted in a delay of five years and five months.
Observations by the RoC:
The RoC noted that the company appointed a Company Secretary only on October 1, 2021 which resulted in a significant delay of five years and five months.
The RoC noted that Section 203(1) of the Companies Act which outlines the requirement for certain classes of companies to appoint key managerial personnel including a managing director or CEO, a company secretary, and a CFO. Further, the RoC noted that Section 203(5) prescribes penalties for non-compliance, including a penalty of five lakh rupees for the company and five lakh rupees for each director and key managerial personnel in default, with an additional penalty for continuing contraventions.
Therefore, the RoC held that the company and its officers were in violation of Section 203(1). The RoC fined the company for five lakh rupees, while the directors and key managerial personnel in default were fined fifty thousand rupees each.
Adjudication Order Under Section 203(1) Of The Companies Act, 2013 In The Matter Of M/S. Standard Glass Lining Technology Limited