Crossing Rs. 10 Crore Capital Without a CFO Violates Section 203; Company and Its Director Penalised

The Registrar of Companies (ROC) Chandigarh under the Ministry of Finance (MCA) has released an Adjudication Order dated January 07, 2026, against a company named Sael Industries Limited, bearing CIN U40106PB2022PLC055755, and its one director named Jasbir Singh, having DIN 01668231, under Section 454 of the Companies Act, 2013, imposing a penalty for the contravention of Section 203(5) of the Act.

The company had voluntarily filed an adjudication application dated October 01, 2025, admitting non-compliance committed by it under clause (iii) of subsection (1) of section 203 of the Companies Act, 2013, read with Rule 8 of the Companies Act (Appointment and Remuneration of Managerial Personnel) Rules, 2014, for non-appointment of the Chief Financial Officer (CFO) within the statutory time limit as specified under law. The appointment should have been made within six months, i.e., by July 03, 2023.

On July 04, 2022, the company increased its paid-up share capital to Rs. 46.12 crore, which crossed the legal limit of Rs. 10 crore. Once this limit is crossed, the Companies Act, 2013, makes it compulsory for the company to appoint a CFO. However, the company did not comply with the requirement; hence, the company was alleged to have violated Section 203 of the Act, read with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

In conclusion, the authority imposed a penalty of Rs. 5 lakh on the company and Rs. 50,000 on its director. The company has been directed to rectify the error and pay the entire penalty amount within 90 days from receiving the order.