Delay in Appointment of Company Secretary Costs Company and Directors Rs 8.8 lakh Penalty

The Ministry of Corporate Affairs (MCA), through the Registrar of Companies (ROC) Mumbai, has penalized First Meridian Business Services Limited and its designated officers a total of Rs. 8.8 lakh. This statutory penalty was imposed because of a 144-day delay in filling the key managerial personnel vacancy of the Company Secretary, thereby directly violating the prescribed compliance period under Section 203(4) of the Companies Act, 2013.

On January 17, 2024, the previous Company Secretary Ms. Monali Joshi, resigned from her office and the statutory office fell vacant. According to the application of Section 203(4) of the Act, the Company was under an obligation to fill this statutory vacancy through a Board meeting within a maximum period of 6 months from the date of the offce being vacant. The Company after a delay of 144 days, appointed Mr Girish Kumar to the position.

The company, along with its whole-time Director and CEO and Chief Financial Officer, filed a suo motu adjudication application before the Registrar of Companies (ROC) under Section 454 of the Act admitting the default. The Adjudicating Officer observed that the company had clearly violated Section 203 by failing to comply with the maximum time period to fill the vacancy.

Accordingly, the Registrar of Companies (ROC) exercised the powers under Section 454 of the Companies Act and imposed a penalty of Rs 5 lakh on the company. Further, penalties of Rs 1.93 lakh each were imposed on Mr Srinivasan Satish and Mr Sudhakar Balakrishnan, which included Rs 50,000 for the initial default and Rs 1,000 per day for 143 days of continuing default under Section 203(5) of the Act.

The Registrar has directed the noticees to pay the penalty within 90 days through the MCA e-adjudication portal and clarified that the penalties imposed on the officers in default must be paid from their personal sources or income.