ROC Slaps Penalty of Rs. 20 Lakhs for Non-Appointment of Company Secretary

Every listed company and every other public company having a paid-up share capital of ten crore rupees or more shall have a Company Secretary.

Penalty for Non-Appointment of Company Secretary

CA Pratibha Goyal | May 22, 2023 |

ROC Slaps Penalty of Rs. 20 Lakhs for Non-Appointment of Company Secretary

ROC Slaps Penalty of Rs. 20 Lakhs for Non-Appointment of Company Secretary

AMBICA SHIPPING & INDUSTRIES LIMITED [herein after known as Company] is a registered company with this office incorporated on 23.04.1973 under the provisions of the Companies Act, 1956 having its registered office as per MCA21 Registry at address 31, LALA LAJPAT RAI SARANI, 5TH FLOOR KOLKATA WB 700020 INDIA.

Facts of the Case:

Appointment of Key Managerial Personnel.

203(1) 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:

203(5) 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.

Rule 8 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 deals with the appointment of Key Managerial Personnel.

Every listed company and every other public company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel. 

Reply of Company:

a) The Company is Listed on the Calcutta Stock Exchange Limited with 49 shareholders. The Stock Exchange where it is listed is a Regional Stock Exchange and is inoperative for more than two decades.

b) The Paid- up capital of the Company is Rs. 10 Lakhs with a “-ve” Net Worth of Rs. 0.63 Lakhs. There is no revenue from operations, and the loss at the FY ended 31.03.2021 stands at Rs. 2.25 Lakhs as against Rs. 1.86 Lakhs in the previous year.

c) Board tried to appoint a Company Secretary many times but could not get one. Due to no revenue generation by the Company, it is quite impossible to appoint a Company Secretary and meet other compliances.

d) The Company has approached many times for delisting it from the Calcutta Stock Exchange, however, could not arrange for the funds for payment of liabilities.

e) The default is not intentional, but circumstantial.

Thereof, the Company requested to take the judicious approach and sought for exemption from such compliance based on the Company’s financial situation.

ROC Order:

1. The applicant company and its officers, who have defaulted the provisions of section 203(1) r/w 203(5) of the Companies Act, 2013 for non-appointment of Whole- Time Company Secretary are liable for penalties under section 203(5) of the Companies Act, 2013.

2. In exercise of the powers conferred vide Companies (Amendment) Ordinance, 2019, the undersigned is entrusted to adjudicate penalties under section 203 of the Companies Act, 2013 with effect from 02.11.2018 and after taking into account the factors mentioned herein above, I do hereby impose the penalty of Total Rs. 20,00,000/- (Rupees Twenty Lakh only} i.e., Rs. 5,00,000/- (Rupees Five Lakh only} on the Company and Rs. 5,00,000/- (Rupees Five Lakh only) on each of its officers-in-default pursuant to Rule 3( 12} of Companies (Adjudication Of Penalties) Rules, 2014 and the proviso of the said Rule and Rule 3(13} of Companies (Adjudication Of Penalties} Rules, 2014 r/w General Circular No. 1 /2020 dated 02.03.2020; as per table below for violation of section 203(4) r/w 203(5) of the Act:

The noticee shall pay the said amount of penalty individually for the company and its directors (out of own pocket) by way of e-payment [available on Ministry Website.

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