Requirement of kmp

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Raja. (Querist)

03 June 2014 If a company is a private limited company and incorporated in may 2013. If its paid capital was increased above Rupees Five Crores on 06/02/2014. As the requirement of paid up capital for appointment of KMP as per compaines act 2013 is increased from Rupees Five Crores to Rupees Ten Crores from 01/04/2014. So I have a doubt whether the company has to appoint a company secretary and managing director although the limit of paid up capital increased to Rupees Ten Crores from 01/04/2014.

Experts views are solicited,

Abhinaya Kulkarni

Abhinaya Kulkarni (Expert)

04 June 2014 Before April 1, 2014 you may present that all reasonable efforts to comply with the provisions of sub-section (1) of section 383A were taken. (proviso)

On or after April 1, 2014 provisions apropos appointment of KMP, is not applicable to private companies. [Section 203 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014]

Raja.

Raja. (Querist)

04 June 2014 thanks for your reply.

As you stated that appointment of KMP is not applicable to private company,but in section 203, there is specifically stated that every companies, although the rule does not include private companies. can we consider rule which override the act or we has to follw act......

and if in the above question, if the company is not appointed the CS till 31st March 2014 then, is there any non compliance attracted? or just is it sufficient to present that all the reasonable efforts for compliance of section 383A were taken.?

Abhinaya Kulkarni

Abhinaya Kulkarni (Expert)

04 June 2014 Ans: 1

Section 203(1) states:

Every company belonging to such class or classes of companies as may be prescribed..

Proscribed classes of companies are given in rule (8) of the Companies (Appointment & Remuneration) Rules, 2014.

Therefore, Section 203 is not applicable to private companies.

Ans: 2

According to sub-section (1A), if a company fails to appoint a Company Secretary, it would be a contravention of section 383A, the company and every officer of the company who is in default, shall be punishable with fine up to `500 for every day during which the default continues. Thus, the default is a continuing one.

However, the proviso may exonerate the company and the officer who is in default of the penalty if it is proved that all reasonable efforts to comply with the provisions of sub-section (1) were taken or that the financial position of the company was such that it was beyond its capacity to engage a whole-time secretary.

Thanks.

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