This Question is asked in May 2018 of CA Final Exam
Q. 1 (b) ABC Limited, an unlisted company having a paid up share capital of Ten crores of
Rupees during the preceding financial year has appointed Shri X, a Fellow member of
the Institute of Chartered Accountant of India as Chief Financial Officer of the company
who is appointed as Key Managerial Personnel under section 203 of the Companies Act,
2013. Shri X is also a Fellow member of the Institute of Company Secretaries of India.
The Company Secretary post has become vacant. In order to reduce the administrative
expenses, the Company proposes to appoint Shri X as Company Secretary in addition to
Chief Financial Officer post. Whether the proposal is legally valid under the provisions of
the Companies Act, 2013?
This answer is copied from suggest answer issued by ICSI
Ans: According to Section 203(1) of the Companies Act, 2013, every company belonging to
such class or classes of companies as may be prescribed, shall have the following whole
time key managerial personnel:-
(a) Managing Director, or Chief Executive Officer or Manager and in their absence, a
Whole-time Director;
(b) Company Secretary; and
(c) Chief Financial Officer.
According to Rule 8 of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 every listed company and every other public company having a
paid-up share capital of ` 10 crore or more shall have whole-time key managerial
personnel.
In the instant case, ABC Limited is having paid up share capital of ` 10 crore, so it is
covered under the above Rule and it is mandatory for it to appoint a whole time KMP. As
the term used is ‘whole time’, therefore, three different individuals are required to hold
these three key positions.
In view of the above, the company cannot appoint Mr. X as the Company Secretary of
the company in addition to his CFO post. Further, Section 203 of the Act specifically
prescribes the word “and” between Company Secretary and CFO. Thus, both the
positions are to be held by separate persons.
But many company appointed a single person as CS & CFO is it legal or answer of ICAI is valid ? Please suggest
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