Hi,
A company is having share capital more than 5 crores. It is required to appoint a whole time secretary. The whole time Company Secretary has resigned and the company is not able to find a suitable replacement for him
What are the consequences of not having a whole time secretary? Can the company file the financial statements without a whole time secretary's signature?
Yes, the company can file.
Thanks for the reply Ankur. Could you please tell within what time they should appoint the new whole time secretary? Is there any other formality to complied as there is no CS to sign the Financial Statements?
The Company can file a Compliance Certificate from a PCS. Many Companies who are supposed to appoint a whole time Company Secretary but has not appointed yet are following this practice, intimating the ROC that the efoorts are being made for appointment of a suitable candidate.
Dear Anjana,
I would advice you to appoint whole time company secretary. They would benefit you in many areas in comparison to the remuneration.
Compliance Certificate is not applicable in case of Companies having paid up capital of Rs. 5 Cr. or more.
| APPOINTMENT OF COMPANY SECRETARY | ||||||
| (Section 383A & Companies (Appointment and Qualifications of Secretary) Rules, 1988) | ||||||
| 1 | Every company having paid-up share capital of not less than5 Crores shall have whole time secretary [Rule 2(1)]. | |||||
| 2 | Where the paid up share capital is increased to5 Crores or more, the Company shall appoint whole time secretary within a period of 1 year from the date of such increase [Proviso to Rule 2(4)]. | |||||
| 3 | A company having a paid up share capital of less than2 Crores may appoint any individual, possessing qualification specified in Rule 2(4), as its whole time secretary to perform duties of secretary, and any other ministerial or administrative duties [Rule 2(3)]. | |||||
| 4 | A company having a paid up share capital of2 Crores or more but less than5 Crores may appoint any individual who is member of ICSI, as a whole time secretary [Rule 2(3A)]. | |||||
| 5 | A company having paid up capital of10 lakhs or more but less than5 Crores shall obtain Compliance Certificate from PCS provided if such company has appointed Whole Time Secretary who is member of ICSI then compliance certificate is not required to be obtained. | |||||
| 6 | Where the BOD comprises only two directors, neither of them shall be secretary of the Company. | |||||
| Summarized | ||||||
| Paid up Capital | Appointment of CS | Any Individual / Member of ICSI | Compliance Certificate | |||
| 5 Crores or more | Compulsory | Only Member of ICSI | N.A. | |||
| 10 Lakhs or more to2 Crores | Voluntarily | Either of Above | Compulsory (Not required if CS is member of ICSI) | |||
| 2 Crores or more to5 Crores | Voluntarily | Member of ICSI | Not required if appointment is made otherwise required | |||
Company Secretary vacancy should be filled within 6 months.
Thje solution to this problem is that the Company has to filr A petition before Company Law board for compounding of offences u/s 621A of the Companies Act, 1956 for default / contravention of provisions of Section 383A of the Companies Act, 1956.
The application if filed for the period from date of cessation of CS till date of appointment of new CS. So first appoint a new CS by making negotiation and if want to comply Law file petition in form 61to CLB.
Please go through the second proviso to Section 383A.
If the company has been taking reasonble steps to fill the vacancy and non-filling is for genuine reasons, the non-compliance would not attract serious penal action. You can always put accross your defense.
However fill the vacancy as soon as possible.
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