Compliance after paid-up capital exceed the limit as prescribed in Rule 8A

Compliance after paid-up capital exceed the limit as prescribed in Rule 8A. Sec. 203 of Companies Act 2013 : appointment of Company Secretary within Six Months
Corporate governance in India is guided by the Companies Act, 2013. The Act not only regulates the incorporation and management of companies but also places responsibility on directors and officers to ensure compliance with statutory requirements. One such responsibility, introduced to bring discipline in larger private companies, is the mandatory appointment of a whole-time company secretary once the company’s paid-up capital crosses a prescribed limit.
The requirement is not just a formality but a measure to ensure that corporate records, legal filings, and statutory obligations are monitored by a qualified professional. The absence of a company secretary in such companies often leads to delays in compliance and poor governance practices.
The case of VMS TMT Limited, adjudicated by the Registrar of Companies (ROC), Ahmedabad, on 18 June 2025, brings this issue into focus. The company failed to appoint a company secretary within the statutory timeline after its paid-up capital exceeded the threshold of ten crore rupees. This failure resulted in adjudication of penalties not only on the company itself but also on its directors, demonstrating the reach of corporate liability under Section 203(5).
Facts of the Case
VMS TMT Limited, registered under CIN U27204GJ2013PLC074403, had its paid-up share capital increased from Rs.8,99,53,860 to Rs.12,61,28,860 as of 31 March 2023. By crossing the statutory benchmark of ten crore rupees, the company came within the ambit of Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. This provision makes it compulsory for such a company to appoint a whole-time company secretary within six months.
This meant that VMS TMT Limited was required to appoint a company secretary by 30 September 2023. However, no such appointment was made. The company continued its operations without fulfilling this requirement until 3 May 2024, when it finally appointed Mr. Vijay Boliya as its whole-time company secretary. By then, the company had remained non-compliant for a period of seven months and two days.
The ROC initiated proceedings by issuing a notice to the company and its directors Manojkumar Jain (DIN 02190018), Varun Manojkumar Jain (DIN 03502561), and Rishabh Sunil Singhi (DIN 09342922). The company and its directors submitted a suo motu application admitting the lapse. They acknowledged that the appointment was delayed and requested adjudication of penalties under Section 454 of the Act.
Issues Raised
The case raised the following issues for adjudication:

Whether VMS TMT Limited, after crossing the prescribed capital threshold, was legally bound to appoint a whole-time company secretary within six months.

Whether the failure to appoint such an officer within the statutory period constituted a default under Section 203(5) of the Companies Act, 2013.

Whether the liability for this default extended only to the company or also to its directors, who were officers in default.

The quantum of penalty that should be imposed on the company and its directors for the period of default, taking into account the statutory limits.

Penal Provisions
The adjudication involved a reading of Section 203 of the Companies Act, 2013 along with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Section 203(1) mandates that every company of a prescribed class shall have whole-time key managerial personnel, which includes a company secretary.

Rule 8A provides that every private company with a paid-up share capital of ten crore rupees or more must appoint a whole-time company secretary.

Section 203(5) lays down the penalty for default: the company is liable to a penalty of Rs.5,00,000, and every director or key managerial personnel who is in default is liable to a penalty of Rs.50,000, with a further penalty of Rs.1,000 for each day after the first during which the default continues, subject to a maximum of Rs.5,00,000.

Section 454 empowers the adjudicating officer, usually the Registrar of Companies, to impose penalties for non-compliance with the provisions of the Act.

These provisions together establish the legal framework within which the ROC assessed the liability of VMS TMT Limited and its directors.
Judgment 
After reviewing the facts and the admission made by the company, the ROC held that the default was clear and established. VMS TMT Limited had exceeded the paid-up capital limit on 31 March 2023, and it was required to appoint a whole-time company secretary within six months. The appointment, however, was made only on 3 May 2024, well after the deadline.
The period of default was calculated as seven months and two days. While the company eventually complied, the delay still attracted statutory penalties. The ROC, exercising powers under Section 454, imposed the following penalties:

On VMS TMT Limited: Rs.5,00,000

On Manojkumar Jain (Director): Rs.2,65,000

On Varun Manojkumar Jain (Director): Rs.2,65,000

On Rishabh Sunil Singhi (Director): Rs.2,65,000

The order further directed that the penalties be paid through the Ministry of Corporate Affairs’ e-Adjudication facility within ninety days. The directors were specifically instructed to pay from their personal sources of income, ensuring that liability was not shifted back to the company.
The ROC also provided the statutory right of appeal. The company and its directors could file an appeal before the Regional Director, Ahmedabad, within sixty days from receipt of the order, by submitting Form ADJ accompanied by a certified copy of the adjudication order.
Legal Impact
The decision in the case of VMS TMT Limited carries lessons for the broader corporate community. The appointment of a company secretary is not a technical formality but a measure that ensures professional oversight of corporate compliance. The absence of such an officer in companies of this size can lead to lapses in filings, weak governance, and poor record maintenance. By enforcing penalties strictly, the ROC has reinforced the accountability of companies to maintain proper governance standards.
The case also demonstrates the personal liability of directors. Directors cannot rely solely on the company’s separate legal status to shield themselves. When the company fails to meet statutory requirements, directors who are responsible for management are equally liable. This order sends a message that directors must remain vigilant about the compliance status of their company.
For stakeholders such as shareholders, creditors, and regulators, the decision enhances confidence that corporate governance standards will be enforced. The requirement of a company secretary ensures that companies with large capital bases are professionally managed, which indirectly benefits those who interact with such companies.
From a governance perspective, the case highlights the importance of timely compliance. Rectification after default, while necessary, does not erase liability. Even though VMS TMT Limited appointed a company secretary eventually, the penalties imposed for the default period serve as a deterrent against delay.
Final Note of the Article
The adjudication against VMS TMT Limited illustrates the seriousness with which compliance under the Companies Act, 2013 is enforced. By failing to appoint a whole-time company secretary within six months of its paid-up capital crossing ten crore rupees, the company and its directors became liable under Section 203(5). The penalties Rs.5,00,000 on the company and Rs.2,65,000 on each director demonstrate the financial consequences of ignoring statutory requirements.
The case reinforces several principles: statutory timelines must be respected, directors share responsibility with the company, and compliance is judged not only by eventual rectification but also by timeliness. For the corporate sector, this case is a reminder that governance requires careful monitoring of statutory thresholds and prompt action when obligations arise.
The ROC’s order thus strengthens the accountability framework of corporate law in India. By ensuring that companies above a certain size cannot operate without a company secretary, it brings professional oversight into corporate functioning and upholds the objective of transparent governance.
Download MCA Adjudication Order

Sec. 203 of Companies Act 2013 : appointment of Company Secretary within Six Months

Corporate governance in India is guided by the Companies Act, 2013. The Act not only regulates the incorporation and management of companies but also places responsibility on directors and officers to ensure compliance with statutory requirements. One such responsibility, introduced to bring discipline in larger private companies, is the mandatory appointment of a whole-time company secretary once the company’s paid-up capital crosses a prescribed limit.

The requirement is not just a formality but a measure to ensure that corporate records, legal filings, and statutory obligations are monitored by a qualified professional. The absence of a company secretary in such companies often leads to delays in compliance and poor governance practices.

The case of VMS TMT Limited, adjudicated by the Registrar of Companies (ROC), Ahmedabad, on 18 June 2025, brings this issue into focus. The company failed to appoint a company secretary within the statutory timeline after its paid-up capital exceeded the threshold of ten crore rupees. This failure resulted in adjudication of penalties not only on the company itself but also on its directors, demonstrating the reach of corporate liability under Section 203(5).

Facts of the Case

VMS TMT Limited, registered under CIN U27204GJ2013PLC074403, had its paid-up share capital increased from Rs.8,99,53,860 to Rs.12,61,28,860 as of 31 March 2023. By crossing the statutory benchmark of ten crore rupees, the company came within the ambit of Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. This provision makes it compulsory for such a company to appoint a whole-time company secretary within six months.

This meant that VMS TMT Limited was required to appoint a company secretary by 30 September 2023. However, no such appointment was made. The company continued its operations without fulfilling this requirement until 3 May 2024, when it finally appointed Mr. Vijay Boliya as its whole-time company secretary. By then, the company had remained non-compliant for a period of seven months and two days.

The ROC initiated proceedings by issuing a notice to the company and its directors Manojkumar Jain (DIN 02190018), Varun Manojkumar Jain (DIN 03502561), and Rishabh Sunil Singhi (DIN 09342922). The company and its directors submitted a suo motu application admitting the lapse. They acknowledged that the appointment was delayed and requested adjudication of penalties under Section 454 of the Act.

Issues Raised

The case raised the following issues for adjudication:

Whether VMS TMT Limited, after crossing the prescribed capital threshold, was legally bound to appoint a whole-time company secretary within six months.
Whether the failure to appoint such an officer within the statutory period constituted a default under Section 203(5) of the Companies Act, 2013.
Whether the liability for this default extended only to the company or also to its directors, who were officers in default.
The quantum of penalty that should be imposed on the company and its directors for the period of default, taking into account the statutory limits.

Penal Provisions

The adjudication involved a reading of Section 203 of the Companies Act, 2013 along with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Section 203(1) mandates that every company of a prescribed class shall have whole-time key managerial personnel, which includes a company secretary.
Rule 8A provides that every private company with a paid-up share capital of ten crore rupees or more must appoint a whole-time company secretary.
Section 203(5) lays down the penalty for default: the company is liable to a penalty of Rs.5,00,000, and every director or key managerial personnel who is in default is liable to a penalty of Rs.50,000, with a further penalty of Rs.1,000 for each day after the first during which the default continues, subject to a maximum of Rs.5,00,000.
Section 454 empowers the adjudicating officer, usually the Registrar of Companies, to impose penalties for non-compliance with the provisions of the Act.

These provisions together establish the legal framework within which the ROC assessed the liability of VMS TMT Limited and its directors.

Judgment

After reviewing the facts and the admission made by the company, the ROC held that the default was clear and established. VMS TMT Limited had exceeded the paid-up capital limit on 31 March 2023, and it was required to appoint a whole-time company secretary within six months. The appointment, however, was made only on 3 May 2024, well after the deadline.

The period of default was calculated as seven months and two days. While the company eventually complied, the delay still attracted statutory penalties. The ROC, exercising powers under Section 454, imposed the following penalties:

On VMS TMT Limited: Rs.5,00,000
On Manojkumar Jain (Director): Rs.2,65,000
On Varun Manojkumar Jain (Director): Rs.2,65,000
On Rishabh Sunil Singhi (Director): Rs.2,65,000

The ROC also provided the statutory right of appeal. The company and its directors could file an appeal before the Regional Director, Ahmedabad, within sixty days from receipt of the order, by submitting Form ADJ accompanied by a certified copy of the adjudication order.

Legal Impact

The decision in the case of VMS TMT Limited carries lessons for the broader corporate community. The appointment of a company secretary is not a technical formality but a measure that ensures professional oversight of corporate compliance. The absence of such an officer in companies of this size can lead to lapses in filings, weak governance, and poor record maintenance. By enforcing penalties strictly, the ROC has reinforced the accountability of companies to maintain proper governance standards.

The case also demonstrates the personal liability of directors. Directors cannot rely solely on the company’s separate legal status to shield themselves. When the company fails to meet statutory requirements, directors who are responsible for management are equally liable. This order sends a message that directors must remain vigilant about the compliance status of their company.

For stakeholders such as shareholders, creditors, and regulators, the decision enhances confidence that corporate governance standards will be enforced. The requirement of a company secretary ensures that companies with large capital bases are professionally managed, which indirectly benefits those who interact with such companies.

From a governance perspective, the case highlights the importance of timely compliance. Rectification after default, while necessary, does not erase liability. Even though VMS TMT Limited appointed a company secretary eventually, the penalties imposed for the default period serve as a deterrent against delay.

Final Note of the Article

The adjudication against VMS TMT Limited illustrates the seriousness with which compliance under the Companies Act, 2013 is enforced. By failing to appoint a whole-time company secretary within six months of its paid-up capital crossing ten crore rupees, the company and its directors became liable under Section 203(5). The penalties Rs.5,00,000 on the company and Rs.2,65,000 on each director demonstrate the financial consequences of ignoring statutory requirements.

The case reinforces several principles: statutory timelines must be respected, directors share responsibility with the company, and compliance is judged not only by eventual rectification but also by timeliness. For the corporate sector, this case is a reminder that governance requires careful monitoring of statutory thresholds and prompt action when obligations arise.

The ROC’s order thus strengthens the accountability framework of corporate law in India. By ensuring that companies above a certain size cannot operate without a company secretary, it brings professional oversight into corporate functioning and upholds the objective of transparent governance.