CS Appointment by the Board shall be Filled Within a Period of 6 months from the date of such Vacancy

CS Appointment by the Board shall be Filled Within a Period of 6 months from the date of such Vacancy . Company, directors and KMPs are liable under Section 203(5) of the Companies Act, 2013 for delay in appointment of CS
The Companies Act, 2013 provides a clear framework for governing companies in India. It outlines the roles and responsibilities of directors, key managerial personnel, and the company itself. One requirement is the appointment of a full-time company secretary for companies that exceed a specific threshold of paid-up share capital. This rule emphasizes the need for ongoing oversight of statutory filings, compliance management, and adherence to legal procedures. 
Not having a full-time company secretary can lead to regulatory scrutiny. The role of the company secretary is crucial for good governance. It ensures that companies follow various parts of corporate law, including board procedures and filings with the Registrar of Companies. The absence of a company secretary for a long time is seen as a serious issue. 
The case involving Pegatron Technology India Private Limited, decided by the Registrar of Companies (ROC), Chennai, in July 2025, highlights this problem. The company did not fill the role of a full-time company secretary within the legal time frame, resulting in penalties for both the company and its directors.
Facts of the Case  
Pegatron Technology India Private Limited is registered under CIN U74999TN2020FTC136376, with its office at Mahindra World City, Chengalpattu, Kancheepuram, Tamil Nadu. In the financial year 2021-22, the company had a paid-up share capital exceeding Rs.10 crore, which triggered the requirement to appoint a full-time company secretary under Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. 
The company appointed Ms. Neha Sharma (Membership No. A58382) as its full-time company secretary on 23 July 2021. However, Ms. Sharma resigned on 12 November 2021. This resignation created a vacancy for the role. Section 203(4) of the Act states that the board of directors must fill such a vacancy within six months. Pegatron was thus expected to appoint a replacement by 12 May 2022. 
Instead, the company appointed Mr. Siddharth Dwivedi (Membership No. A52460) on 8 June 2022, which caused a delay of 27 days past the statutory deadline. The company claimed that the delay was due to difficulties in finding a suitable candidate during the pandemic and the associated restrictions. It admitted the oversight by submitting an application for adjudication in e-form GNL-1 on 22 January 2025, acknowledging a violation of Section 203. 
The ROC noted that the company had filed e-form DIR-12 to report Ms. Neha Sharma's resignation on 24 November 2021 and later filed another DIR-12 for Mr. Dwivedi's appointment on 6 July 2022. This confirmed that the vacancy remained unfilled beyond the allowed period. Therefore, the ROC held that the company and its directors were liable for penalties under Section 203(5) of the Act.
Issues Raised

Whether the company had violated Section 203(4) of the Companies Act, 2013 by failing to appoint a full-time Company Secretary within six months from the date of resignation of Ms. Sharma.

Whether the reasons cited by the company, namely the difficulty in identifying a suitable candidate and the pandemic-related restrictions, could be accepted as valid explanations for the delay in compliance with the statutory requirement.

Whether the liability for non-compliance extended to all directors of the company collectively, or only to those directors who were involved in the day-to-day operations and management of the company.

Whether, under Section 203(5) of the Companies Act, 2013, the applicable penalty should be imposed at the minimum statutory limit or at the maximum prescribed limit, considering the facts and circumstances of the case

Relevant Sections

Section 203(1): This section specific types of companies to appoint key managerial personnel, including a full-time company secretary. Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 states that every private company with paid-up share capital of ten crore rupees or more must have a full-time company secretary.

Section 203(4): This Section addresses vacancies in key managerial positions, requiring the board to fill such positions within six months during a meeting. Failing to meet this timeline is a violation.

Section 203(5): This Section sets penalties for defaults. A company may face a fine of five lakh rupees. Each director and key managerial personnel in default faces a fine of fifty thousand rupees. If the default continues, there is an extra charge of one thousand rupees per day after the first day, capped at five lakh rupees.

Section 454: This Section lets the Registrar of Companies, as the adjudicating officer, impose these penalties. It also gives companies and individuals the right to appeal to the Regional Director within sixty days of receiving the adjudication order.

These rules ensure that companies must have a full-time company secretary once they exceed the specified capital limit, and any compliance failure incurs financial penalties.
Judgment  
The adjudicating officer issued a notice for e-adjudication on 6 March 2025. The company’s authorized representative acknowledged the lapse but argued that there was no intentional effort to avoid compliance. They stated that the vacancy came from a resignation, and despite efforts, the board could only appoint a new company secretary on 8 June 2022, resulting in a 27-day delay. The company asked for leniency, citing pandemic-related challenges. 
After reviewing these arguments, the ROC concluded that the company had failed to comply with Section 203(4) and (5). The reasons provided did not change the fact that the statutory deadline had passed. Compliance obligations under the Act are mandatory and cannot be ignored due to practical issues unless specific exemptions are granted by law. 
The penalties imposed were as follows: 
Pegatron Technology India Private Limited: Rs.5,00,000 
Chiu Tan Lin (DIN 08793219): Rs.77,000 
Mingchun Tsai (DIN 09412507): Rs.77,000 
Jian Jong Cheng (DIN 08864480): Rs.77,000 
The order stated that the penalty must be paid within ninety days of receipt through the MCA e-Adjudication portal. It also ordered that directors must pay the penalties out of their own funds. The order allowed the company and its directors to appeal to the Regional Director, Chennai, within sixty days in Form ADJ, along with a certified copy of the adjudication order.
Final Note of the Article
The case against Pegatron Technology India Private Limited under Section 203(5) of the Companies Act, 2013 reinforces that statutory requirements must be strictly followed and within the specified time. Failing to appoint a full-time company secretary within six months of a resignation, even if corrected later, was considered a violation. 
The penalties Rs.5,00,000 on the company and Rs.77,000 on each director illustrate that regulators will not overlook even minor delays. The order also reinforces that directors share personal responsibility with the company. This case serves as a warning to all companies with significant paid-up capital that compliance with managerial appointments is essential, and prompt action is crucial to avoid penalties.
Download MCA Adjudication Order

Company, directors and KMPs are liable under Section 203(5) of the Companies Act, 2013 for delay in appointment of CS

The Companies Act, 2013 provides a clear framework for governing companies in India. It outlines the roles and responsibilities of directors, key managerial personnel, and the company itself. One requirement is the appointment of a full-time company secretary for companies that exceed a specific threshold of paid-up share capital. This rule emphasizes the need for ongoing oversight of statutory filings, compliance management, and adherence to legal procedures.

Not having a full-time company secretary can lead to regulatory scrutiny. The role of the company secretary is crucial for good governance. It ensures that companies follow various parts of corporate law, including board procedures and filings with the Registrar of Companies. The absence of a company secretary for a long time is seen as a serious issue.

The case involving Pegatron Technology India Private Limited, decided by the Registrar of Companies (ROC), Chennai, in July 2025, highlights this problem. The company did not fill the role of a full-time company secretary within the legal time frame, resulting in penalties for both the company and its directors.

Facts of the Case

Pegatron Technology India Private Limited is registered under CIN U74999TN2020FTC136376, with its office at Mahindra World City, Chengalpattu, Kancheepuram, Tamil Nadu. In the financial year 2021-22, the company had a paid-up share capital exceeding Rs.10 crore, which triggered the requirement to appoint a full-time company secretary under Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The company appointed Ms. Neha Sharma (Membership No. A58382) as its full-time company secretary on 23 July 2021. However, Ms. Sharma resigned on 12 November 2021. This resignation created a vacancy for the role. Section 203(4) of the Act states that the board of directors must fill such a vacancy within six months. Pegatron was thus expected to appoint a replacement by 12 May 2022.

Instead, the company appointed Mr. Siddharth Dwivedi (Membership No. A52460) on 8 June 2022, which caused a delay of 27 days past the statutory deadline. The company claimed that the delay was due to difficulties in finding a suitable candidate during the pandemic and the associated restrictions. It admitted the oversight by submitting an application for adjudication in e-form GNL-1 on 22 January 2025, acknowledging a violation of Section 203.

The ROC noted that the company had filed e-form DIR-12 to report Ms. Neha Sharma's resignation on 24 November 2021 and later filed another DIR-12 for Mr. Dwivedi's appointment on 6 July 2022. This confirmed that the vacancy remained unfilled beyond the allowed period. Therefore, the ROC held that the company and its directors were liable for penalties under Section 203(5) of the Act.

Issues Raised

Whether the company had violated Section 203(4) of the Companies Act, 2013 by failing to appoint a full-time Company Secretary within six months from the date of resignation of Ms. Sharma.
Whether the reasons cited by the company, namely the difficulty in identifying a suitable candidate and the pandemic-related restrictions, could be accepted as valid explanations for the delay in compliance with the statutory requirement.
Whether the liability for non-compliance extended to all directors of the company collectively, or only to those directors who were involved in the day-to-day operations and management of the company.
Whether, under Section 203(5) of the Companies Act, 2013, the applicable penalty should be imposed at the minimum statutory limit or at the maximum prescribed limit, considering the facts and circumstances of the case

Relevant Sections

Section 203(1): This section specific types of companies to appoint key managerial personnel, including a full-time company secretary. Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 states that every private company with paid-up share capital of ten crore rupees or more must have a full-time company secretary.
Section 203(4): This Section addresses vacancies in key managerial positions, requiring the board to fill such positions within six months during a meeting. Failing to meet this timeline is a violation.
Section 203(5): This Section sets penalties for defaults. A company may face a fine of five lakh rupees. Each director and key managerial personnel in default faces a fine of fifty thousand rupees. If the default continues, there is an extra charge of one thousand rupees per day after the first day, capped at five lakh rupees.
Section 454: This Section lets the Registrar of Companies, as the adjudicating officer, impose these penalties. It also gives companies and individuals the right to appeal to the Regional Director within sixty days of receiving the adjudication order.

These rules ensure that companies must have a full-time company secretary once they exceed the specified capital limit, and any compliance failure incurs financial penalties.

Judgment

The adjudicating officer issued a notice for e-adjudication on 6 March 2025. The company’s authorized representative acknowledged the lapse but argued that there was no intentional effort to avoid compliance. They stated that the vacancy came from a resignation, and despite efforts, the board could only appoint a new company secretary on 8 June 2022, resulting in a 27-day delay. The company asked for leniency, citing pandemic-related challenges.

After reviewing these arguments, the ROC concluded that the company had failed to comply with Section 203(4) and (5). The reasons provided did not change the fact that the statutory deadline had passed. Compliance obligations under the Act are mandatory and cannot be ignored due to practical issues unless specific exemptions are granted by law.

The penalties imposed were as follows:

Pegatron Technology India Private Limited: Rs.5,00,000

Chiu Tan Lin (DIN 08793219): Rs.77,000

Mingchun Tsai (DIN 09412507): Rs.77,000

Jian Jong Cheng (DIN 08864480): Rs.77,000

The order stated that the penalty must be paid within ninety days of receipt through the MCA e-Adjudication portal. It also ordered that directors must pay the penalties out of their own funds. The order allowed the company and its directors to appeal to the Regional Director, Chennai, within sixty days in Form ADJ, along with a certified copy of the adjudication order.

Final Note of the Article

The case against Pegatron Technology India Private Limited under Section 203(5) of the Companies Act, 2013 reinforces that statutory requirements must be strictly followed and within the specified time. Failing to appoint a full-time company secretary within six months of a resignation, even if corrected later, was considered a violation.

The penalties Rs.5,00,000 on the company and Rs.77,000 on each director illustrate that regulators will not overlook even minor delays. The order also reinforces that directors share personal responsibility with the company. This case serves as a warning to all companies with significant paid-up capital that compliance with managerial appointments is essential, and prompt action is crucial to avoid penalties.