The company secretary of a company, having a paid up share capital of more than ₹10 crores, resigned and left the company. The company has not appointed his successor. Meanwhile, it has started incurring losses. Its sale

According to Section 203 read with Rules 8 and 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a company having a paid-up share capital of ₹10 crore or more must appoint a whole-time Company Secretary possessing the prescribed qualifications. According to Section 203(4) of the Companies Act, 2013, in case the Company Secretary resigns and leaves the company, the resulting vacancy shall be filled up by the Board at a meeting of the Board within a period of six months from the date of such vacancy. Therefore, the company should take all the necessary steps for the appointment of the new Company Secretary within the stipulated period of six months. Here the company has not appointed a new Company Secretary on the ground that it has started incurring losses, its sales have declined and financial position has become weak. The argument will not find favour with the authorities. As per Section 203(5) of the Companies Act, 2013, the company shall be liable to a penalty of ₹5 Lakhs and every director and key managerial personnel of the company who is in default shall be liable to a penalty of ₹50,000 and where the default is a continuing one, with a further penalty of ₹1000 for each day after the first during which such default continues but not exceeding ₹5 Lakhs.