A founder closes a Series B in June and the round pushes paid-up capital from ₹9 crore to ₹11 crore. The cap table looks excellent. What nobody mentions in the celebration is that the company has just crossed the Section 203 line and now needs a whole-time Company Secretary, with a clock already running. One company that left both its CS and CFO seats empty was fined ₹79.40 lakh by the Registrar.
At ₹10 crore of paid-up share capital, a whole-time Company Secretary becomes mandatory for any company, public or private — and for public companies the full KMP set of MD, CEO or Manager, CFO and CS applies.
The bottom line
Public companies, and every listed company: at ₹10 crore or more of paid-up capital, appoint a whole-time MD, CEO or Manager (or a whole-time director), a CFO and a Company Secretary.
Private companies: at ₹10 crore or more, a whole-time Company Secretary is mandatory. The other KMP roles are not.
Miss it: ₹5 lakh on the company, and ₹50,000 on every director and KMP in default plus ₹1,000 for each continuing day, capped at ₹5 lakh.
Who the KMP are
Key Managerial Personnel is a defined set under Section 2(51), not a loose description of senior staff. It means the Managing Director, CEO or Manager — and in their absence a Whole-Time Director — plus the Company Secretary, the Chief Financial Officer, and any other officer no more than one level below the directors whom the board designates as KMP.
These are statutory officers. The law attaches specific duties and liabilities to them personally, which is why the appointment is regulated rather than left to whoever writes the offer letters.
Which companies must appoint what
Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 sets out who needs the full set.
| Company type | Must appoint full-time KMP? |
|---|---|
| Every listed company | Yes — regardless of capital |
| Unlisted public company, paid-up ≥ ₹10 crore | Yes — MD/CEO/Manager, CFO and CS |
| Private company | Not the full set (but see Rule 8A) |
The trigger catches founders out because it is paid-up share capital — not authorised capital, and not net worth. A company with ₹1 crore authorised but ₹11 crore paid up after premium-priced rounds is squarely in scope, and nothing about the authorised figure warns you.
Rule 8A, the private company trap
Private companies are not outside this. Rule 8A, in force from 1 April 2020, requires every company with paid-up capital of ₹10 crore or more that Rule 8 does not already cover to appoint a whole-time Company Secretary.
So a private company at ₹10 crore needs a CS, even though the MD and CFO requirements do not reach it.
Two practical constraints follow. A whole-time CS cannot simultaneously hold the CS office in another unrelated company — only in a holding, subsidiary or associate company — so a shared-services CS spread across unconnected entities does not satisfy the rule. And below ₹10 crore, a Practising Company Secretary on retainer is the sensible answer: they can certify filings and handle event-based compliance without a full-time hire.
Making the appointment
The appointment is made by board resolution under Section 203(2), fixing the terms and remuneration. Then the filings follow.
- DIR-12 within 30 days, for every KMP — MD, WTD, CEO, CFO and CS.
- MR-1 within 60 days, additionally for MD, WTD and Manager appointments, under Section 196(4).
- MGT-14 within 30 days for the board resolution, in public companies, for MD and Manager appointments.
Section 203(4) gives 6 months to fill a vacancy in a required KMP office. The same six-month window applies when you cross the ₹10 crore threshold mid-year — you need not act the same week, and you cannot drift past six months.
What non-appointment costs
Under Section 203(5) the company is liable to a penalty of ₹5 lakh. Every director and KMP in default is liable to ₹50,000, plus ₹1,000 for each day the default continues, capped at ₹5 lakh.
The word that matters is continuing. The figure grows for as long as the seat stays empty, which is how a single company reached ₹79.40 lakh across a missing CS and a missing CFO.
A worked example
A private company closes a ₹12 crore Series B in June, taking paid-up capital to ₹11 crore. Rule 8A now applies, so it must appoint a whole-time Company Secretary within 6 months.
The board appoints an ACS-qualified CS effective 1 July, files DIR-12 within 30 days, files MGT-14 for the resolution, and updates the register of KMP. The cost is one salary line and two filings.
Drifting instead would have started a ₹1,000-a-day clock against the company and its directors the moment the six-month window closed — for a hire the company was going to need anyway.
Common mistakes
- Watching authorised capital instead of paid-up capital. Premium-priced rounds cross the line quietly.
- Assuming private companies are exempt. Rule 8A pulls them in at ₹10 crore for a whole-time CS.
- Sharing one CS across unrelated companies, which does not satisfy the whole-time requirement.
- Combining the CFO and CS roles in one person. That dual role is not permitted.
- Leaving a KMP vacancy open past six months and starting the continuing penalty.
A working routine
- Check paid-up capital against the ₹10 crore line after every funding round.
- On crossing it, work out which roles apply — the full set for a public company, a CS for a private one.
- Verify ICSI membership for a CS, and the relevant qualifications for a CFO.
- Pass the board resolution fixing terms and remuneration.
- File DIR-12 within 30 days, MR-1 within 60 days where applicable, and MGT-14 within 30 days where applicable.
- Update the register of KMP and the company letterheads.
Frequently asked questions
Is a Company Secretary mandatory for a private company? Yes, once paid-up capital reaches ₹10 crore. Below that a CS is optional, and a Practising CS on retainer is the common arrangement.
Is the ₹10 crore threshold authorised or paid-up capital? Paid-up share capital. Not authorised, and not net worth.
Can the same person be CFO and Company Secretary? No. Section 203 prohibits holding both offices.
What if we cross ₹10 crore mid-year? Appoint the required KMP within 6 months of the increase.
Who can be appointed Company Secretary? Only a member of the Institute of Company Secretaries of India.
Does a whole-time CS have to be exclusive to us? Effectively yes, outside the group. A whole-time CS may hold the office in a holding, subsidiary or associate company, but not in an unconnected one.
Primary sources
- Sections 2(51) and 203, Companies Act, 2013, including 203(4) and 203(5)
- Rules 8 and 8A, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
- Section 196(4) for MR-1 and Section 117 for MGT-14