Cross ₹10 crore in paid-up capital and the law stops asking — a whole-time Company Secretary (and, for public companies, an MD/CEO and CFO) becomes mandatory, with daily penalties for sitting on it.
The trigger is paid-up share capital, not authorised capital and not net worth.
A founder raises a Series B in June; the round pushes paid-up capital from ₹9 crore to ₹11 crore. The cap table looks great. What the celebration misses: that company has now crossed the Section 203 line and must appoint a whole-time Company Secretary — and the clock to do so has already started. Skip it, and the penalty accrues daily. In one real case, a company that didn't appoint its CS and CFO was fined ₹79.40 lakh by the ROC.
KMP appointment is one of those obligations that arrives silently with growth. No one sends a reminder when you cross the threshold — the law just expects you to know.
BOTTOM LINE
- Public companies (and all listed companies): at ₹10 crore+ paid-up capital, appoint whole-time MD/CEO/Manager (or WTD), CFO and Company Secretary.
- Private companies: at ₹10 crore+ paid-up capital, a whole-time Company Secretary is mandatory (other KMP optional).
- Miss it: company penalty up to ₹5 lakh; every director/KMP in default ₹50,000 + ₹1,000/day continuing, capped at ₹5 lakh.
Who exactly are the KMP?
Governs this section: Section 2(51) & Section 203, Companies Act, 2013
"Key Managerial Personnel" is a defined set, not a loose label. It means the Managing Director, CEO or Manager (and, in their absence, a Whole-Time Director); the Company Secretary; the Chief Financial Officer; and any other officer (not 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, which is why their appointment is regulated rather than left to HR.
Which companies must appoint, and what?
Governs this section: Rule 8, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
The mandatory full set — MD/CEO/Manager, CFO and CS — applies to:
| 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 that catches founders off guard: it's 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.
The private-company trap: Rule 8A
Governs this section: Rule 8A (w.e.f. 1 April 2020)
Private companies aren't off the hook. Rule 8A requires every company — public or private — with paid-up capital of ₹10 crore or more that isn't already covered by Rule 8 to appoint a whole-time Company Secretary. So a private company at ₹10 crore needs a CS even though the MD/CFO requirement doesn't bite.
PRACTITIONER'S NOTE
A whole-time CS can't simultaneously hold the CS office in another unrelated company (only in a holding, subsidiary or associate) — so a shared-services CS across unconnected entities won't satisfy the rule. Below ₹10 crore, a Practising Company Secretary on retainer is the sensible alternative: they can certify filings and handle event-based compliance without being a full-time hire.
How the appointment is made — and which forms
Governs this section: Section 203(2), Section 196(4) & Section 117
The appointment is made by board resolution, fixing the terms and remuneration. Then the filings:
- DIR-12 within 30 days — for every KMP (MD, WTD, CEO, CFO, CS).
- MR-1 within 60 days — additionally, for MD, WTD and Manager appointments (Section 196(4)).
- MGT-14 within 30 days — for the board resolution, in public companies, for MD/Manager appointments.
A vacancy in a required KMP office must be filled within 6 months (Section 203(4)). The same six-month window applies if you cross the ₹10 crore threshold mid-year — you don't have to act the same day, but you can't drift past six months.
What does non-appointment cost?
Governs this section: Section 203(5)
PENALTY — 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. Because it's a continuing default, the number grows the longer the seat sits empty — which is how one company ran up a ₹79.40 lakh penalty for missing both its CS and CFO.
Worked example
Mini-case — the round that triggered a hire
A private company closes a ₹12 crore Series B in June, taking paid-up capital to ₹11 crore. Rule 8A now applies: 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 KMP register. Total cost: one salary line and two filings. The alternative — drifting — would have started a ₹1,000/day clock against the company and its directors the moment the six-month window closed.
Common mistakes
- Watching authorised capital, not paid-up. The threshold is paid-up share capital. Premium-priced rounds can cross it quietly.
- Assuming private companies are exempt. Rule 8A pulls in private companies at ₹10 crore for a whole-time CS.
- Using a shared CS across unrelated companies. A whole-time CS can't hold office in another unconnected company.
- Combining CFO and CS in one person. The dual role is not permitted.
- Leaving a KMP vacancy open. It must be filled within 6 months, or the continuing penalty starts.
Checklist
- Track paid-up capital after every funding round against the ₹10 crore line.
- On crossing it, identify which KMP roles apply (full set for public; CS for private).
- Verify ICSI membership for a CS; relevant qualifications for CFO.
- Pass the board resolution fixing terms and remuneration.
- File DIR-12 (30 days), MR-1 (60 days, for MD/WTD/Manager), MGT-14 (30 days, where applicable).
- Update the Register of KMP and company letterheads.
FAQ
Is a Company Secretary mandatory for a private company? Yes, once paid-up capital reaches ₹10 crore. Below that, a CS is optional (a Practising CS on retainer is common).
Is the ₹10 crore threshold based on authorised or paid-up capital? Paid-up share capital — not authorised, not net worth.
Can the same person be CFO and Company Secretary? No. The dual role of CFO and CS is prohibited under Section 203.
What if we cross ₹10 crore mid-year? Appoint the required KMP within 6 months of the increase.
Who can be appointed as Company Secretary? Only a member of the Institute of Company Secretaries of India (ICSI).
Primary sources
- Section 2(51) & Section 203, Companies Act, 2013 (incl. 203(4), 203(5))
- Rule 8 & Rule 8A, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
- Section 196(4) (MR-1), Section 117 (MGT-14) — related filings
Disclaimer: This article is general information on a fast-changing area of company law, current at the time of writing. It is not legal or professional advice for any specific company. Verify the position against the live MCA rules and consult your company secretary before filing.