In a recent enforcement action, the Registrar of Companies (ROC), Cuttack, under the Ministry of Corporate Affairs, imposed a hefty penalty on Sambandh Finserve Private Limited for failing to appoint a whole-time Company Secretary as mandated by the Companies Act, 2013. This case serves as a strong reminder that compliance with corporate governance norms is not optional, it is a legal obligation.
Why This Matters
A Company Secretary plays a critical role in ensuring legal compliance, corporate governance, and smooth functioning of board processes. Non-appointment of a Company Secretary can lead to severe penalties, reputational damage, and even regulatory scrutiny.
Background of the Case
- Company: Sambandh Finserve Private Limited
- CIN: U67120OR1996PTC011931
- Registered Office: Rourkela, Odisha
- Default Period: From 29 January 2021 till date
- Order Date: 11 December 2025
The company failed to comply with Section 203(1)(ii) of the Companies Act, which requires certain companies to appoint a whole-time Company Secretary. For private companies, this applies if their paid-up share capital is ₹10 crore or more, as per Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Legal Provisions Involved
- Section 203(1)(ii): Mandatory appointment of a whole-time Company Secretary.
- Section 203(5): Penalty for non-compliance:
- Company: ₹5,00,000
- Each defaulting officer: ₹50,000 + ₹1,000 per day for continuing default (maximum ₹5,00,000)
- Section 454: Adjudication of penalties by ROC.
Findings by ROC
- The company did not appoint a Company Secretary from 29.01.2021 onwards.
- A Show Cause Notice was issued on 15.09.2025, and the company responded on 29.09.2025, stating it was under Corporate Insolvency Resolution Process (CIRP).
- ROC clarified that the default occurred before CIRP initiation, making the erstwhile management liable.
Penalty Details
| Entity | Penalty Amount |
| Sambandh Finserve Pvt Ltd | ₹5,00,000 |
| James Dinesh Raj | ₹5,00,000* |
| Deepak Kindo | ₹5,00,000* |
| Independent Directors | Exempted |
*Note: The Act prescribes ₹50,000 plus continuing penalty up to ₹5,00,000. The order capped penalties at ₹5,00,000 for each director due to prolonged default.
Exemptions Granted
Independent Directors Akshaya Kumar Parhi and Uma Shankar Lal were exempted from penalties after proving they were not involved in daily operations and only provided strategic oversight.
Next Steps for the Company
- Rectify the default by appointing a Company Secretary immediately.
- Pay penalties within 90 days via MCA’s e-Adjudication portal.
- Officers must pay penalties from personal income.
- Appeals can be filed with Regional Director, Kolkata within 60 days.
Why Compliance Is Critical
Failure to appoint a Company Secretary can lead to:
- Financial penalties
- Legal complications
- Loss of credibility with stakeholders
A Company Secretary ensures:
- Proper governance
- Timely regulatory filings
- Risk management and compliance
Key Takeaways
- Companies with paid-up share capital of ₹10 crore or more must appoint a Company Secretary.
- Penalties for non-compliance are severe, and continuing defaults increase liability.
- Independent Directors may avoid penalties if they prove non-involvement in daily operations.
References:
ROC Cuttack Penalty Order dated 11/12/2025