Compliance Management, Audit and Due Diligence · Values, Ethics and Professional Conduct

Disciplinary Mechanism and Penalties for Company Secretaries

Updated 11 October 2026 · Fact-checked

A complaint against a CS goes to the Director (Discipline), who forms a prima facie opinion. First Schedule misconduct goes to the Board of Discipline (reprimand, removal up to three months, fine up to ₹1 lakh). Second Schedule misconduct goes to the Disciplinary Committee (removal permanently or for a period, fine up to ₹5 lakhs). Appeal lies to the Authority within 90 days.

Understand Disciplinary Mechanism and Penalties

The Company Secretaries Act, 1980 gives the Institute a built-in system to deal with misconduct by its members. It works like a funnel. Information or a complaint comes in, it is screened, and only then does it reach a body that can punish.

The first stage is the Disciplinary Directorate, set up by the Council by notification and headed by the Director (Discipline). On receiving information or a complaint along with the prescribed fee, the Director (Discipline) forms a prima facie opinion on whether the alleged misconduct occurred. This is only a screening opinion, not a finding of guilt.

The next step depends on the Schedule. If the Director thinks the member is guilty of misconduct in the First Schedule, the matter goes to the Board of Discipline. If the misconduct is in the Second Schedule, or in both Schedules, it goes to the Disciplinary Committee. The Second Schedule is treated as more serious, so the body is stronger and the penalties are heavier.

The Board of Discipline has a presiding officer with experience in law, a Council member elected by the Council, and the person designated under section 16(1)(c). The Director (Discipline) is its Secretary. It follows summary disposal procedure. The Disciplinary Committee has the President or Vice-President as Presiding Officer, two Council members elected by the Council, and two Central Government nominees of eminence in law, economics, business, finance or accountancy.

Both bodies must give the member an opportunity of being heard before making any order. A member aggrieved by a penalty can appeal to the Authority. The Authority can confirm, modify or set aside the order, or even enhance the penalty.

Key rules to remember

Screening (Section 21): Complaint/information + prescribed fee → Director (Discipline) → prima facie opinion; First Schedule → Board of Discipline. Second Schedule, or both Schedules → Disciplinary Committee.
Board of Discipline penalties (Section 21A(3)): Reprimand | removal from Register up to 3 months | fine up to ₹1,00,000; One or more actions, after hearing the member. Applies to First Schedule misconduct.
Disciplinary Committee penalties (Section 21B(3)): Reprimand | removal from Register permanently or for such period as it thinks fit | fine up to ₹5,00,000; One or more actions, after hearing the member. Applies to Second Schedule or both Schedules.
Board of Discipline composition (Section 21A(1)): Presiding officer (law experience) + 2 members + Director (Discipline) as Secretary; One of the two members is a Council member elected by the Council; the other is the person designated under section 16(1)(c).
Disciplinary Committee composition (Section 21B(1)): President or Vice-President (Presiding Officer) + 2 elected Council members + 2 Central Government nominees; The Council may constitute more Disciplinary Committees when it considers necessary.
Appeal (Section 22E): Appeal to the Authority within 90 days of the order being communicated; The Authority may entertain a late appeal if there was sufficient cause. The Director (Discipline) may also appeal if authorised by the Council.
Withdrawal of complaint (Section 21(5)): Director places withdrawal before Board/Committee, which may permit it at any stage if circumstances warrant; Withdrawal is not automatic.
Powers of civil court (Section 21C): Summoning and examining on oath | discovery and production of documents | evidence on affidavit; Vested in the Authority, Disciplinary Committee, Board of Discipline and Director (Discipline) for an inquiry.

How to solve Disciplinary Mechanism and Penalties questions

Use this order for any case question on a complaint against a company secretary.

1Identify the facts: who is the member, what act or omission is alleged, and who complained.
2State the entry point: information or complaint with the prescribed fee goes to the Director (Discipline), who forms a prima facie opinion (Section 21).
3Classify the alleged misconduct as First Schedule, Second Schedule or both, using the facts given.
4Route the matter: First Schedule to the Board of Discipline; Second Schedule or both to the Disciplinary Committee. If there is no prima facie case, the Director submits it to the Board, which may close it or advise further investigation.
5Note the hearing: the member must get an opportunity of being heard before any order.
6Apply the penalty range of the correct body and say that one or more actions may be taken.
7Add the remedy: appeal to the Authority within 90 days, with the Authority's powers.
8Conclude clearly with the body, the likely penalty range and the appeal right.

Quickest way: Schedule-to-body-to-penalty shortcut

When to use it: Use when the question gives a misconduct and asks who decides and what penalty can follow.

Ask: First or Second Schedule?
First: Board of Discipline, fine up to ₹1 lakh, removal up to 3 months, reprimand.
Second or both: Disciplinary Committee, fine up to ₹5 lakhs, removal permanent or for a period, reprimand.
Write the hearing requirement in one line.
Close with the 90-day appeal to the Authority.

Common mistakes in Disciplinary Mechanism and Penalties

Saying the Director (Discipline) decides guilt and imposes penalty.
Students see the Director as the head of the process.
Fix: The Director only forms a prima facie opinion and places the matter before the Board or Committee. Only they can penalise.
Mixing up the fine limits of the Board and the Committee.
Both lists look alike: reprimand, removal, fine.
Fix: Remember Board = ₹1 lakh and up to 3 months; Committee = ₹5 lakhs and permanent or such period.
Sending a case with both Schedules to the Board of Discipline.
Students look only at the First Schedule item.
Fix: Second Schedule alone, or both Schedules, goes to the Disciplinary Committee.
Forgetting the right of hearing.
The focus stays on penalties.
Fix: State that the member must be heard before any order is made against him.
Writing that appeal lies to the Council or High Court, or giving the wrong time limit.
Confusion with other professional laws.
Fix: The appeal is to the Authority within 90 days of communication of the order; late appeals are allowed for sufficient cause.
Treating a complainant's withdrawal as ending the case automatically.
Assuming the complainant controls the case.
Fix: The Board or Committee must permit the withdrawal, and only if circumstances so warrant.

Worked examples

Example 1

A complaint with the prescribed fee is received against CS Meera Iyer alleging a First Schedule misconduct. The Director (Discipline) finds a prima facie case. Explain the procedure and the maximum penalty.

Show the solution

The complaint with fee reaches the Director (Discipline) of the Disciplinary Directorate, who forms a prima facie opinion under Section 21.
The misconduct is in the First Schedule, so the Director places the matter before the Board of Discipline.
The Board follows summary disposal procedure and must give Meera an opportunity of being heard before any order.
If it finds her guilty, it may reprimand her, remove her name from the Register up to three months, or impose a fine up to ₹1,00,000, one or more of these.
If aggrieved, Meera may appeal to the Authority within 90 days of communication of the order.

Answer: The Board of Discipline decides after hearing her. The maximum is a fine of ₹1,00,000 and/or removal up to three months and/or reprimand, with appeal to the Authority within 90 days.

Example 2

The Director (Discipline) believes CS Arjun Rao is guilty of misconduct under both the First and Second Schedules. The Disciplinary Committee removes his name permanently and fines him ₹3,00,000. Is the order within power, and what can Arjun do?

Show the solution

Misconduct in both Schedules goes to the Disciplinary Committee under Section 21(3).
The Committee must hear Arjun before making an order (Section 21B(3)).
Its powers include reprimand, removal permanently or for such period as it thinks fit, and a fine up to ₹5,00,000.
Permanent removal is permitted, and ₹3,00,000 is below ₹5,00,000, so the order is within power.
Arjun may appeal to the Authority within 90 days; it can confirm, modify, set aside, reduce or enhance the penalty, or remit the case, after hearing the parties.

Answer: The order is within the Committee's powers if Arjun was heard. He can appeal to the Authority within 90 days, and the Authority may even enhance the penalty.

Exam tips

Write the Schedule-to-body routing first; it earns the core marks in case questions.
Quote the exact limits: ₹1 lakh and 3 months for the Board; ₹5 lakhs and permanent removal for the Committee.
Mention the hearing and the appeal in every answer; examiners look for them.
For a 'no prima facie case' fact pattern, say the Board may close the matter or advise further investigation.
Keep section numbers (21, 21A, 21B, 21C, 22E) only where you are sure; the rule matters more.

Practice questions from Values, Ethics and Professional Conduct

Disciplinary Mechanism and Penalties in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Disciplinary Mechanism and Penalties: frequently asked questions

How do I file a complaint against a company secretary?

You send the information or complaint to the Institute along with the prescribed fee. It is dealt with by the Director (Discipline), who forms a prima facie opinion. Check the Institute's current rules for the prescribed form and fee.

What is the difference between the Board of Discipline and the Disciplinary Committee?

The Board handles First Schedule misconduct by summary disposal, with penalties up to ₹1 lakh fine or three months' removal. The Committee handles Second Schedule or both-Schedule misconduct, with fines up to ₹5 lakhs and permanent removal possible.

Can a CS be removed from the Register permanently?

Yes, but only by the Disciplinary Committee. The Board of Discipline can remove the name only up to three months.

Where can a CS appeal against a disciplinary order?

To the Authority, within 90 days of the order being communicated. The Authority can accept a late appeal if there is sufficient cause.

Do these bodies have powers of a civil court?

Yes, for an inquiry. They can summon and examine persons on oath, order discovery and production of documents, and receive evidence on affidavit.