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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Empowerment of the Company Secretary Profession

Gomti Dairy Producer Company Ltd, with average turnover above Rs 5 crore in three consecutive years, has not appointed a whole-time secretary for 400 days. It shows that it made all reasonable efforts but could not find a suitable ICSI member. What is the position under section 378X?

No penalty can be imposed if the company shows it took all reasonable efforts to comply, or that its finances made hiring a whole-time secretary beyond its capacity. Otherwise the penalty would be Rs 100 per day up to Rs 1 lakh.

  1. APenalty of Rs 40,000 is automatic and no defence exists
  2. BPenalty of Rs 1 lakh is automatic
  3. CNo penalty may be imposed if it is shown that all reasonable efforts to comply were takenCorrect
  4. DImprisonment of the officers in default

Explanation

The default penalty is Rs 100 per day, capped at Rs 1 lakh, so 400 days would give Rs 40,000. However, the proviso bars penalty if it is shown that all reasonable efforts were made or the financial position made engaging a secretary beyond capacity. Hence the automatic penalty options are wrong.

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