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

Sahyadri Growers Producer Company Limited has failed to appoint a whole-time secretary for two years though required to. In penalty proceedings, which circumstance would, under the proviso to Section 378X(3), prevent any penalty from being imposed?

No penalty is imposed if it is shown that the company's financial position made engaging a whole-time secretary beyond its capacity, or that all reasonable efforts to comply were made. Ignorance of the threshold or engaging another professional is not a defence under the proviso.

  1. AThe board had never discussed the matter, though a qualified member of ICSI was available at a reasonable fee
  2. BIt is shown that the financial position of the company was such that engaging a whole-time secretary was beyond its capacityCorrect
  3. CThe company's directors were all unaware of the turnover threshold
  4. DThe company had engaged a practising chartered accountant to handle filings

Explanation

The proviso bars a penalty if it is shown that all reasonable efforts to comply were taken, or that the financial position made engaging a whole-time secretary beyond the company's capacity. Ignorance of the law or engaging a different professional is not a listed defence. Lack of discussion shows no effort.

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