1. Why Every Founder Suddenly Cares About the Company Secretary
Imagine you’ve just landed a new customer, your cash flow looks healthy, and then—boom—the ROC slaps a notice on your desk for not having a Company Secretary on the payroll. It’s the kind of letter that hijacks board meetings, freezes expansion plans, and drains coffee machines. So, is a Company Secretary really compulsory for your Private Limited Company, or can you keep the peace (and cost) by outsourcing to a Practising Company Secretary (PCS) instead?
Spoiler: the answer depends on (i) your paid-up share capital, (ii) the fine print under Rule 8 & 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, and (iii) how much late-night compliance anxiety you can live with. Let’s decode everything before the next ROC alert pops up.
2. The Legal Trigger—Paid-Up Share Capital of ₹10 Crore
Under Section 203 of the Companies Act 2013, read with Rule 8A, every Private Limited Company with a paid-up share capital of ₹10 crore or more must appoint a whole-time Company Secretary.
The threshold used to be ₹5 crore until 2019; since then, Rs 10 crore has been the magic number. If your most recent audited balance sheet shows ₹9.99 crore, you still breathe easy—at least until the next allotment of shares. The moment you hit or cross ₹10 crore, the clock starts, and the ROC expects you to file Form DIR-12 and MGT-14 within thirty days of the board resolution.
Quick Threshold Checklist
| Paid-Up Capital | Mandatory Whole-Time CS? | Statutory Reference |
|---|---|---|
| Below ₹5 crore | No, but consider engaging a PCS for good governance | Rule 8A (voluntary) |
| ₹5 crore – ₹9.99 crore | Still no mandatory whole-time CS after 2019 amendment | Rule 8A proviso |
| ₹10 crore and above | Yes—appoint a whole-time Company Secretary | Rule 8A, Sec 203 |
(All amounts in Indian Rupees. Data updated for FY 2024-25 filings.)
3. Whole-Time CS vs Practising CS (PCS): The Real-World Trade-Off
When founders whisper “Let’s hire a CS,” they often mean “Let’s find someone who’ll keep the ROC happy without burning through cash.” Below is an unvarnished comparison:
| Factor | Whole-Time Company Secretary (Employee) | Practising Company Secretary (Retainer) |
|---|---|---|
| Legal Status | Key Managerial Personnel (KMP) under Sec 2(51) & Sec 203 | External professional, not KMP |
| When Allowed | Mandatory once capital ≥ ₹10 crore | Optional at any size; cannot substitute a whole-time CS when mandatory |
| Typical Monthly Cost | ₹1.2 lakh – ₹3 lakh (salary + benefits) | ₹25k – ₹60k retainer for routine filings |
| Board Meeting Presence | In-house, attends every meeting | Invited as and when required |
| Turnaround Time | Instant access | Depends on engagement terms |
| Risk Mitigation | Directly accountable officer, signs all documents | Limited liability via engagement letter |
| Hidden Headaches | Payroll taxes, leave encashment, PF, HR policies | Coordination delays, scope creep |
| Best For | Growth-stage or funded startups, large family businesses, PE-backed companies | Bootstrapped companies, early-stage startups, transitional phase before ₹10 crore |
4. Step-by-Step Appointment Timeline (Whole-Time CS)
- Board Resolution – Convene a board meeting; pass a resolution referencing Sec 203 & Rule 8A.
- Issue Offer Letter – State designation, remuneration, date of joining.
- File Form DIR-12 – Within 30 days of appointment for KMP.
- File Form MGT-14 – Attach the board resolution.
- Update Statutory Registers & Letterheads – Add CS name and membership number.
- Intimate Bankers & Stakeholders – CS often becomes a bank signatory for ROC forms.
Pro-Tip: Back-date appointments are a red flag. ROC officers can levy penalties for “continuing default,” calculated daily.
5. What Happens if You Ignore the Rule?
Failure to appoint a Company Secretary isn’t a slap on the wrist. In November 2024, ROC Hyderabad fined Virupaksha Organics Ltd. ₹79.40 lakh for non-appointment of a CS and CFO.
Penalty Structure (Sec 203(5))
- Company: ₹5 lakh – ₹20 lakh, plus ₹1,000 per day of continuing default.
- Every Director & Key Officer: ₹50,000 each + ₹1,000 per day.
Recalling cash flow projections? Exactly.
6. FAQs (Asked at Every Founder Dinner)
- My paid-up capital is ₹10.2 crore but I’m loss-making. Do I still need a whole-time CS?
Yes. The Companies Act looks at capital, not profitability. - Can we appoint the CFO as the Company Secretary?
No. Dual roles of CFO and CS are prohibited under Sec 203. - Can a foreign-qualified chartered secretary hold the post?
Only an ICSI-qualified, Indian-registered Company Secretary can sign Indian e-forms. - We crossed ₹10 crore last week. By when must we file DIR-12?
Within 30 days of the board resolution, which itself should be passed “as soon as possible,” typically within the same month. - What if we reduce capital below ₹10 crore later—can we terminate the CS?
Yes, but notify ROC and file cessation forms. Consider reputational impact. - Is Secretarial Audit mandatory for Private Companies?
Only if your paid-up capital ≥ ₹50 crore or turnover ≥ ₹250 crore (Rule 9). PCS can sign MR-3. - Can a PCS be our Compliance Officer under the SEBI (LODR) if we become listed?
Exchanges usually insist on a whole-time in-house CS as Compliance Officer.
7. Governance Roadmap for Startups Climbing Toward ₹10 Crore
| Stage | Paid-Up Capital | Action Plan | Engagement Model |
|---|---|---|---|
| Seed | < ₹2 crore | Retain PCS for annual filings, MOA changes | PCS (quarterly) |
| Pre-Series A | ₹2–₹5 crore | Draft ESOP policy, board calendar, due-diligence-ready records | PCS (monthly) |
| Series A | ₹5–₹9.99 crore | Implement governance SOPs, digitise minute-books, prep for Rule 8A | Hybrid: part-time in-house + PCS |
| Series B / Growth | ≥ ₹10 crore | Recruit whole-time Company Secretary, formal KMP structure, secretarial audit readiness | Full-time CS |
8. Case Study—Startup “CodeLoop Pvt. Ltd.”
- Background: SaaS startup; raised ₹8 crore Series A; using PCS for annual filings.
- Growth Event: Series B worth ₹12 crore in June 2025 raises paid-up capital to ₹11 crore.
- Action Taken:
- Board meeting on 28 June 2025; resolution to appoint Ms. Riya Sharma (ACS 55555) as whole-time Company Secretary effective 1 July 2025.
- DIR-12 filed on 2 July; MGT-14 on 3 July.
- Salary fixed at ₹1.4 lakh per month plus ESOPs.
- Internal audit in Q3 FY 25-26 flagged zero non-compliances.
- Outcome: Clean ROC record; investors praised swift compliance in shareholder letter.
9. The Last Word—Governance as a Growth Lever
Running a startup without a Company Secretary after you cross ₹10 crore is like driving a supercar without a dashboard—legal blind spots can end a victory lap before it starts. Whether you keep compliance lean with a PCS today or roll out the red carpet for a whole-time Company Secretary tomorrow, the goal is identical: safeguard directors, woo investors, and stay ROC-proof.
Remember, the Company Secretary is not mere paperwork—she’s your in-house diplomat to regulators, your governance GPS, and your pre-emptive defence against million-rupee penalties. Hire wisely, engage proactively, and let compliance become the silent engine of your scale-up story.
Need help drafting your board resolution or running a compliance health-check? Reach out to the Indefine team, and our rosters of seasoned Company Secretary professionals will handhold you all the way.
