Section 203 of the Companies Act, 2013
Section 203 of the Companies Act, 2013 deals with the appointment of Key Managerial Personnel (KMP) in a company.
✅ Section 203 – Appointment of Key Managerial Personnel
🔑 Key Managerial Personnel (KMP) Includes:
As per this section, the following are considered KMP:
Managing Director (MD) or Chief Executive Officer (CEO) or Manager
Company Secretary (CS)
Whole-time Director (WTD)
Chief Financial Officer (CFO)
Such other officer as may be prescribed
📌 Applicability:
The following companies must appoint whole-time KMPs:
Every listed company
Every public company having paid-up share capital of ₹10 crore or more
📝 Rules & Conditions:
One Person = One Role (Generally):
A person shall not be appointed or reappointed as the chairperson of the company and the MD/CEO at the same time unless:
The articles of the company provide otherwise, or
The company is not engaged in multiple businesses
Appointment Process:
The appointment of whole-time KMPs must be approved by the Board.
A return of appointment must be filed with the Registrar of Companies (ROC) in Form DIR-12 and/or MR-1 within 30 days.
Restriction on Holding Office in Multiple Companies:
A whole-time KMP shall not hold office in more than one company, except in its subsidiary company.
However, he/she can be a director in other companies with the Board’s permission.
Vacancy in KMP Post:
If the office of any KMP is vacated, the vacancy must be filled within 6 months from the date of such vacancy.
⚠️ Penalty for Non-Compliance:
| Offender | Penalty |
|---|---|
| Company | ₹5 lakh |
| Every director and KMP in default | Up to ₹50,000 + ₹1,000 per day (for continuing default) |
📚 Example:
If a public company with ₹12 crore paid-up capital doesn’t appoint a full-time CFO or CS, it violates Section 203 and may be penalized.
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