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Officer in default

CS Sagar Khandelwal (Practice) (87 Points)

27 September 2011

Hi...

Please advice in case of a Private company who do not have a MD,WTD, Manager and appoints a Company Secretary does it change the postion under section 5 (g). As per the provisions of Section 5(d) a CS is already included as officer in default... do the company need to appoint an officer in default under section 5 (f) to safeguard the directors from section 5(d)... or is it automatically considered the CS to be an officer in default?

Also can a CS be again charged with the responsibilty of section 5(f) as it already included by 5 (d)or should it be any other person other than the CS

Thanks in advance

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2 Replies

DS Mahajani (1) (242 Points)
Replied 27 September 2011

The Section 5 (g) of the Companies Act, 1956 states that where any company does not have any of the officers specified in clauses (a) to (c), any director or directors who may be specified by the Board in this behalf or where no director is so specified, all the directors:

Provided that where the Board exercises any power under clause (f) or clause (g), it shall, within thirty days of the exercise of such powers, file with the Registrar a return in the prescribed form.

In your case there is no MD, WTD or Manager and I assume that no director or directors are specified by the Board in this behalf; in that case all the directors would be considered as Officer in default [as per Clause (g)]

Further to answer your first qs, the appointment of CS would not change the position in your case. Please note CS is already included in the list of Officer in default vide clause (d) and therefore he would be charged again just because compliance of Clause (a), (b) and (c) is not done by the Company.

Hope this clarifies.

Regards

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DS Mahajani (1) (242 Points)
Replied 27 September 2011

Dear Sagar,

The query answered again as there was some mistake (which is highlighed in color).

The Section 5 (g) of the Companies Act, 1956 states that where any company does not have any of the officers specified in clauses (a) to (c), any director or directors who may be specified by the Board in this behalf or where no director is so specified, all the directors:

Provided that where the Board exercises any power under clause (f) or clause (g), it shall, within thirty days of the exercise of such powers, file with the Registrar a return in the prescribed form.

Further to answer your first qs, the appointment of CS would not change the position in your case. Please note CS is already included in the list of Officer in default vide clause (d) and therefore he would NOT be charged again just because compliance of Clause (a), (b) and (c) is not done by the Company.

Hope this clarifies.

Regards