Who must appoint KMPs under section 203?
Which companies must appoint whole-time key managerial personnel under section 203 of the Companies Act, 2013, the Rs 10 crore paid-up capital test in rule 8, the six-month vacancy clock, and the Rs 5 lakh company penalty.
In this guide
Every listed company and every other public company with paid-up share capital of Rs 10 crore or more must have whole-time KMPs under section 203 of the Companies Act, 2013 and rule 8. That is a managing director or CEO or manager (or a whole-time director in their absence), a company secretary, and a Chief Financial Officer. Fill a vacancy at a board meeting within six months. Default costs the company Rs 5 lakh.
What does section 203 require?
Section 203 of the Companies Act, 2013 requires every company in a prescribed class to have whole-time key managerial personnel. The three posts are a managing director, or Chief Executive Officer or manager, and in their absence a whole-time director; a company secretary; and a Chief Financial Officer.
Appointment is by a Board resolution that records the terms, including remuneration. That is section 203(2). Filing the resolution is not the appointment. The Board has to pass it.
Which companies must appoint KMPs?
Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is the class for section 203(1). Every listed company, and every other public company having a paid-up share capital of ten crore rupees or more, shall have whole-time key managerial personnel.
Does a private company need a whole-time KMP?
Not under rule 8. A private company is not a listed company and is not "every other public company". Rule 8A, which once required a whole-time company secretary in companies with paid-up capital of Rs 5 crore or more outside rule 8, was omitted by the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020.
Does listed status override the capital test?
Yes. Rule 8 names every listed company first, then every other public company at Rs 10 crore paid-up. A listed company below that capital figure still needs the three whole-time posts.
Can a KMP serve two companies?
A whole-time key managerial person shall not hold office in more than one company except in its subsidiary at the same time. That is section 203(3). The Board may still permit that person to be a director of another company.
A company may appoint as managing director a person who is already managing director or manager of one, and of not more than one, other company, if the appointment is approved by a Board resolution with the consent of all directors present, on specific notice to all directors then in India.
When must a KMP vacancy be filled?
Section 203(4) gives the Board six months from the date of vacancy to fill it, at a meeting of the Board. A circular resolution is not that meeting.
| Event | What the law requires |
|---|---|
| Company enters the rule 8 class | Appoint the three whole-time posts under section 203(1) |
| Office of a whole-time KMP is vacated | Board meeting fills it within six months |
| Appointment of MD, WTD, manager, CEO, CS or CFO | Form MR-1 with the Registrar within 60 days (rule 3) |
| Any appointment or change among directors and KMPs | Form DIR-12 within 30 days under section 170 |
The DIR-12 clock and the MR-1 clock run together. Missing DIR-12 is a separate default from missing the six-month vacancy fill. See the Form DIR-12 guide.
What is the section 203 penalty?
Section 203(5), as substituted by the Companies (Amendment) Act, 2019, makes the company liable to a penalty of five lakh rupees. Every director and key managerial person of the company who is in default is liable to a penalty of fifty thousand rupees, and where the default is a continuing one, a further penalty of one thousand rupees for each day after the first, not exceeding five lakh rupees.
How do I confirm the KMP rules?
- Read section 203 for the three posts, the six-month vacancy rule, and the penalty.
- Confirm the company is in the rule 8 class: listed, or a public company with paid-up capital of Rs 10 crore or more.
- Check Form DIR-12 and Form MR-1 against the appointment date, not against each other.
Why do companies miss the KMP clock?
- Treating a private company as if rule 8 still required a CS at Rs 5 crore after rule 8A was omitted in 2020, or the reverse: ignoring rule 8 once a public company crosses Rs 10 crore paid-up.
- Counting six months from the Board meeting that noted the resignation, instead of from the date the office was vacated.
- Filing DIR-12 and assuming MR-1 is optional, or filing MR-1 and skipping DIR-12.
- Letting a whole-time CS remain CS of a second company that is not a subsidiary.
Where are KMP appointment rules notified?
The class of companies, the forms and the fees move through MCA. Complied AI keeps MCA updates in one feed so you can open the source behind a change. When the duty itself is the question, read section 203 next to that update.
Practical checks
Common questions
Which companies must appoint a whole-time company secretary?
Every listed company, and every other public company with paid-up share capital of Rs 10 crore or more, under section 203 of the Companies Act, 2013 read with rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. A private company is outside that class unless it is listed, which a private company is not.
Who counts as a key managerial person under section 203?
Section 203(1) requires three whole-time posts: a managing director, or Chief Executive Officer or manager, and in their absence a whole-time director; a company secretary; and a Chief Financial Officer. Section 2(51) of the Companies Act, 2013 is the definition clause that also includes such other officer as may be prescribed and an officer not more than one level below the directors who is in whole-time employment and designated as KMP by the Board.
Our CFO resigned on 1 April. How long do we have?
Six months from the date of vacancy. Section 203(4) of the Companies Act, 2013 requires the Board to fill the resulting vacancy at a meeting of the Board within that period. Count from 1 April, not from the date you accepted the resignation letter if those dates differ.
Can our whole-time CS also be CS of another company?
Not as a whole-time KMP of both, except in a subsidiary. Section 203(3) of the Companies Act, 2013 bars a whole-time key managerial person from holding office in more than one company at the same time, other than a subsidiary. Board permission still lets that person sit as a director of another company.
What is the penalty if we never appoint a CS?
Section 203(5) of the Companies Act, 2013, as substituted by the Companies (Amendment) Act, 2019, makes the company liable to a penalty of Rs 5 lakh. Every director and key managerial person in default is liable to Rs 50,000, plus Rs 1,000 for each day the default continues, capped at Rs 5 lakh on that continuing limb.
Do we file DIR-12 or MR-1 after appointing a CFO?
Both, on different clocks. Form DIR-12 is the section 170 return of directors and KMPs, due within 30 days of appointment. Rule 3 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 also requires Form MR-1 within 60 days for appointment of a managing director, whole-time director, manager, CEO, company secretary or CFO.
Can the same person be chairperson and managing director?
Not after commencement of the Act, unless the articles allow it or the company does not carry multiple businesses. That is the first proviso to section 203(1). A further proviso carves out a notified class of companies that carry multiple businesses and have appointed one or more CEOs for each business.
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How this guide was prepared
This guide is published by the Complied AI research desk. Its source list and stated position were checked against the official records shown below on 9 September 2026.
Automation, including AI, may assist research, drafting and structure. It does not replace the official record or amount to an independent professional review. Read our editorial standards and corrections policy.
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