Proposed Update: CS Appointment Threshold May Change – What Companies Need to Know
The Ministry of Corporate Affairs (MCA) has recently proposed a significant change that could reshape corporate compliance requirements for many Indian companies. The proposal suggests revising the mandatory threshold for the appointment of a Company Secretary (CS) by increasing the paid-up capital limit from ₹10 crore to ₹25 crore. If implemented, this move is expected to ease the compliance burden on smaller and mid-sized companies while allowing regulators to focus on entities with greater operational and governance complexity.
At present, this change remains a proposal only, and its final applicability will depend on the issuance of an official notification by the MCA. Nevertheless, the proposal has already generated considerable interest among businesses, professionals, and compliance advisors. This blog provides a detailed overview of the proposed update, its background, potential impact, and how companies should prepare for possible changes.
Understanding the Current CS Appointment Requirement
Under the Companies Act, 2013, certain companies are required to appoint a whole-time Company Secretary. As per the existing provisions:
Every company having a paid-up share capital of ₹10 crore or more must appoint a whole-time CS.
The CS plays a crucial role in ensuring statutory compliance, maintaining corporate records, and acting as a key governance professional within the organization.
This requirement was introduced to strengthen corporate governance, improve transparency, and ensure that companies adhere to legal and regulatory obligations. Over time, however, many smaller companies have expressed concerns about the cost and operational burden associated with mandatory CS appointments.
What Is the Proposed Change?
The MCA has proposed revising the threshold for mandatory CS appointment as follows:
Current threshold: ₹10 crore paid-up capital
Proposed threshold: ₹25 crore paid-up capital
If approved, only companies with paid-up capital of ₹25 crore or more would be required to appoint a whole-time Company Secretary.
It is important to emphasize that:
The proposal is under review
No official amendment or notification has been issued yet
Existing compliance requirements remain fully applicable until formal notification
Why Is the MCA Considering This Revision?
The proposed change reflects the MCA’s broader approach towards rationalizing compliance requirements and promoting ease of doing business. Some key reasons behind this proposal include:
1. Reducing Compliance Burden on Smaller Companies
Many companies with paid-up capital just above ₹10 crore operate on a limited scale and may not have complex compliance needs. Increasing the threshold could relieve them from mandatory full-time CS appointment costs.
2. Aligning Compliance with Business Scale
Larger companies typically have more stakeholders, transactions, and regulatory exposure. Raising the threshold ensures that mandatory CS appointments are aligned with actual governance needs.
3. Encouraging Entrepreneurship
Lower compliance costs can encourage startups and growing businesses to scale without being overwhelmed by regulatory expenses.
4. Evolving Corporate Governance Framework
The proposal reflects the MCA’s evolving view that compliance should be risk-based and proportionate, rather than uniform across all company sizes.
Potential Benefits of the Proposed Change
If implemented, the revised threshold could offer several advantages:
✔ Cost Savings
Companies below ₹25 crore paid-up capital could save on salary and administrative costs related to appointing a full-time CS.
✔ Operational Flexibility
Smaller companies may rely on external professionals or consultants instead of maintaining an in-house CS function.
✔ Focus on Core Business
Reduced compliance overhead allows management to concentrate on business growth and strategic initiatives.
✔ Streamlined Governance
The change could reduce unnecessary regulatory pressure on companies with relatively simple structures.
Concerns and Considerations
While the proposal has been welcomed by many businesses, it also raises certain concerns:
⚠ Governance Risks
Without a dedicated CS, some companies may struggle to keep up with evolving compliance requirements.
⚠ Increased Dependence on External Advisors
Companies may need to rely more heavily on external consultants, making compliance reactive rather than proactive.
⚠ Director Accountability
Even if CS appointment is not mandatory, directors remain fully responsible for compliance failures.
Impact on Company Secretaries and Professionals
The proposal could also affect the professional landscape:
Demand for full-time CS roles in smaller companies may reduce
Advisory and consultancy-based CS services may increase
Professionals may focus more on high-value compliance, governance, and advisory roles
This shift highlights the changing nature of corporate compliance from routine filing to strategic governance support.
What Companies Should Do Right Now
Until the MCA issues an official notification, companies should:
✔ Continue Existing Compliance
Companies meeting the current ₹10 crore threshold must continue appointing and maintaining a whole-time CS.
✔ Monitor MCA Updates
Stay alert to notifications, circulars, and amendments issued by the MCA.
✔ Review Compliance Structures
Companies nearing the threshold should assess whether their compliance systems are robust enough to function without a full-time CS, if the change is approved.
✔ Seek Professional Guidance
Expert advice can help companies transition smoothly if the proposal becomes law.
What Happens If the Proposal Is Approved?
If the MCA formally notifies the revised threshold:
Companies with paid-up capital between ₹10 crore and ₹25 crore may no longer be required to appoint a whole-time CS
Existing CS appointments may be restructured based on business needs
Companies must still ensure compliance through alternative mechanisms
However, it is crucial to note that other compliance requirements under the Companies Act will continue to apply, regardless of CS appointment thresholds.
The Bigger Picture: Compliance Is Still Essential
Even if the threshold is revised, compliance responsibilities do not disappear. Companies must still:
File annual returns and financial statements
Maintain statutory registers
Conduct board and shareholder meetings
Comply with MCA, ROC, and other regulatory requirements
The proposed change should be seen as a compliance rationalization measure, not a relaxation of corporate governance standards.
How Taxla Services Can Support You
At Taxla Services, we assist companies of all sizes with:
Corporate compliance and ROC filings
CS advisory and outsourced compliance services
Compliance audits and risk assessments
Director and board advisory support
Whether or not the proposed change is implemented, our experts ensure that your business remains compliant, efficient, and well-governed.
Conclusion
The proposed revision of the CS appointment threshold from ₹10 crore to ₹25 crore marks a potentially significant shift in India’s corporate compliance landscape. While the proposal aims to ease the burden on smaller companies, its final impact will depend on the MCA’s official notification and implementation framework.
Until then, companies must continue to comply with existing laws while staying informed and prepared for possible changes. Proactive planning, professional guidance, and strong governance practices remain the keys to sustainable business growth.
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