The Company Secretary shall be a member of the Institute of Company Secretaries of India (ICSI). The ICSI is the regulatory body that oversees and maintains the profession of Company Secretary. The Company Secretary of the Company will be considered as Key Managerial Personnel of the Company.
Eligibility Criteria of Company Secretary
The person who has qualified exam of the Company Secretary Course given under the Institute of Company Secretaries of India and active member of the ICSI will be considered the Company Secretaries.
Compulsion to have full-time Company Secretaries:
The following companies shall compulsory require to appoint full-time company Secretaries:
- Every Public Company has paid up capital of Rs 10 Crore or more.
- Every Private Company has paid up capital of Rs 10 Crore or more.
Responsibility of full-time Company Secretaries:
- To convene the meeting of Directors and Shareholders
- To send the Notice of Board Meeting along with Agenda to all the Directors of the Meeting.
- To send the Notice of General Meeting along with the agenda to all the Shareholders of the Meeting.
- To prepare and maintain minutes of the Meeting of Shareholders and Directors.
- To maintain the Statutory registers of the company.
- To sign the Balance Sheet of the Company.
- To prepare and file the E Forms to the office of the Registrar of Companies.
- To sign the Annual Return of the Company.
- Or any other Documents and forms as authorized by the Board of Directors of the Company.
Appointment of Company Secretary
A Company Secretary is appointed by the Company as per Section 203 of the Companies Act, 2013 and Rule 8/8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Rule 8 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 says that every listed or public company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel.
Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 states that every private company which has a paid-up share capital of ten crore rupees or more shall have a whole-time company secretary.
Procedure for the Appointment of Company Secretary
- Give the Notice of the Board Meeting as per Section 173 of the Companies Act, 2013 for the Appointment of the Company Secretary and finalize the date, place and time of the Board Meeting.
- Call the Board Meeting and pass the resolution for the Appointment of the Company Secretary.
- File Form DIR-12 for the Appointment of the Company Secretary within 30 days from the date of the Appointment of the Company Secretary.
- In the case of the listed company and every other public company, file Form MGT-14 within 30 days from the date of the passing resolution for the Appointment of the Company Secretary.
- In the case of the listed Company, intimate to the Stock Exchange for the Appointment of the Company Secretary as a Compliance Officer.
- A Company Secretary should not hold office in more than one company, except in its subsidiary company at the same time.
- Make entries in the key managerial personnel and register of directors under Section 170 of the Act.
Functions of Company Secretaries:
Section 205 of the Companies Act, 2013 explains the functions of Company Secretaries that are:
- To make sure that the company abides to the applicable secretarial standards.
- To report to the Board about compliance with the provisions of this Act, laws and rules applicable to the company.
- To discharge other duties as specified.
Duties of Company Secretaries:
Rule 10 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 explains the duties of Company Secretaries that are:
- Provide the guidance to the directors of the company, both collectively and individually, regarding their duties, responsibilities, and powers
- Establish the convening of meetings and attend Board, general meetings and maintain the minutes of the meetings.
- Obtaining approval from the Board, general meeting, the government and such other authorities in accordance with the provisions of this Act.
- Represent before regulators and authorities in link with discharge of numerous duties under the Act.
- Assist the board in managing the company's operations.
- Assist and advise the board to ensure good corporate governance and compliance with good corporate governance requirements and practices.
- Perform other duties specified in the law or regulations.
- Such other duties as may be assigned by the Board from time to time.
Responsibilities of a Company Secretary in India
Responsibilities of a Company Secretary in India in practice:
1. Company Secretary as a Business Facilitator:
Under the Companies Act, a Company Secretary in India is granted certain rights that enable them to promote companies, perform audits, sign annual returns, oversee corporate restructuring and takeovers. Additionally, they can administer the revival of sick companies as technical members of the Company Law Tribunal and investigate taxation and corporate affairs.
2. Company Secretary as an Auditor:
The Company Secretary, in their role as an auditor, is responsible for attaching a Secretarial Audit Report (Form MR-3) to authorities under the Companies Act to ensure that corporate discipline and compliance with laws are maintained. This report ensures that the company follows procedures set forth in general laws and legal statutes and is obligated to report any fraudulent activities to the government.
3. Company Secretary in Regulatory Compliance:
The role of Company Secretaries in ensuring regulatory compliance is crucial, and they play a significant role in this field. Maintaining current legal developments, implementing necessary modifications in company procedures, and shielding the organization from legal hazards are all part of this.
4. Company Secretary as an advisory agent:
A Company Secretary acts as an advisory agent in various scenarios, including the issue of shares, drafting of prospectuses/sale letters, matters related to securities and private placements, buyback of shares and provide the guidance in policies related to mergers, amalgamations, and joint ventures.
5. Company Secretary in Corporate Governance:
Company Secretaries help a lot in maintaining high standards of corporate governance. They guide the company's compliance with ethical principles, transparency and accountability, and promote a decision-making culture in the organization.
Statutory Restrictions and Authority of a Company Secretary
A Company Secretary operates within defined constraints set by ICSI and regulatory bodies. As a company representative, they are responsible for any negligence leading to duty discharge, prohibited from exceeding their authority, obligated to keep company secrets confidential, and subject to dismissal for deriving secret profits.
Additionally, they are restricted from entering into contracts, borrowing money, acknowledging debts, and registering/transferring shares without proper Board of Directors (BOD) authorization.
Therefore, the Company Secretary in India plays a pivotal role in upholding legal standards and fostering corporate governance. Their diverse responsibilities contribute to the integrity and compliance of a company, making them an integral part of its success.
Procedure for the Removal/Resignation of Company Secretary
A company secretary can be removed or dismissed like any other employee of the organization. Since they are appointed by the Board, the Board of the Director has absolute discretion to remove a company secretary or terminate their services at any time, with or without a reason. However, principles of natural justice, such as providing a show cause notice, conducting a hearing, and issuing a reasoned order, must be followed.
To remove or resign a Company Secretary, the following steps should be taken:
- Give the Notice of the Board Meeting as per Section 173 of the Companies Act, 2013 for the Removal/Resignation of the Company Secretary and finalize the date, place and time of the Board Meeting.
- Call the Board Meeting and pass the resolution for the Removal/Resignation of the Company Secretary.
- File Form DIR-12 for the Removal/Resignation of the Company Secretary within 30 days from the date of the Removal/Resignation of the Company Secretary.
- In the case of the listed company and every other public company, file Form MGT-14 within 30 days from the date of the passing resolution for the Removal/Resignation of the Company Secretary.
- In the case of the listed Company, intimate to the Stock Exchange for the Removal/Resignation of the Company Secretary as a Compliance Officer.
- Make entries in the Register of directors and key managerial personnel under Section 170 of the Act.
Importance of Company Secretary in the Business Environment
Every company needs a Company Secretary to make sure that all legal requirements are fulfilled. It is a worker despite holding a High Status comparable to that of a corporation’s director. Typically, the only employee in the company with advising authority is the owner.
In essence, the Business Secretary’s recommendations are implemented, used to carry out crucial tasks, and translated into company policy. He is the sole outsider permitted to attend the board meeting as a result. It must be an ICSI member or possess other necessary credentials.
Penalty for the Non-Appointment of Company Secretary
If any company makes any default in complying with the provisions of this section, such company will have to pay a penalty of five lakh rupees and every director and key managerial personnel will have to pay fifty thousand rupees as penalty. If the default is a recurrent one, a further penalty of one thousand rupees for each day after the first during which such default continues but the fine should not be above five lakh rupees.
Conclusion
A company secretary is a crucial figure responsible for compliance and legal aspects within a company. Their functions, duties, appointment procedures, and removal/resignation processes are essential to maintaining good corporate governance. By understanding these aspects, companies can ensure smooth operations and adhere to the legal framework governing their activities.
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