Get on a journey through the vital role of a Company Secretary (CS), overseer of compliance and legal intricacies. Regulated by ICSI, a CS ensures adherence to statutory norms, advises on financial risks, and plays a crucial role in maintaining legal compliance.
A Company Secretary (CS) is a crucial figure in a company, responsible for managing compliance and legal aspects. The Institute of Company Secretaries of India (ICSI) oversees and regulates the profession of Company Secretaries, defining them as individuals who are members of the ICSI.
The primary role of a CS involves maintaining the company’s financial records, auditing tax returns, and offering guidance to the board of directors on legal and financial risks. Their pivotal responsibility is ensuring the company adheres to statutory regulations, contributing significantly to the company’s overall governance and operational integrity. In this article, we discuss the company secretary’s duties and the way to appoint one for your company.
Under the Companies Act, 2013
According to laws, public or private companies with a paid-up share capital of ₹ ten crores or more must appoint a full-time company secretary. Additionally, all listed companies must have whole-time key managerial personnel. These key administrative personnel include:
- Chief Executive Officer
- Company Secretary
- Chief Financial Officer
- A full-time Director
- and other officers defined under the Companies Act,2013.
Who is a Company Secretary in India?
A company secretary is a person appointed by a company responsible for ensuring that the company adheres to all the corporate laws, taxes, and economic and industrial laws that apply to the business. They must perform all the secretary’s duties under the Company Act, 2013. According to law, they are a member of the ICSI (Institute of Company Secretary of India).
Roles and Responsibilities of a Company Secretary
Section 205 of the Companies Act
- CS is mandated to report compliance to the board.
- Ensure strict adherence to secretarial standards.
- Fulfill duties as prescribed by the company board.
Rule 10 Responsibilities
- Guide directors in matters pertaining to their powers, duties, and responsibilities.
- Facilitate the convening of various meetings, including general, board, and committee meetings.
- Obtain necessary approvals from meetings, government, and other authorities as per the Act.
- Represent the company before regulatory authorities.
Duties of a Company Secretary in India
According to the Companies Act, 2013 and Companies Rules, 2014, the company secretary services must perform the following duties:
- Ensure that the company follows the relevant secretarial standards
- Make the board of directors aware of the rules and laws applicable to the company
- Advise the board of directors members to assist them with their duties and responsibilities towards the company
- Help in organizing and recording meeting with the concerned people, including the board of directors
- Help the board to comply with all the corporate governance standards
- Representing the company in front of regulators and other authorities
- Act as a principal officer of the company to sign documents on behalf of the company if approved by the board
- The duty of signing share certificates lies in the hands of the company secretary after his appointment and by a director if the company secretary has not been appointed yet.
- The annual return is signed by the director and company secretary of the company before filing it with the Registrar of Companies. The company secretary can sign the return in practice if the company does not have a full-time company secretary
- A company secretary must coordinate with the depository and stock exchange in case of Demat shares
- When a company is established by submitting the required documents, such as the MOA and AOA, the company secretary can sign the declarations and the person specified in the article as director or manager
- Section 204 of Companies Act, 2013 and Rule 9 of Companies Rules, 2014 obligates the company secretary in practice to conduct a Secretarial Audit for the company and submit the report in Form MR-3
- Many other duties along with the responsibilities mentioned above are given to the company secretary depending upon different laws and also as mentioned under the company policy. The company secretary also has to handle the duties related to the company if given by the board of directors
- The secretary cannot, in any case, borrow money on behalf of the company
- In case of default by the company, or any violations by the company like breaking local or state laws or other offences committed under the Companies Act, the company secretary, being the ‘officer in default, can be punished along with other key personnel that including the manager, director, managing director etc.
How Do Appoint a Company Secretary In India?
- Find the best candidate: Find a person with the proper knowledge and who is responsible for handling the company secretary position. You can advertise for the position through different mediums, and companies can also go through this step of appointment of company secretary online. After gathering applications, shortlist the best candidates through their resumes and interview process. Discuss and finalize their appointment
- Conduct a board meeting: All members of the board of directors of the company must be informed about conducting the meeting. The notification should be sent to the addresses of the directors. The agenda for the appointment of a company secretary is discussed at the meeting. The board then passes a resolution to approve the appointment of the new secretary
- Issue an appointment letter to the full-time company secretary
- After the appointment is made, the company shall fill the concerned documentation, such as Form DIR-12 with ROC must be filed concerning the return of appointment of the company secretary within 30 days from the date of the officer’s appointment. Listed companies need to adhere to other legalities as well. Within 24 hours of the board meeting, the listed companies must disclose the work to the Stock exchanges. The disclosure must also be published on the company’s website no more than two days from the meeting
- Public companies must go through Companies (Registration of Offices and Fees) Rules, 2014 and fill the concerned forms, including Form MGT-14, with a copy of the board resolution within 30 days of passing the resolution
- Suppose the company secretary is engaged in party transactions with critical managerial personnel, as written in Section 188 of the Companies Act of 2013. In that case, proper legal regulations must be followed regarding the concern
- The secretary is not supposed to hold office in more than a single company. There is an exception in case the other companies are a subsidiary of the leading company.
Removal Process of a Company Secretary
The removal of a Company Secretary (CS) is a methodical process designed for transparency and compliance. Initially, the board takes the lead by passing a formal resolution, officially signalling the decision to remove the CS. Following this, the company is obligated to complete Form DIR-12, a regulatory document that is then submitted to the Registrar of Companies. This step is critical for maintaining precise and up-to-date records and ensuring accountability in corporate governance.
Simultaneously, if the company’s shares are publicly traded, an additional step comes into play. The company is required to promptly notify the stock exchange about the change in the CS position. This notification serves to keep relevant stakeholders, especially investors, well-informed about significant alterations in key managerial roles. As a final step in the process, the company must promptly fill the vacancy created by the removal within six months. This underscores the importance of ensuring a seamless transition and sustaining operational efficiency in corporate functions.
Conclusion
The company secretary is one of the key managerial personnel. They hold a lot of power in the company and can take the company on the path of success or failure through their decisions. Being the person given so much responsibility, they should be someone the board can trust and one who also showcases abilities that they can handle all the duties satisfactorily. The power of appointing and removing a company secretary lies in the hands of the board after following a proper procedure.
Frequently Asked Questions
Is CS compulsory for companies?
Yes, for certain specified companies as per the Companies Act.
What is the time limit for appointing CS?
Within 30 days from the date of the board resolution.
How many CS are required in a company?
The requirement is mandatory for certain listed and large companies.
What is rule 8 for the appointment of CS?
Rule 8 pertains to the specific companies that are required to appoint a CS.
Which company must have CS?
Companies listed on stock exchanges and certain others exceed a prescribed capital limit.
What is the penalty for not appointing CS?
Non-compliance attracts penalties as stipulated in the Companies Act.
What is the penalty for non-appointment of a company secretary?
Penalties are explicitly defined in the Companies Act for non-compliance.
Can a CS be appointed in two companies?
No, simultaneous roles in two companies are not permitted, but holding positions in a company and its subsidiary is allowed.
Who appoints CS in a company?
The appointment is made through a board resolution.
What is the CS limit?
The limit is determined by statutory requirements for specific types of companies.
What is compulsory for CS?
Compliance with the Companies Act and the execution of duties assigned by the company board.
What are the documents for the CS appointment?
Essential documents include a board resolution, form DIR-12, and other regulatory filings.
What is the procedure for appointing CS?
The procedure involves a board resolution, informing relevant authorities, and updating company records.
Can CS appear in court?
Yes, a CS is authorised to represent a company in legal matters, showcasing the versatile role played in ensuring legal compliance.
