Appointment of Company Secretary Under Companies Act, 2013 By CS Gaurav Kumar


Dear Professional Colleagues,

Appointment of a Company Secretary has been one of the most talked topics in the recent times as Companies not just appoint them because there is a statutory requirement for a few class of the company including listed companies or company having paid-up capital more than the prescribed limited but due to the reason that he is someone who adds values to the corporate governance of the Company..

The Institute of Company Secretaries of India is the Regulatory Body in India. The Company Secretary is responsible for the efficient administration of a company, particularly with regard to ensuring compliance with statutory and regulatory requirements and for ensuring that decisions of the board of directors are implemented. Visit www.icsi.edu for more info.

Despite the name, the role is not clerical or secretarial. The company secretary ensures that an organisation complies with relevant legislation and regulation, and keeps board members informed of their legal responsibilities. Company Secretaries are the company’s named representative on legal documents, and it is their responsibility to ensure that the company and its directors operate within the law. It is also their responsibility to register and communicate with shareholders, to ensure that dividends are paid and to maintain company records, such as lists of directors and shareholders, and annual accounts.

Company Secretary is someone who holds a very high rank and position and is next to the Chief Executive including Managing Director, Chief Financial Officer, Whole-Time Directors. He himself may be the Chief Executive and then his position is next to the directors. In fact, he is the only employee who has advisory powers. His advice is sought in carrying out general administration and in the decision-making process at the time of framing policies of the Company. He is consulted to ascertain the legal implications of policy decisions. And so he is the only outsider who is present at the meetings of the Board of Directors. Very often he is taken to the level of Vice-President.

Definition of Company Secretary:

As per Section 2 sub-section 24 of Companies Act, 2013:

Company Secretary or Secretary means a Company Secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 who is appointed by a company to perform the functions of a Company Secretary under this Act;

As Per Company Secretaries Act, 1980: 

“Company Secretary” means a person who is a member of the Institute of Company Secretaries of India.

The requirement to appoint a Company Secretary in Private Limited Company is governed by the Provision of Rule 8A and in Public / Listed Company by the provisions of Rule 8 of The Companies “Appointment and Remuneration of Managerial Personnel” Chapter XIII under Section 203 of the Companies Act, 2013.

Following Companies need to appoint whole time company secretary (mandatory):

1. All Listed Companies (Rule 8 Companies Appointment & Remuneration of Managerial Personnel Rules, 2014)
2. Every Public Company having paid-up share capital of Rs. 10 Cr. or More (Rule 8)
3. Every other Company having paid-up share capital of Rs. 5 Cr. or More (Rule 8A)

CRUX:

Therefore every company which has a paid-up share capital of Rs 5 Cr. or more is compulsorily required to appoint whole time Company Secretary.

Steps to be followed for appointment of Company Secretary:

  • Pass a Board Resolution for Appointment of Company Secretary
  • Terms and Condition of Appointment, Remuneration and Membership No.
  • Receive consent from Company Secretary to act as Company Secretary
  • Details of Company Secretary must be recorded in the register of Key Managerial Personnel.
  • Form DIR-12 shall be filed with the ROC within 30 days from the appointment
  • MGT- 14 within 30 days of the passing of Board Resolution with Consent Letter and CTC of Board Resolution.
  • MR-1 within 60 days of the passing of Board Resolution, with CTC of Board Resolution and Consent Letter.
  • If such company is listed then give an intimation to all the Stock Exchange where the company's securities are listed. 
Note: Now, no need to file a return of appointment in form MR-1 with Registrar of Companies(RoC) for Chief Executive Officer (CEO), Company Secretary (CS) and Chief Financial Officer (CFO). As these expressions have been omitted from the provisions of Rule 3 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 by Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016.

Board Resolution Format:

“RESOLVED  THAT pursuant to provisions of section 203 of the Companies Act 2013 and Rule 8 and Rule 8A of Companies Appointment & Remuneration of Managerial Personnel Rules 2014), Mr……………………………… Company Secretary (ACS/FCS: …………) be and is hereby appointed as the whole time Company Secretary of the Company with effect from (date) on such terms and conditions as decided and agreed by and between the Board and Company Secretary.

FURTHER RESOLVED THAT  Mr………………………… director of the company be and is hereby authorised to file necessary eforms and documents with Registrar of the Company and to do all other such acts, deeds and things which are necessary to give effect to the above resolution.”

Casual Vacancy: Vacancy must be filled in 6 months.

Roles and Responsibilities of the Company Secretary:

Company Secretary has the role to play to the Board, to the Company, and to the Shareholder.

General Duties of a Company Secretary:

  • Meetings of the Board of Directors
  • General Meetings
  • Memorandum and Articles of Association
  • Requirements of Stock Exchanges
  • Statutory Registers
  • Statistical Books
  • Statutory Returns
  • Report and Accounts
  • Registration of Shares
  • Communications to and from Shareholder
  • Issues of Share and Capital and Restructuring
  • Acquisitions, Disposals, and Mergers
  • Corporate Governance
  • Common Seal of the Company etc.
Rights of the Company Secretary:

Company Secretary is a  senior level officer. He enjoys the rights as per the agreement signed by him with the Company:

  • As a senior level officer he can supervise, control and he can direct subordinate officers and employee.
  • He can sign any contract/agreement on behalf of the company as a principal officer, subject to the delegation of power by the board of the company.
  • Company Secretary can issue guidelines for the employees on behalf of the company.
  • Company Secretary can attend the meeting of shareholders and the meeting of the board of directors.
  • During Winding up, he can claim his legal dues as a preferential creditor of a company.
  • He can sign and authenticate the proceeding of meetings (Board, AGM/EGM) and other documents on behalf of the company where the common seal is not required.
  • Company Secretary is a Compliance Officer and concise keeper of the company and he has a right to blow the whistle whenever he finds the conduct of the officers or of the directors of the company are detrimental to the interest of the Company.

Restrictions on Company Secretary:

  • He cannot enter into a contract on behalf of the company unless specifically authorised by the BOD;
  • He cannot borrow money in the name of the company;
  • He cannot call meetings which are related to third parties;
  • He cannot acknowledge a debt against a suit against the company; and
  • He cannot register, transfer shares without the authority of Board of Directors.
Offence and Penalty:

If a company contravenes the provisions relating to appointment of whole-time key managerial personnel (which includes company secretary), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every director and key managerial personnel of the company who is in default shall also be punishable with fine which may extend to one thousand rupees for every day after the first during which the contravention continues. 

Click here to read the disclaimer


Write a Comment

  • I'm a student of company secretaryship .Is it compulsory to graduate in law ??

    01-06-2018 / 05:04:12 PM
    Reply
  • There is a serious predicament the present day company secretaries face. They have to show their allegiance to the management that pays them their salaries while protecting the interests of the shareholders and the board in a largely promoter-run business environment which is forced to find covert ways in related party transactions or some others to keep the business running, having lost out of favour with banks for getting corporate loans. On the other hand, the illiquid job market available for the company secretaries with it's proclivity for freshers and semi-qualifieds than the experienced cadre is plagued by a dodgy recruitment process where company secretaries who, by the very nature of their jobs being extremely risky tend to do frequent job hunting but unfortunately aren't finding that 'tantalizing job offer' as and when they need it. So, it's a Hobson's choice for them where they have to decide whether to throw caution to the wind and put up with a management that couldn't care less about compliance or stay unemployed and risk losing their market worth. Surely they deserve better for the struggle that has made them get there. Sir, do you think this 'glaring lacunae' of 'who should be paying the company secretary his/her salary' will ever get addressed to be fair to the company secretary who is otherwise put in a moral dilemma while discharging his/her responsibilities strictly by the rule of the law?

    02-06-2018 / 02:38:23 PM
    Reply
  • Hello sir, 

    As i was going through your article, i had a small doubt in respect of filing of Return of Appointment of Company Secretary in MR-1. 

    Hasn't this requirement been relaxed by Notification dated June 30, 2016?

    21-11-2018 / 10:38:31 AM
    Reply