ROLE OF COMPANY SECRETARY
The Company Secretary plays a crucial role in the governance of the Company, and helps the board in discharging leadership in vital areas as well as in discharge of individual duties.
The contemporary Company Secretary is much more than a “note taker” a board meeting or a mere servant of the board but is “the Key Managerial officer of the company”. The specialized role of modern Company Secretary has emerged as the “Key Managerial Personnel” and “Compliance Officer” within the organization.
“The dynamics of the boardroom are changing…Directors are realizing that they need a diversity of specialist skills and are looking…to advise to provide this expertise.”
Company secretaries are the natural conscience keepers for the corporate sector since they are specialists in the fields of corporate governance, regulation and processes and are the eyes and ears of the Board on such matters. It is they who validate board processes and ensure that companies always do the right things.
The Act has incorporated a framework which is based on self-regulation but with enhanced disclosures and accountability on the part of companies and their managements. The corporate sector will be required to exhibit responsible self-regulation and corporate governance on their part, which necessitates the services of independent, competent and responsible governance professionals. From this perspective, company secretaries, would be required to play a very important role in implementation of the Act.
A. Who is Company Secretary?
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 Secretary Act, "Company Secretary" means a person who is a member of the Institute of Company Secretary of India.
ROLE OF COMPANY SECRETARY:
Company Secretary is Key functionary in the corporate pyramid with increasing emphasis on the principles of good governance and on Companies; responsibilities of Company secretary have increased manifolds towards safeguarding the interests of all stakeholders. The Companies Act, 2013 has enhanced the role of Company Secretary substantially, both in employment and in practice.
DESIGNATION OF COMPANY SECRETARY:
Companies Act, 2013: As per Section 2(51) Company Secretary in Companies Act, 2013 Company Secretary will be designated as “Key Managerial Personnel”.
The Act has substantially strengthened the role and position of the company secretaries. In particular, it considers a company secretary as a key managerial personnel. While this is expected to enhance the position of a company secretary, it also casts responsibility on them for due compliance with the provisions of law. It should also be noted that for non-compliance of the provisions of law, he is also an “officer-in-default” thus, subject to liability under relevant penal provisions
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015: As per Regulation No. 6 Company Secretary will be designated as “Compliance Officer”.
Market regulator SEBI has mandated the appointment of Company Secretary as compliance officer for the purpose of the newly framed listing regulations. The latest SEBI requirement widens the area of responsibilities of a Company Secretary and makes him solely responsible for compliance of listing regulations, according to capital market observers.
APPOINTMENT AS WHOLE TIME COMPANY SECRETARY:
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:
As per Regulation 6 only CS can be a compliance officer ‘every listed entity shall appoint a qualified company secretary as the compliance officer except for units of Mutual Funds listed on Stock Exchange’.
SIGNING AND CERTIFICATION BY COMPANY SECRETARY:
As per Provisions of Section 92 of Companies Act, 2013 read with sub rule 2 of Rule 11 Chapter VII, Companies (Management and Administration) Rules, 2014. Annual Return of below mentioned companies are required to sign or certify the Company Secretary:
CERTIFICATON OF ANNUAL RETURN (MGT-8):
a) All Listed Companies
b) Every Company having:
Ø Paid-Up share capital of 10 Crore (Ten Crore) rupees or more or
Ø Turnover of 50 Crore (fifty crore) rupees or more
SIGNING OF ANNUAL RETURN:
a) All Listed Companies
b) All Public Companies
c) Private Limited company having:
Ø Paid up share Capital Exceeding 50 lac
Ø Turnover exceeding 2 Crore
REPORT ON ANNUAL GENERAL MEETING:
Every listed public Company is required to prepare a report on each annual general meeting including the confirmation to the effect that the meeting was convened, held and conducted as per the provisions of this Act and the rule made there under. The report is also required to be signed by company secretary of the Company.
CS AS SECRETARIAL AUDITOR:
Secretarial Audit is certainly a complete expression of faith of the legislature and government on the Company Secretaries to instill corporate discipline and ensure compliance with laws:
The following class of companies shall be required to Annex with their Director Report a Secretarial Audit Report signed by Practicing Company Secretary, namely:-
a) All Listed Companies
b) Every Public Company having a Paid-Up Share Capital of Rs. 50 Crore (fifty crore rupees) or more
c) Every Public Company having a Turnover of Rs. 250 Crore (two hundred fifty crore rupees) or more
This wide scope of Secretarial Audit requires:
§ Compliance with Companies Act, 2013, Securities Contracts (Regulation) Act, 1956, Depositories Act, 1996, Foreign Exchange Management Act, 1999, Securities and Exchange Board of India Act, 1992.
§ Compliance of Sector specific law.
§ Examining and reporting whether the adequate systems and processes are in place to monitor and ensure compliance with general law like labor laws, competition laws, and environmental laws.
Functions of Company Secretary under Companies Act 2013
According to Section 205 of the Companies Act, 2013 the Company Secretary shall discharge the following functions and duties, this is the first time that the duties of the company secretary have been specified in the company law:
· To report to the Board about the compliance with the provisions of this Act.
· To ensure that the company complies with the applicable secretarial standards.
· To provide to the directors of the company the guidance they require in discharging their duties, responsibilities and powers.
· To facilitate the convening of meetings and attend Board, committee and general meetings and maintain the minutes of these meetings.
· To obtain approvals from the Board, general meeting, the government and such other authorities as required under the provisions of the Act.
· To assist the Board in the conduct of the affairs of the company.
· To assist and advise the Board in ensuring good corporate governance and in complying with the corporate governance requirements and best practices
OTHER Functions of Company Secretary:
The Act also contains some other provisions giving recognition to the profession of company secretaries. They are briefly listed below:
v PROFESSIONAL ASSISTANCE TO COMPANY LIQUIDATOR (Section 291) With the sanction of the Tribunal, the Company Liquidator may appoint one or more professionals, including company secretaries, to assist him in the performance of his duties and functions under the Act.
v APPEARANCE BEFORE TRIBUNAL (SECTION 432) A party to any proceedings or appeal before the Tribunal or the Appellate Tribunal may authorize amongst others, a company secretary, to present the case before the Tribunal or the Appellate Tribunal, as the case may be.
v CS AS REGISTERED VALUER: Registered valuer is one of the new concepts introduced by the Companies Act, 2013 to provide a proper mechanism for valuation of the various assets and liabilities related to a Company and to standardize the procedure thereof. A Company Secretary in Practice is eligible to be valuer.
v CS TO PROVIDE BANKING SERVICES:
· Diligence Report and Certification in respect of Consortium / multiple banking arrangement made by Scheduled Commercial Banks/ Urban Co-operative Banks.
· Loan syndication and Documentation, registration of charges, status and search report.
Duty to Reporting of Fraud:
In the course of the performance of his duties as secretarial auditor, if company secretary in practice has reason to believe that an offence involving fraud is being or has been committed against the company by officers or employees of the company, he should immediately report the matter to central government.
Section 143 (12) of the Act provides that notwithstanding anything contained in this section, if an auditor of a company, in the course of the performance of his duties as auditor, has reason to believe that an offence involving fraud is being or has been committed against the company by officers or employees of the company, he shall immediately report the matter to the Central Government within such time and in such manner as may be prescribed. As per section 143 (14), the provision of section 143 shall mutatis mutandis apply to a company secretary in practice conducting secretarial audit under section 204
Responsibility of Company Secretary
A. Compliance Officer:
The compliance officer of the listed entity shall be responsible for-
(a) Ensuring conformity with the regulatory provisions applicable to the listed entity in letter and spirit.
(b) Co-ordination with and reporting to the Board, recognized stock exchange(s) and depositories with respect to compliance with rules, regulations and other directives of these authorities in manner as specified from time to time.
(c) Ensuring that the correct procedures have been followed that would result in the correctness, authenticity and comprehensiveness of the information, statements and reports filed by the listed entity under these regulations.
(d) Monitoring email address of grievance redressal division as designated by the listed entity for the purpose of registering complaints by investors.
B. Other functions under Listing Regulations:
· As per regulation 18 the Company Secretary shall act as the secretary to the audit committee .
· The listed entity shall ensure that the share transfer agent and/or the in-house share transfer facility, as the case may be, produce a certificate from a practicing company secretary within one month of the end of each half of the financial year, certifying that all certificates have been issued within thirty days of the date of lodgement for transfer, sub-division, consolidation, renewal, exchange or endorsement of calls/allotment monies
The focus of the company secretary’s responsibilities will differ depending on the type of company, whether it is public or private, and also depending on the industry no matter what the organization however the role has expanded beyond simply ensuring statutory compliance to become a pivotal one where the skills of the company secretary can have a direct impact on the effectiveness of the Board and organization.