CLG:MCA:2016 Dated: February 15, 2016
Shri Tapan Ray
Secretary
Ministry of Corporate Affairs
Shastri Bhawan
New Delhi 110001
Dear Sir,
Sub: Para No. 13.11 of Part I of the Report of Companies Law Committee
Ref: Report of Companies Law Committee
This is with reference to subject captioned above, wherein Ministry has invited comments from the stakeholders in Report of Company Law Committee. In order to avoid repetition/duplication of comments/suggestions, the Ministry desired the members/ patrons of the Professional Institutes/ Councils/ Industry Chambers to route their comments/ suggestions through respective Institute/Council/Chamber.
In this regard, the ICSI has invited comments from its members and other stakeholder. After receiving the comments, the said comments / suggestions were placed before Special Meeting of the Central Council of ICSI and after due deliberations, we hereby submit as under
1. Para No. 13.11 of Part I of the Report of Companies Law Committee reads as under:
At the same time, the Committee also recommended enabling a whole time Key Managerial Personnel (KMP), holding necessary qualifications, to hold more than one position in the same company at the same time, so as to reduce the cost of compliance for such companies, and also to utilise the capacities of these officers to the optimum level.
2. We submit that merging all the three positions may not be in the interest of duties. ICSI submissions with reference to Para no. 13.11 of Part I is that one individual should hold one position of KMP. The justification is as under:
a. Each of the Key Managerial Personnel has specificassigned role to be performed under the Actand responsibilities being onerous, one individual would not be in a position to effectively discharge the duties envisaged.
b. The CFO looks after the financial aspects of a company whereas the company secretary is the compliance officer who ensures compliance of all laws, therefore the roles cannot be said to be complementary.
c. One person holding all three key offices or more than one key offices would lead to concentration of power in a few hands and would be against the spirit of good governance.
d. Requirement of appointment whole time ‘KMP’ is applicable only to public companies with a paid up share capital of Rs. 10 crore or more.
In view of the enormous challenges faced by corporates, particularly in areas related to corporate compliances, corporate governance, Board Processes, Stakeholder Relationship etc., services of whole time company secretary is the need of the hour, therefore individual responsibilities of different KMPs should not be merged and they should remain responsible for the specific position they are holding in their organisation.
Thanking you,
Yours Sincerely,
(CS Mamta Binani)
President
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Shri Amardeep Singh Bhatia
Joint Secretary
Ministry of Corporate Affairs
Shastri Bhawan
New Delhi
Source- ICSI
