In this article, we will explore the definition, functions, duties, and procedures for the appointment and removal of a company secretary (CS). As a key managerial personnel, the company secretary plays a vital role in ensuring legal compliance and maintaining the governance standards of a company. Let’s delve into the details of this crucial position.
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Definition of a Company Secretary (CS):
A Company Secretary (CS) is a key managerial personnel of a company. A CS is entrusted with the compliance and legal aspects of the company. The Institute of Company Secretaries of India (ICSI) is the regulatory body that oversees and maintains the profession of Company Secretary.
Functions of a Company Secretary:
The functions of a Company Secretary include:
- Reporting to the Board on compliance with the relevant laws, rules, and regulations applicable to the company.
- Ensuring that the company adheres to the applicable secretarial standards.
- Discharging other prescribed duties.
Explanation: For the purpose of this section, “secretarial standards” refers to the standards issued by the Institute of Company Secretaries of India, which is constituted under section 3 of the Company Secretaries Act, 1980, and approved by the Central Government.
Duties of a Company Secretary:
According to clause (c) of sub-section (1) of section 205, the duties of a Company Secretary include:
- Providing guidance to the directors of the company, both collectively and individually, regarding their duties, responsibilities, and powers.
- Facilitating the convening of meetings and attending Board, committee, and general meetings, while maintaining accurate minutes.
- Obtaining approvals from the Board, general meetings, the Government, and other authorities as required by the provisions of the Act.
- Representing the company before regulators, tribunals, and other authorities in connection with the discharge of various functions.
- Assisting the Board in conducting the company’s affairs.
- Assisting and advising the Board in ensuring good corporate governance and compliance with corporate governance requirements and best practices.
- Discharging other duties assigned by the Board from time to time, as well as those prescribed under the Act and Rules.
Section 205(2) clarifies that the provisions contained in section 204 and section 205 do not affect the duties and functions of the Board of Directors, chairperson of the company, managing director, or whole-time director under this Act or any other law currently in force.
Procedure for Appointment of a Company Secretary:
The following procedural steps should be followed for appointing a whole-time company secretary:
1. Advertise the position, collect applications, conduct interviews, shortlist candidates, and finalize the terms of appointment.
2. Convene a Board meeting, giving notice to all directors as per section 173 of the Act. During the meeting, present the proposal to appoint a Company Secretary, providing details of the selected individual, and pass a resolution appointing the Company Secretary while approving the terms and conditions of their appointment.
3. File the appointment return with the Registrar in Form DIR-12 within thirty days from the date of appointment (date of joining office). In the case of a public company, a copy of the Board Resolution should also be filed in Form MGT.14, along with the specified fee as per the Companies (Registration of Offices and Fees) Rules, 2014. The required information, such as particulars of the Company Secretary, Income-tax PAN, Membership details (validated from ICSI records), residential details, date of appointment, and communication email ID, should be filled in the Form.
4. A Company Secretary should not hold office in more than one company, except in its subsidiary company at the same time.
5. Make entries in the Register of directors and key managerial personnel under Section 170 of the Act.
6. Inform the Stock Exchange(s) where the company is listed.
7. Verify whether the appointed Company Secretary is involved in any related party transactions within the provisions of Section 188 of the Act, as key managerial personnel are included in the definition of ‘related party.’ If applicable, ensure compliance with the requirements in this regard.
Procedure for Removal/Resignation of a 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 directors 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:
1. Convene a Board meeting, giving notice to all directors as per section 173. During the meeting, place the matter of removal/ resignation of the Company Secretary and pass a resolution to that effect.
2. Obtain a duly dated and signed Resignation Letter, if applicable.
3. File Form DIR-12 electronically within thirty days with the Registrar of Companies, along with the requisite filing fees. Evidence of cessation, such as a Resignation Letter, can be attached optionally.
4. Inform the stock exchange where the company is listed within 24 hours of the Board Meeting.
5. Make entries in the Register maintained for recording the particulars of Company Secretaries under section 170.
6. Issue a general public notice, if warranted, based on the size and nature of the company.
7. The resulting vacancy should be filled by the Board within six months from the date of such vacancy through a Board meeting.
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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