THE INSTITUTE OF
Company Secretaries of India
IN PURSUIT OF PROFESSIONAL EXCELLENCE
Statutory body under an Act of Parliament
PD: MCA/ Jan: 2020/1
Shri Injeti Srinivas,1AS
Secretary, Ministry of Corporate Affairs
Government of India
Shastri Bhawan, Dr. Rajendra Prasad Road
New Delhi – 110 001
3rd February, 2020
Subject: Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020 notified on 3rd January, 2020
Further to our letter dated 10th January, 2020 on the above mentioned subject wherein it was submitted that with the alteration in the limits for mandatory appointment of Whole-Time Company Secretaries from rupees 5 (five) crore to rupees 10 (ten) crore, it has caused apprehension for loss of employment in the minds of our members and students.
We wish to reiterate that a Company Secretary is recognised as Compliance Officer under the Companies Act 2013 as well as by other Regulators such as Securities and Exchange Board of India. His role includes advising the Board on good governance practices and compliance of rules and regulations. He commands high position in the value chain and acts as conscience keeper of the company. The Company Secretary is a unique interface between the Board and the Management and as such acts as an important link between the Board and the stakeholders.
The Company Secretary has also an important role to play in organizing and implementation of decisions of the Board, its Committees and the general body meetings mandated under law. With greater focus on governance, the stakeholders’ expectations are increasing and it is this need that has led to rise of the importance of role of Company Secretary.
In view of the above, it is in the best interest of the corporate world, to have Whole-Time Company Secretary who protects and promotes Corporate Governance.
Hence, we humbly request your good office to kindly consider further amendment in Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2013, taking into consideration inserting the following in place of the existing provision:
“Every company which has:
a) a paid-up share capital of ten crore rupees or more; or
b) networth of one hundred crore rupees or more; or
c) outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more; or
d) turnover of two hundred fifty crore rupees or more shall have a Whole-Time Company Secretary.
Explanation:- For the purpose of this rule, the paid up share capital, networth, outstanding loans or borrowings or turnover as the case may be, existing on the last date of latest audited financial statement may be taken into account.
Every company which ceases to be a company covered under Rule 8A for three consecutive financial years shall not be required to appoint Company Secretary till such time it meets the criteria specified in Rule 8A.”
Justification for submission
The companies have proper and significant business operations which triggers compliance with various laws. In absence of services of Whole-Time Company Secretaries, these active companies may be exposed to greater regulatory risk and non-compliances. Further, in such companies, public interest is also involved and following good governance practices becomes more significant.
We request you to kindly consider the above submissions favorably. We shall be pleased to provide any further information or clarification on hearing from your goodself.
(CS shok Kumar Dixit)
The Institute of Company Secretaries of India