The Company Secretary (CS) is an important part of the management and administration of the Company. Being a legal representative of a company, CS carries out and manages various regulatory functions, such as company incorporation, preparation and audit of adequate business reports; filing annual returns; dealing with amended laws regularly, etc. CS is also active as a management consultant on the Company’s board of directors and guides them in corporate governance, strategic management; project planning; capital market and securities law. In short, the corporate secretary works as an internal legal expert and compliance officer in the Company.
As per the Companies Act, a company secretary is an individual who:
- Recognized Member of the Institute of Company Secretaries of India (ICSI) &;
- Performing the functions determined by the institution and following the rules and regulations stipulated in the current Company Act.
The Company Act abides and gives special status to every company secretary who works as a Key Management Personnel (KMP) to share his experience as an employee with everyone:
- Private Company with paid-up capital of Rs5 crores or more.
- Public Company with paid-up capital from Rs 5 crores to Rs. 10 crores.
Being characterized by many roles and responsibilities, the company secretary has a multi-disciplinary background. This article will take you through some of the essential elements of determining company secretary legal status in India regarding employment and practice.
Role of a Company Secretary:
Company secretaries are the building blocks of companies, and they must carry their duties with reasonable care. In addition to the role as legal mentor, CS must ensure that all business processes comply with all legal requirements; failure to comply may result in liability for wrongdoing and termination for dishonesty or violation of the Company’s legal rights.
Duties as per Companies Act:
To initiate and carry out the incorporation procedure, e.g. validation of documents and procedures used in registration; ensuring the sending of registration data and its distribution to the registrar; submission of application for additional share capital; monitoring data on share certificates allotment; keeping records of share warrant holders, comply with and submit annual return; Issuance of the obligation to obtain a certificate of commencement, managing statutory books; giving updates and notifications for general meetings to every member; Signing and authenticating financial statements and reports (balance sheet and P&L statement) for non-bank financial companies; submission of resolutions to the registrar and preparation of minutes of all general and board meetings within 30 days.
Duties as per Income Tax Act:
To verify and submit attested returns and forms; monitoring the authentication process and TDS (Tax Deducted at source), ensure appropriate TDS is deducted from staff salaries; ensure that TDS reports are properly maintained, and TDS are properly submitted to the government.
Obligations from other Acts:
Obtain government approvals; complying with the regulatory process of industrial disputes; FEMA Act, State Insurance Act; Depositories Act 1996; Foreign Exchange Management Act; monitoring and compliance with various legal laws such as labour laws; Competition law; Environmental law etc.
Other general duties of a Company Secretary:
Advisory bodies and BOD (Board of Directors) in risk management; Business policies and strategies; corporate social responsibilities; brand equity and image building; managing the Company’s intellectual property rights; ensure healthy communication between those involved; authorities, and government.
Key Responsibilities of a Company Secretary in Practice:
CS as a Business Promoter: The Companies Act grants the Company Secretary special rights – to promotion and incorporation of companies; serving audit and certification services; sign the annual returns, to handle corporate restructuring and acquisitions; pay attention to reports and voting procedures in a transparent manner; managing revival of sick businesses; become a technical member of the Company Law Tribunal to investigate tax and corporate cases.
CS as an Auditor: To ensure company discipline and compliance with the law; The Company Act confides the company secretary to provide the authority with a secretarial audit report in the form MR-3 to ensure that the Company complies with the procedures set out in the laws and general regulations; report any abusive fraud to the government.
CS as a consultant: CS acts as a consultant for – share issuance; Preparation of prospectus/sales certificate/issuance of securities/private placement and share buyback, raising funds in international markets; Loan syndication and documentation; Income tax planning; preparation of legal documents; on intellectual property issues; guiding in policies of merger; amalgamation and joint ventures, etc.
Legal Restrictions and Authority of the Company Secretary:
The Company Secretary is legally bound by the restrictions and liability policies established by ICSI and various regulatory bodies. As a representative body of the Company, he is responsible for any negligence he does that may result in the discharge of his obligations; liable for doing something beyond his authority; if a company is required to maintain secret from outsiders, he can be fired because the Company is making a secret profit. In addition, he may not enter into a contract on behalf of the Company unless the Board of Directors has approved it; cannot borrow money on behalf of the Company; can not recognize a debt against a suit of a company; cannot register or transfer shares without the authorized Board of Directors.
Conclusion:
The role of the company secretary is on the rise in Indian companies; With the increasing number of compliances, the needs and responsibilities of CS cannot be ignored. When a company fails to follow the advent procedures of the Companies Act and other relevant laws, CS can counter various penalties.
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