The Appointment of Company Secretary (CS) has been made mandatory under Companies Act 2013 for a few class of the company like listed companies or company having paid-up capital more than the 5 Crore.
Page Contents
- Who is a Company Secretary?
- Who is required to have company secretary/ KMP?
- Time Period for such appointment of Company Secretary:
- Process for appointment of company secretary
- Roles and Responsibilities of Company Secretary
- Appointment of Company Secretary – Offence & Penalty [Section 203(5)
- Draft Format of Board resolution: Appointment of Company Secretary
Who is a Company Secretary?
A company secretary is a principally an employee even though he holds very high rank. He / She may be the Chief Executive & then his position is near to those of the directors. In reality, he is the only employee who has advisory powers.
CS advice is pursued in carrying out general administration and in the decision-making process at the time of framing policies of the company. He is consulted to determine the lawful suggestions of policy decisions. Therefore, he/she is the only outsider who is present at the Board meetings.
Company Secretary is the person who is a member of the (ICSI) Institute of Company Secretary of India appointed by the company to perform the functions of the Company Secretary.
Who is required to have company secretary/ KMP?
All listed company and all other company having paid-up share capital of Rs. 5 crore or more shall have whole-time key managerial personnel and shall have following whole-time key managerial personnel namely—
- Managing director, or Chief Executive Officer or manager and in their absence, a whole-time director;
- Company Secretary; and
- Chief Financial Officer
Time Period for such appointment of Company Secretary:
The Companies Act 2013 does not provide the period wherein the Company has to designate Company Secretary as (KMP) key managerial personnel. But it is advisable to appoint a Company Secretary as KMP in the first board meeting which is to be conducted after applicability of such a provision.
Process for appointment of company secretary
- Arrange for Board Meeting only after giving notice to every director to discuss besides others the following matters. Approve the terms and conditions at which the Company Secretary (CS) is proposed to be appointed.
- Obtain a written consent from the person who is to be appointed as Company Secretary.
- Inform the Stock Exchange with which shares of the company are listed on the date of this meeting before the board meeting
- Inform the said Stock Exchange within 15 minutes of the Board Meeting, of the outcome of the meeting by letter or fax.
- File the relevant form with the concerned ROC within 30 days from the date of Appointment.
- Pay the requisite fee for the same.
- Make necessary entries in the Register of Directors/ Secretary.
- The ‘whole-time secretary’ indicates that a Company Secretary must be in the employment of the company.
Roles and Responsibilities of Company Secretary
The three main areas, a Company Secretary, has the role to play viz. to the Board, to the Company, and to the Shareholder.
Core Duties of the Company Secretary
- Meetings of the Board of Directors
- General Meetings
- Memorandum and Articles of Association
- Requirements of Stock Exchanges
- Statutory Registers
- Statistical Books
- Statutory Returns
- Report and Accounts
- Registration of Shares
- Communications to and from Shareholder
- Issues of Share and Capital and Restructuring
- Acquisitions, Disposals, and Mergers
- Corporate Governance
- Common Seal of the Company etc.
Appointment of Company Secretary – Offence & Penalty [Section 203(5)
If a company contravenes the provisions relating to appointment of whole-time key managerial personnel (which includes company secretary), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every director and key managerial personnel of the company who is in default shall also be punishable with fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
Draft Format of Board resolution: Appointment of Company Secretary
“RESOLVED THAT pursuant to provisions of section 203 of Companies act 2013 and Rule 8 and Rule 8A of Companies appointment & remuneration of Managerial Personnel Rules 2014), Mr……………………………….. company secretary (ACS/FCS no …………..) be and is hereby appointed as the whole time Company Secretary of the company with effect from (date) on such terms and conditions as decided and agreed by and between the Board and Company Secretary.
FURTHER RESOLVED THAT Mr………………………… director of the company be and is hereby authorised to file necessary eforms and documents with Registrar of the Company and to do all other such acts. deeds and things which are necessary to give effect to above resolution.”
Author be Contacted at csannusharma123@gmail.com & +91-7021848742 : CS Annu Sharma
Author Bio
If CS’s could handle additionally All legal and admin matters, they shall be more valued in the Corporate world. this shall help to get better pays
Dear all, since there are maximum number of private companies in our country that have been covered for statutory appointments, this article will become more useful if duties n liabilities of company secretary in a private co are summed up.
If not protecting the whole-time company secretary who is also just another hapless employee who has to survive out of the income earned through his/her job, what the government could have at least done is to slap a stiff penalty to the tune of say, Rs. 50 lakh for non-appointment of a whole-time company secretary instead of the current Rs. 5 lakh penalty amount which hardly ruffles the companies from creating a new job of a whole-time company secretary as companies can just do with their CFO to double as a CS also for ‘just a little more’ which hardly pinches them as most of them are already paying hefty salaries to their CFOs. Or, in worst cases, can even dodge the appointment of a whole-time company secretary for several months or years at a stretch as they will have to shell a couple of lakhs only even after the new Companies Act is in place, not doing any good to this small group of professionals, though being called a KMP, are in fact doing a highly risky job and prone to frequent job hunting as when compared to other normal professionals such as software engineers. Either way, without adequate vigil or legal enforcement, it’s a lose-lose situation for company secretaries, which also is getting aggravated by the employer’s inclination to hire freshers or semi-qualified over those of experienced company secretaries in order to keep the cost of corporate governance less which they would have avoided if law didn’t enforce it upon them. So, companies by their passive approach are giving two hoots to corporate governance in the absence of more teeth in the law to penalize them. Before the legal experts start talking about corporate governance and their nitty-gritties, let them first address the ‘glaring lacuna’ of ‘who should be paying salary to a whole-time company secretary’ to be fair to the bunch of hard-working professionals who have laboured for many years for getting such a coveted qualification which should be put to proper use without worrying about whom to show their allegiance: whether to the promoter or the management of the listed or unlisted company with a paid-up capital of over Rs. 5 crores that they work for, or to it’s shareholders and it’s board even if they are to go against the people whom they have to depend upon for their salaries.
Who is required to have company secretary/ KMP?
All listed company and all other company having paid-up share capital of Rs. 5 crore or more shall have whole-time key managerial personnel and shall have following whole-time key managerial personnel namely—
Managing director, or Chief Executive Officer or manager and in their absence, a whole-time director;
Company Secretary; and
Chief Financial Officer.
In this paragraph 10 crore is not added since article was focused on CS .
All professionals in India has similar problems and professional hazard. Govt only fix responsibility for professional however don’t provide any protection mechanism in terms of safety and minimum income security like any other statutory appointments. All the professionals failed to draw attention of government in this regard due to fearful and professional jeleosy.
There is a serious predicament present time company secretaries go through. On one end, they have to show their allegiance to the promoter/management that pays them their salaries while at the other end are expected to protect the interests of the shareholders and the board in a largely promoter-run business environment that is compelled to find covert ways in related party transactions or some others to keep the business and the employees afloat , having lost out of favour with banks in getting corporate loans. On the other hand, the illiquid job market available for the company secretaries with it’s proclivity for freshers and semi-qualifieds than the experienced cadre is plagued by a dodgy recruitment process where company secretaries, who by the very nature of their jobs being extremely risky are prone to do frequent job hunting, but unfortunately aren’t finding that ‘tantalizing job offer’ as and when they need it. So, it’s a Hobson’s choice for them where they have to decide whether to throw caution to the wind and put up with a management that couldn’t care less about compliance or stay unemployed and risk losing their market worth. Surely they deserve better for the struggle that they underwent to get there. Ma’am, do you think this ‘glaring lacunae’ of ‘who should be paying the whole-time company secretary his/her salary’ will ever get addressed to be fair to the company secretary who is otherwise put in a moral dilemma while discharging his/her responsibilities strictly by the rule of the law?
Truly informativ
Good coverage and well done.