A company secretary is a senior position in a private sector company or public sector organisation. The company secretary is responsible for the efficient administration of a company, particularly with regard to ensuring compliance with statutory and regulatory requirements and for ensuring that decisions of the board of directors are implemented.
The company secretary ensures that an organisation complies with relevant legislation and regulation, and keeps board members informed of their legal responsibilities. Company secretaries are the company’s named representative on legal documents, and it is their responsibility to ensure that the company and its directors operate within the law. It is also their responsibility to register and communicate with shareholders, to ensure that dividends are paid and to maintain company records, such as lists of directors and shareholders, and annual accounts.
As they have such important role in a top management of the company, their appointment is covered under the Companies Act, 2013. Let’s us go through the important aspects as well as procedure for appointment of Company Secretary (C.S.).
Who is Company Secretary (C.S.)?
As per the Companies Act, 2013 company secretary” or “secretary” means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980) who is appointed by a company to perform the functions of a company secretary under this Act.
Why are they appointed in a company?
A Company Secretary (C.S.) of a company that has primary responsibility to ensure compliance with statutory and regulatory requirements and for ensuring that decisions of the board of directors are implemented. There are number of laws, statues and regulations, etc applicable on company, which a Company secretary looks after and comply thereon.
In India, A company secretary needs to be a member of Institute of Company Secretaries of India. Only then she/he is eligible to appointed as Company Secretary of any company.
Which companies are required to appoint a Company Secretary (C.S.)?
As per section 203 of the Companies Act, 2013 a Company Secretary (C.S.) is considered as Key managerial Personnel. And below given companies are required to appoint a Company Secretary (C.S.): –
a) Every listed company
b) every other public company having a paid-up share capital of ten crore rupees or more.
c) Every private company which has a paid up share capital of ten crore rupees or more shall have a whole -time company secretary.
What laws governs the appointment of Company Secretary (C.S.)?
The appointment and other related provisions for appointment of Company Secretary (C.S.) are:-
a) The Companies Act, 2013.
b) SEBI (Listing Obligations and Disclosure requirements) Regulations, 2015.
Is Company Secretary (C.S.) is considered as Key Managerial personnel (KMP)?
As per the Companies Act, 2013,
a) Every listed company
b) every other public company having a paid-up share capital of ten crore rupees or more.
c) Every private company which has a paid up share capital of ten crore rupees or more shall have a whole -time company secretary
All above companies are required to appoint Company Secretary (C.S.) as Key managerial personnel (KMP).
As per interpretation if any company not falling in above category or ambit, a Company Secretary (C.S.) are not required to appointed. Though, a company can voluntary comply with this provision.
Note that a Company Secretary (C.S.) who is appointed as key Managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time.
For how long a Company Secretary (C.S.) can serve in a company?
A Company Secretary (C.S.) can be appointed for any number of years, it totally depends upon the management and already included in the appointment letter of Company Secretary (C.S.) stating his term, reasons for cessation etc.
What is the process to appoint a Company Secretary (C.S.)?
The following process is followed for appointment of Company Secretary (C.S.): –
a. Prepare notice of board meeting along with draft resolution(s) to be passed in the board meeting for candidate consideration for appointment as Company Secretary (C.S.).
b. Sending of Notice along with Agenda of Board meeting to all the Directors of company.
c. Convene board meeting and pass the following Board Resolution.
d. Sending of Outcome of Board Meeting to Stock exchange wherever company’s securities are listed within 30 minutes from the conclusion of meeting. (this point is applicable for listed companies only)
e. Issue letter of appointment to the candidate for their appointment as Company Secretary (C.S.).
f. File e-Form DIR-12 along with attachments with the Registrar of Companies regarding appointment of director and simultaneously as a Company Secretary (C.S.) within thirty (30) days from appointment as Company Secretary (C.S.).
g. Sending of Appointment letter to Company Secretary (C.S.) and entry in register, minute books, etc of company.
What are the forms to appoint a Company Secretary (C.S.) in a company?
Only one form is required for appointment of Company Secretary (C.S.) and which is E-form DIR-12 within thirty (30) days from the date of Board meeting in which his appointment is approved.
What if Company Secretary (C.S.) resigns from the company?
There are many times when a situation arises that a Company Secretary (C.S.) wants to resign from the company, whatever the reason maybe.
If a Company Secretary (C.S.) resigns, she/he can anytime resign from the company after giving a notice as well as reason. The company will take the required steps for such resignation.
It should be noted that the resulting vacancy shall be filled-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.
What are the documents required for appointment of Company Secretary (C.S.)?
The following documents are required: –
- Intimation letter to stock exchange
- Copy of Board Resolution for Board Meeting
- Consent letter of proposed Company Secretary (C.S.)
- Appointment letter
- Any other as required.
What if company fails to appoint a Company Secretary (C.S.)?
Any company which is mandatorily required to appoint a Company Secretary (C.S.) if don’t appoint, such company shall be liable to a penalty of five lakh rupees and every director and key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees and where the default is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such default continues but not exceeding five lakh rupees.
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Disclaimer: – The above article is prepared keeping in mind all the important and basic question as well as provision of section 203 of the Companies Act, 2013 which comes in mind of a professional or other stakeholder while company doing appointing a Company Secretary (C.S.) in a company. The author has tried to cover all the important and basic question. Under no circumstance, the author shall not liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.
(The Author is Corporate Consultant and provides varied array of services including Start-ups mentor, Secretarial, Legal, Trademark, taxation, Audit, GST, Book keeping and other ancillary advisory service in Delhi, Chandigarh as well as The National Capital Region (NCR) and can be contacted through email id:- [email protected] and Contact Number: 91-8178515005)
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and what about MGT-14 ? is it not required to be filed for appointment and removal of KMP ?