In my previous write up “Appointment of a Company Secretary as per Companies Act, 2013” had discussed about Who is a company secretary and who need needs a company secretary and company secretary appointment obligation on companies. In regard of that article I received multiple calls and emails.
Appointment of a Company Secretary has been one of the most talked topics in the recent times as Companies not just appoint them because there is a statutory requirement for a few class of the company including listed companies or company having paid-up capital more than the prescribed limited but due to the reason or the compliance to file E- form INC 22A. While Filing From 22-A, The Ministry of Corporate Affairs is insisting for compliance of appointment of Company Secretary for companies that has paid up capital of Rs.5 Crore of more. So, it becomes a mandatory condition for appointment of Whole time Company Secretary by Companies with paid up capital of Rs.5 Crore more.
For much more clarification we shall discuss in detail about CS (Company Secretary) Appointment in companies incorporated in India, as Introduction of Form INC 22A has created a problem for companies those which are in Non Compliance of Rule 8A of Section 203 of Companies Act, 2013 due to which now companies are forced to appoint company secretary, to file E-form INC 22A else there company can become inactive due to Non-Compliance. Therefore Companies having paid up capital more that 5 crore and have not appointed a Company Secretary (CS) will not be able to file form INC 22 A.
DEFINITION OF COMPANY SECRETARY:
As per Section 2 sub-section 24 of 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 who is appointed by a company to perform the functions of a Company Secretary under this Act;
AS PER COMPANY SECRETARIES ACT, 1980:
“Company Secretary” means a person who is a member of the Institute of Company Secretaries of India.
The requirement to appoint a Company Secretary in Private Limited Company is governed by the Provision of Rule 8A and in Public / Listed Company by the provisions of Rule 8 of The Companies “Appointment and Remuneration of Managerial Personnel” Chapter XIII under Section 203 of the Companies Act, 2013.
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 Company Secretary.
| Company having Paid Up capital less than 5 Crore | It is OPTIONAL to appoint a Whole Time Company Secretary |
| Company having Paid Up capital More than 5 Crore | It is MANDATORY to appoint a Whole Time Company Secretary |
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.
But if there is Casual Vacancy: Vacancy must be filled in 6 months.
WHO IS A COMPANY SECRETARY?
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.
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.
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.
THE THREE MAIN AREAS, A COMPANY SECRETARY, HAVE THE ROLE TO PLAY VIZ.
1. To the Board,
2. To the Company, and
3. To the Shareholder.
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 authorized 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 [email protected] & +91-7021848742 : CS Annu Sharma for any discrepancy.)
Author Bio
Dear Madam,
Very good article. Thank you.
Section 203 talks about KMP & the filling of casual vacancy, 6 months cooling period is there to fill & penalties etc.,
Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel), Rules, 2014 talks about Whole-time CS (not KMP).
In case Whole-time CS vacancy arises, is any cooling period is there as per the Act ? Any specific rule ? (most of the articles talking 6 months)
Kindly note that Section 203 talks for KMP, not for Whole-time CS.
Whole-time CS is not required to be a KMP(CS), but
KMP (CS) is compulsory be a Whole-time CS.
Extract of Section 203(4) is for ready reference-
If the Office of any whole-time KMP is vacated, 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.
Can you please guide.
If shareholders of an unlisted company have not yet demat their shares, but company registered all paid up shares at NSDL , how can the company issue further shares for this year, by physical or demat form.
Please clarify
Will you quote the Regulation number under LODR. Which regulation provides that we need to inform within 15minutes to Stock Exchange?
no Cs are interested in taking a job for a small company having a share capital of RS.5 crore and also there is an acute shortage of CS. The companies are also facing a financial crunch due to job shortage. Any relief or extension expected?
Could the Draft Resolution be modified as under:
“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, namely, XYZ Limited, 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 Board Resolution.”