Appointment of Company Secretary & Scope of Secretarial audit (Latest Changes)

Introduction

MCA has vide Notification dated 03^rd January, 2020 notified Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020 to amend the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 which has lead to an increase in the limit of paid up share capital for appointment of Company Secretary and widening of the scope of Secretarial Audit.

Amendment:

The following two amendments have been made by the Ministry in the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

1) The paid-up share capital limit for appointment of Whole Time Company Secretary for Private Companies in rule 8A has been increased from Five Crore Rupees to Ten Crore Rupees.

2) Under rule 9, an additional scope has been added for Secretarial Audit Report i.e. “every company having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more”.

It means that even Private Companies falling under the above criteria have to annex with its Board’s report a secretarial audit report, given by a company secretary in practice.

Conclusion:

On one hand the amendment has reduced the employment opportunities for the Company Secretaries in the Private Companies and on the other hand it has increased the scope of work for a Practicing Company Secretary.