In India Company Secretary abbreviated as “CS” is a highly qualified professional in the Corporate World. A CS is regarded as a “KMP” i.e Key Managerial Personnel under the express provisions of the Companies Act, 2013. By virtue of designated as ‘KMP’ he is put along with Managing Director, CEO, Whole Time Directors and the CFO. Basically all of them performs the most important roles in their individuals capacity and as well as a team.
In many advanced countries of the world like USA, United Kingdom, Canada, etc the ‘Company Secretaries’ are commonly known as “Corporate Secretary” or “Board Secretary”.
We will take a very practical approach to understand the title that whether a ‘CS’ in employment is doing a ‘Corporate Job’ or is rendering a ‘Service’ to the nation by acting as government eyes.
By ‘Job’ here we means he is working as a Corporate Employee to maximize the profits and mitigate the risks for the Company for which he is working and by ‘Service’ we means that he is acting as a government nominee to protect its interest.
How Effectively a CS can Serve the Government(Major stakeholder) in his Corporate Job…?
Let us Understands the same:-
ROLE OF A CS AS “KMP” (DOING JOB)
As the very name suggest that CS is one of the Key Personnel who manages the Company and is made responsible for the overall Compliance under the Companies Act and other applicable legislation. He has to report to the Board of Directors for timely guidance and strategic planning and perform such other duties as have been specified under various laws or delegated by the board from time to time. Moreover under SEBI norms a CS is regarded as a ’Compliance Officer’ which in itself is a great recognition.
But can we see a clear line drawn in the role of a CS as an “KMP or Compliance Officer ” who is also a “Corporate Employee” meaning how effectively can he perform his duties being in dual role.
In today’s world the role of Company Secretaries is multi fold and many times their role is combined with another role, but care should be taken that the Prime role of governance should not be compromised.
The author opine that both the title “Compliance officer/KMP” and “Corporate Employee” are opposite to each other by there very basic nature because as a Compliance Officer you have to Comply and not manage.(here by manage we do not mean Compliance management but business management).
It’s a fact that “Businesses are run to do business and compliance is not their business, it is the law that compel them to Comply“. However all Corporate are not alike many follows the compliance voluntarily.
But it doesn’t means that CS has to do only the Compliance part rather Company secretaries are expected to possess Commercial approach as well and use their senses along with technical skills to maintain sustainability of business instead of short term survival. As such they are entrusted with multi fold role so balancing both the business and governance are equally important.
One fine example is that when Company Secretaries leave their position they are usually asked to attend board meeting and explain the reasons for leaving the organization, here the significance is that it is a kind of alert to the board that whether there is any governance issue that may have contributed to the decision.
CA/CS/CMA as Army/ Navy/ Airforce for the Corporate World (DOING SERVICE)
Recently I was in a Programme in which Shri. Injeti Srinivas the Hon’ble Secretary Ministry of Corporate Affairs in his Guest speech said that these three professionals are the Army, Navy and Airforce for the Corporate Sector.
We all knows that in comparison to services rendered by armed forces of our nation we are nothing they renders selfless service for the entire nation by sacrificing their lives for our protection. But indeed I felt very proud by hearing such kind words for the Profession from Hon’ble Secretary who gave us such huge respect.
CS RENDERING SERVICE TO NATION
To Co-relate with Corporate sector I completely agree to his words and I also appreciate one more thing that he said that we Professionals are not doing a Job but are rendering our services to the nation. Rendering a service here means protection of the interest of the stakeholders including the government and contributing towards the betterment of the society.
With high regards to what the hon’ble secretary said there is no doubt about it at all that Professionals are doing a great service to the economy. But a question came to my mind as said earlier that whether the CS is an Insider being a ‘KMP’ or an outsider being a Statutory Person.
Now Let’s Substantiate the Statement
For a moment forget about what is written in the books, if a Person is working as a ‘CS’ an employee of a Private Concern then how will he justify his role as a Government nominee to protect their interest is a matter of debate.
Don’t you think that there is some overlapping to work for his employer or to serve the government and the society as a whole. Professionals mostly endeavor to apprise their employer that this is better and the other way is not sustainable. But there are many circumstances in which they have to act either ‘Yes’ or ‘No’ .
Irrespective of choosing the right option, how sustainable is it for a Corporate Employee is the question…?
CS TO DECIDE THE CORPORATE CULTURE AND TORCHBEARERS FOR VISION 2022
The Hon’ble Prime Minister Shri. Narendra Modi once in his speech said that CS Professionals decides the Corporate Culture and are responsible for establishing the best Corporate Governance Practices across the boards of Companies. The Prime Minister also asked “ICSI” as a governance institution to give its Promise to contribute its role in making the country a high tech Compliant Society by the year 2022.
Every single word is highly motivational for all of us and we are very fortunate that the Hon’ble PM of our country gave us such high recognition and responsible role to play in his dream of nation building.
WHAT IS THE WAY FORWARD…?
Like a person cannot sail in two boats at the same time, similarly the CS Professionals must be given appropriate powers by bringing them within a larger purview of the government for example government appoints its nominee officers at various places to safeguard its interests from time to time and they are given adequate rights to have a say. This is just an example there can be numerous permutations to achieve this.
But how far a Corporate Employee can drive the board in the right direction unless he is given the freedom to act with valid limitations is a question that needs to be answered.
CONCLUSION: Arriving at the conclusion it is absolute correct to say that CS Professionals are rendering their services to the nation but to utilize their true potential, the stakeholders should delegate them necessary powers and liberty to act on their behalf.
There is no ambiguity that to maximize the profits and minimize the risks for the Promoters is one of his duty but what matters more is to balance the interest of all stakeholders including the Company which is in itself a legal stakeholder different from its promoters.
It is a well established fact that an organization is a Corporate Citizen and Company secretaries are the conscience of such citizen due to their governance role. But being a conscience is not an easy role and to perform this role the authority be changed beyond the letter of the law. To balance this interest a formal and effective authority is definitely needed instantly. Just awarding the title of “KMP” will not do much unless it is pursued on ground level.
These are the personal views of the author and not an exact interpretation of the statue and may differ from person to person. The author considered it as a matter of significance to share. Readers may have their opinion and may share for a healthy discussion so that it may reach the appropriate person. Further the content is an original work of the author and it should not be used without permission. The author extends his thanks to the readers of this article.
(The author may be reached at email id firstname.lastname@example.org or handphone +91-9643451968)