Companies required to appoint a Company Secretary- New Rules

Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020

 The amendment has substituted Rule 8A and amended Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (the Rules).

Date of Notification– January 3, 2020

Applicability – The amended rules shall be applicable in respect of Financial Years commencing on and from April 1^st, 2020.

Rule 8A – Appointment of Company Secretaries in Companies Not Covered Under Rule 8

Sec 203 of Companies At 2013, provides for the appointment of a whole-time company secretary in all the companies belonging to a specified class. The said class is provided under the Rules.

Prior amendment, the Rule 8A of the Rules provided that all the companies not covered under Rule 8[1] and having a paid-up share capital of Five Crore INR or more shall have a whole-time company secretary.

The amendment has substituted the rule by providing that every private company which has a paid-up share capital of Ten Crore INR or more shall have a whole-time company secretary.

Post amendment the following companies are mandatorily required to appoint a whole-time Company Secretary:

1. Listed Company,

2. Unlisted Public Company having paid-up share capital of INR 10 Crore or more,

3. Private Company having paid-up share capital of INR 10 Crore or more.

 Rule 9 – Secretarial Audit Report

Pursuant to Sec 204, every listed company and companies belonging to such other class shall annex a Secretarial Audit Report, given by a Practicing Company Secretary, with its Board Report. Such other class of company which are required to comply with this provision are given in Rule 9 of the Rules.

Prior amendment, such class of companies were: –

(a) Every public company having a paid-up share capital of fifty crore rupees or more, or

(b) Every public company having a turnover of two hundred fifty crore rupees or more;

Post amendment, one more class of companies has been added in Rule 9. The new class of companies is every company having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more.

Post amendment the following companies are mandatorily required to conduct a Secretarial Audit:

(a) Every public company having a paid-up share capital of fifty crore rupees or more; or

(b) Every public company having a turnover of two hundred fifty crore rupees or more; or

(c) Every company having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more.

 Explanation –

For the purposes of this sub-rule, it is hereby clarified that the paid-up share capital, turnover, or outstanding loans or borrowings as the case may be, existing on the last date of the latest audited financial statement shall be taken into account.

[1] Rule 8 –Appointment of Key Managerial Personnel – Every listed company and every other public company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel(which includes a company secretary).