The provisions pertaining to appointment of Company Secretaries are given under Section 203 and the Rules under Chapter XIII of Companies Act, 2013.
A 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. Thus, the Company Secretary is appointed to ensure that the Company is following good Corporate Governance practices.
2. MAIN CONSTITUENTS:
- Section 203 of the Companies Act, 2013 (“Act”).
- Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 “Rules”).
- Clause 55A of Listing Agreement [SEBI].
Section 2 (24) of the Act “Company 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 the Act.
Section 2(25) of the Act “Company secretary in practice” means a company secretary who is deemed to be in practice under sub-section (2) of section 2 of the Company Secretaries Act, 1980.
A. The Act:
As per Section 203 of the Act read with Rule 8 of the Act, every Listed Company and other public company having a paid-up share Capital of Rs. 10 Crores or more shall have Whole-Time Company Secretary.
As per Section 203 of the Act read with Rule 8A of the Act, A company other than a company covered under rule 8 which has a paid up capital of Rs. 5.00 Crores or more shall have Whole time Company Secretary.
- Market regulator, SEBI has mandated the appointment of a Company Secretary as compliance officer for the purpose of listing regulations.
- Pursuant to the press release by SEBI dated November 19, 2014, every listed Company is required to mandatorily appoint a Company Secretary as a Compliance Officer.
C. Consequences of Non-Appointment of a Company Secretary:
- Non-appointment of a Company Secretary shall violate the above mentioned press release.
- It shall further cause violation of Clause 55A of Listing Agreement [Reconciliation of Share Capital Audit Report] wherein, the name of the Compliance Officer [Company Secretary of the Company] is required to be indicated.
- As non-compliance with the above is a violation of the requirements of the Listing Agreement, the Company may face disciplinary action including suspension/delisting of securities.
- Pursuant to Section 203(5) of the Act, the Company shall be punishable with a fine of minimum Rs. 1.00 lakh which may extend up to Rs. 5.00 lakhs. Also, every director and key managerial personnel [i.e. Managing Director, or Chief Executive officer or manager, Chief Financial Officer] of the Company who is in default shall be punishable with a fine which may be extend up to Rs. 50,000.
The following are the functions of the company secretary:-
- to report to the Board about the compliance with the provisions of this Act, the rules and other laws applicable to the company;
- to ensure that the company complies with the applicable secretarial standards;
- to discharge such other duties as mentioned in Rule 10 of the companies (appointment and remuneration of managerial personnel) Rules, 2014.
- To guide the directors of the company as may require with regards to duties, responsibilities and powers and assisting the Board in the conduct of the affairs of the company;
- To facilitate the convening of meetings and attend the board, committee and general meetings and at the same time to ensure that minutes of these meetings are maintained;
- To obtain approvals from the Board, general meeting, the government and such other authorities as required under the provisions of the Act;
- To represent before various regulators, other authorities under the Act in connection with discharge of various duties under the Act;
- To assist and advise the Board in ensuring good corporate governance and in complying with the corporate governance requirements and best practices; and
- To discharge such other duties as have been specified under the Act or rules; and such other duties as may be assigned by the Board from time to time.
Company Secretaries play a vital and creative role in assisting their organisation. The Corporate world is becoming a more complicated place for companies to operate in, and when directors feel uncomfortable with emerging paradigms of corporate governance, where else, in the company, is professional assistance to be found but from the Company Secretary.