A firm’s company secretary (CS) executive is a crucial management and administrative component. He conducts many regulatory tasks as one of a company’s legal agents, including carrying out the incorporation of the business, adequately preparing and auditing financial reports, submitting annual returns, dealing with regularly revised regulations, etc.
Additionally, he plays a significant part in the company’s board of directors’ incorporation of laws, corporate governance, strategic management, project planning, capital markets, and securities laws as a business advisor. In essence, a business secretary serves as the organization’s in-house legal advisor and compliance officer.
- Who is a Company Secretary?
- The Requirements for Becoming a Company Secretary
- What a company secretary does?
Who is a Company Secretary?
The Company Secretary is a person who, in accordance with the Companies Act, – Is an approved member of the Institute of Company Secretaries of India (ICSI) & ; Performs tasks specified by the Institution and complies with operating rules and regulations specified under the Companies Act.
The Companies Act also abides and grants each company secretary unique status so that he can serve as a Key Managerial Personnel (KMP) and contribute his knowledge as a worker in every:
- Private company with at least Rs. 5 crore in paid-up capital.
- Public Corporation with a paid-up capital range of Rs. 5 to Rs. 10 crore.
A business secretary has a multidisciplinary background and is known for having various jobs and responsibilities.
The Requirements for Becoming a Company Secretary
According to Section 2(24) of the Companies Act of 2013, a Company Secretary is required to abide with certain laws that the Indian Government sporadically establishes. The Companies (Secretary’s Qualifications) Rules of 1975 further specify the qualifications that a CS must fulfil.
If a private limited company has paid-up capital of at least $50,000, a company secretary must be a member of the Institute of Company Secretaries of India (ICSI).
If a private limited company has a paid-up capital of at least 50 lakhs, the secretary must be a member of the ICSI—Institute of Secretaries of India. The Secretary shall be a member of the ICSI, possess a legal degree from any recognized university, and shall satisfy one or more of the foregoing requirements. A member of the Indian Institute of Cost and Works Accountants (ICMAI), an advanced degree in commerce from a reputable university, and a diploma in company law from any India Law Institute.
What a company secretary does?
The company secretary is a crucial component and must carry out his responsibilities with due diligence. In addition to serving as a legal mentor, he must guarantee that all business practices comply with all legal requirements; if not, he may be held accountable for misconduct and fired for deceit or violating the company’s legal rights.
Tasks under the Companies Act:
As required by the Companies Act, responsibilities include initiating and carrying out incorporation procedures, including authenticating registration documents and processes, ensuring the registrar receives registration and allotment information, applying for an increase in share capital, monitoring the delivery of share certificates of allotment, keeping track of share warrant holders, complying with reporting requirements, releasing statutory declarations to receive commencement certificates, and managing the incorporation process.
To verify and submit attested returns and forms; to supervise the authentication and filing procedure of TDS (Tax Deducted at Source); to ensure that the appropriate amount of TDS is being deducted from employees’ salaries; to ensure that TDS reports are well maintained; and to ensure that TDS is duly submitted to government.
Other Acts mandate the following tasks: obtaining government approvals; adhering to the rules governing industrial disputes; the FEMA Act; the State Insurance Act; the Depositories Act of 1996; the Foreign Exchange Management Act; and monitoring and following a number of other laws, including those pertaining to labour; competition; the environment, etc.
Other general responsibilities of a company secretary include advising authorities and the BOD (Board of Directors) on risk management, corporate social responsibility, brand equity and image building, managing intellectual property rights of the company, and fostering open dialogue between stakeholders, authorities, and the government.
The following are the main duties of a company secretary in practice:
CS as a business benefactor:
The Companies Act grants a company secretary specific authority, including the ability to carry out company promotion and incorporation, handle company audit and certification services, sign annual returns, handle corporate restructuring and takeovers, scrutinize reports and voting procedures in a transparent manner, administer revival of sick companies, join the Company Law Tribunal as a technical member, and conduct tax and corporate affairs investigations.
CS as an Auditor:
The Companies Act gives a company secretary the authority to annex a Secretarial Audit Report to the authorities in form MR-3 to ensure that the company complies with the policies set forth in general laws and legal acts and to report any egregious instances of fraud discovered to the government in order to ensure corporate discipline and compliance with the law.
CS as an Advising Agent:
CS serves as an advisor in cases involving the following: the issuance of shares; the drafting of prospectuses, sale letters, and other securities-related documents; private placement and buyback of shares; the raising of funds from international markets; the syndication and documentation of loans; income tax planning; the drafting of legal documents; matters relating to intellectual property rights; the direction of merger, amalgamation, and joint venture policies, among other things.
Statutory Powers and Restrictions for Company Secretaries
A company secretary is legally constrained by the limitations and responsibility guidelines established by ICSI and other regulatory bodies.
As a representative body of a company, he is responsible for any negligence on his part that may affect the performance of his duties; accountable for acting outside of his authority; required to protect a company’s secrets from third parties; and subject to termination for making any unreported profits from the company.
In addition to this, he is not permitted to register or transfer shares without the proper approval of the BOD, nor is he permitted to borrow money in the company’s name or admit a debt in a lawsuit against the firm.
In a nutshell, the need for and responsibilities of company secretaries cannot be disregarded as their position expands at a rapid rate in Indian corporations due to a rise in compliances. A corporation may face a multitude of penalties that only a company secretary may mitigate if it violates the requirements of the Companies Act and other authoritative laws.