Role of Company Secretary is to make sure to execute and implement the decisions take by the higher authorities like the board of directors of the company, chairman, CEOs, etc. The responsibility of Company Secretary to ensure the effective management and administration of the organization and meeting the regulatory and statutory expectation and requirements. Attending general meetings, managing legal documents, advises the board if required. The role of the company secretary is not secretarial. Company Secretaries works with professionals and leaders in an organization.
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Meaning of Company Secretary under Companies Act, 2013
Firstly, for the meaning of the Company Secretary, the Companies Act refers to Section 2(1)(c) of the Company Secretaries Act, 1980.
According to Section 2(1)(c) of the Company Secretaries Act, 1980, company secretaries are the people who are the member of the Institute of Company Secretaries of India. Hence, he is a member of ICSI and performs various ministerial and administrative functions of the organization.
Sections under Companies Act which affected the Role of Companies Secretary
1. Section 118
The Companies Act, 2013 under Section 118 makes it necessary for the Companies to comply with the secretarial standards. Hence, the main purpose behind it was to integrate, harmonize and standardization of diverse secretarial practices.
2. Section 204
According to Section 204 of the Companies Act 2013, it is the duty of the Company Secretary in practice to perform the secretarial audit of every listed company.
Secretarial Audit means a process to check the company’s compliance with the relevant laws. The main purpose behind it was to improve corporate governance and compliance.
Understand the Role of Company Secretary as Scrutinizer in E-voting here in detail.
3. Section 203
According to Section 203 of the Companies Act, 2013, it is necessary for a certain class of companies to appoint the whole time ket managerial personnel. The following Key Managerial Personnel are as follows:
1. Managing Director or CEO
2. Company Secretary
3. Chief Financial Officer
Hence, this makes the appointment of whole-time Company Secretary mandatory for better efficiency.
4. Section 92
Annual return is a return that investment provides over a period of time, expressed as a time-weighted annual percentage. Earlier, only the listed companies were required to get its annual returns signed by the company secretary.
Now, according to new companies act, many industries are added to do the same. Hence, it increases the role of the Company Secretary in the organization.
Major Roles of Company Secretary according to Companies Act, 2013
1. Firstly, to assist the Board in the conduct of the affairs of the company.
2. Secondly, to provide guidance to the directors about their duties.
3. Ensuring and Complying with Corporate Governance.
4. Ensuring that the company complies with secretarial standards.
5. To take the required permissions from the board and various government bodies. Hence, he also has to follow the provisions regarding the permission acquisition.
6. Lastly, to facilitate the convening of meetings.
Major Rights of Company Secretary
1. Firstly, he can supervise, control and he can direct subordinate officers and employee.
2. Secondly, he can sign and authenticate the proceeding of meetings.
3. He has a right to blow the whistle whenever he finds necessary.
4. He can attend the meetings of the shareholders and the Board of Directors.
5. He can sign any contract/agreement on behalf of the company.
6. Lastly, at the time of liquidation, he can claim his dues like a creditor.
Restrictions on Company Secretary
1. Firstly, he cannot acknowledge a debt against a suit against the company.
2. Secondly, he cannot register, transfer shares without the authority of the Board of Directors.
3. Thirdly, he cannot enter into a contract on behalf of the company (unless specifically authorized by the BOD).
4. Lastly, he cannot borrow money in the name of the company.
Difference between the Old and New Companies Act regarding the roles of Company Secretary
|Basis of Difference||Companies Act, 1956||Companies Act, 2013|
|1. Compliance Certificate||Under the old Companies Act, 1956, company secretaries have to issue a compliance certificate to the companies. Hence, their major function was to issue the compliance certificate.||Under the Companies Act, 2013 the role of CS (Company Secretaries) has increased by providing with the opportunities such as promotion, formation, and incorporation of companies, etc. Hence, their performance area has increased.|
|2. Appointment||Every company with paid-up share capital of more than Rs.5 lakhs had to appoint a CS.||Every listed company having paid-up share capital of more than Rs.10 lakhs has to appoint a CS.|
|3. Penalty||If a company fails to appoint a CS, the penalty was Rs.500 per day. Hence, there were fewer restrictions.||If a company fails to appoint a CS, the penalty is not less than Rs.1 lakh. Hence, there is more control over the appointment.|
Solved Question on Role of Company Secretary
Question: Which companies need to appoint a Whole Time Company Secretary?
Answer: Following Companies need to appoint a whole time company secretary (mandatory):
1. All Listed Companies (Rule 8 Companies Appointment & Remuneration of Managerial Personnel Rules, 2014)
2. Public Companies which have Rs. 10 Crore or more paid-up share capital (Rule 8)
3. Every other Company which have Rs. 5 Crore or more paid-up share capital (Rule 8A)
Hence, every company which has a paid-up share capital of Rs 5 Cr. or more is mandatorily required for appointing the whole time CS (Company Secretary).