As business owners, you must have that tedious compliance checklist to cross over every month, quarter or year.
If by any chance you forget, the consequences of ignoring this aspect could be severe fines, aggressive legal action, and reputational harm.
And this is where a company secretary comes in as a life saviour.
In India, where the economy is expanding at the quickest rate, and the number of enterprises is increasing, effective compliance is more critical than ever. A company secretary ensures that the organization abides by the legal and regulatory framework and that its governance meets standards set by the industry.
Moreover, according to the Institute of Company Secretaries of India (ICSI), the demand for company secretaries has increased by 25% in recent years.
So, without further ado, let’s examine the significance of a company secretary in India and why your firm needs one.
Who Is A Company Secretary?
A company secretary is a highly qualified professional specialized in corporate and governance — responsible for ensuring the company complies with all legal and regulatory requirements.
This is a crucial position because failure to comply can have serious repercussions for the business, its shareholders, and its stakeholders.
A business secretary assists the board of directors, keeps track of the organization’s paperwork, interacts with shareholders, and makes sure board meetings are run well. To put it briefly, they are the backbone of a company’s compliance framework.
Who Is Qualified To Serve As A Company Secretary?
The Companies Act, 2013 mandates that a person wishing to be appointed as a company secretary must have completed a recognized course and be a member of the Institute of Company Secretaries of India (ICSI).
To become a member of the ICSI, a person must have completed the Company Secretary (CS) course, which includes three levels of examinations: Foundation, Executive, and Professional. The candidate must pass the exams and satisfy all additional requirements established by the ICSI for eligibility, including completing a practical training program.
This guarantees that the individual has the knowledge and abilities required to carry out the role’s legal and regulatory requirements.
Key Duties of a Company Secretary Under Different Laws
Moving on to the responsibilities of a company secretary, there are various laws that govern their duties.
For example, the Companies Act of 2013 outlines the company secretary’s responsibilities with regard to board meetings, share transactions, and more.
- Maintaining official records and registries. These registers include the Register of Members, Register of Directors, Register of Charges, and Register of Debenture holders. It is crucial to update these registries to comply with the 2013 Companies Act.
- Managing board meetings and ensuring the company’s meetings comply with the law.
- Submitting reports and other paperwork to the Registrar of Companies.
- Assisting in corporate restructuring and mergers and acquisitions.
- Advising the Board of Directors on legal and regulatory matters — ensures that the company’s interests are protected and its reputation is upheld.
Similarly, the Income Tax Act of 1961 also defines specific obligations of the company secretary role — such as ensuring compliance with Corporate tax-related requirements. This includes filing tax returns, paying taxes on time, and ensuring the company complies with all other tax-related regulations.
But that’s not all. A company secretary must also ensure compliance with other laws, such as the Securities and Exchange Board of India (SEBI) regulations.
7 Benefits To Hire a Company Secretary in India
Here are some of the reasons why a company secretary is essential for any company:
1. Compliance Needs
A company secretary makes sure that a business complies with different laws and rules, lowering the possibility of fines and legal problems.
They also ensure that board meetings go smoothly and effectively by organizing agendas, taking minute notes, and ensuring all decisions comply with the law. For instance, a company secretary can assure the annual general meeting (AGM) is conducted in accordance with the 2013 Companies Act.
2. Board Support
A company secretary advises the Board of Directors on legal and regulatory matters. They assist development and implementation of long-term strategies for the business, assuring that it also complies with all applicable laws and regulations.
For instance, a company secretary can help the board of directors comply with insider trading laws, ensure the board’s decisions are properly recorded, and make sure the board appoints directors following the correct procedures.
3. Corporate Governance
A company secretary ensures that the board of directors and shareholders comply with the company’s articles of association and corporate governance principles.
Let’s say XYZ Corporation has a board of directors consisting of five members. According to the company’s articles of association, each board meeting must be attended by three board members or more to be legally constituted. In this scenario, the company secretary’s duties include making sure the board members are aware of this obligation and keeping track of who attended each board meeting.
A company secretary is responsible for maintaining important records such as minutes of meetings, share registers, and more.
For example, if a company is looking to appoint a new CEO. It is the responsibility of the company secretary to attend this meeting and record in-depth minutes of the deliberations and decisions reached. Following compilation, this information will be distributed to all pertinent parties, including the board of directors and shareholders.
In addition, the company secretary also assists in keeping correct and current records of the share register for the company. This entails maintaining track of all shareholders’ names, addresses, the number of shares each owns, and any changes to this data.
All of this ensures the smooth operation of a company.
5. Strategic Planning
The company secretary works closely with the management team to analyze market trends, spot potential risks and opportunities, and create plans to help the business realize its long-term objectives.
For instance, a company secretary might counsel the management group on corporate reorganizations, M&A deals, or other strategic plans. They can assist by offering guidance to the transaction’s directors, helping with due diligence, and assisting during acquisition negotiation and execution.
A company secretary acts as a liaison between the company and its stakeholders.
He assures that the firm’s annual report is created and released on time, keeps shareholders informed about corporate advancements, and ensures that the website is updated with accurate, transparent, and true information to all parties involved.
7. Risk Management
A company secretary helps to identify and mitigate various risks to the company. As an illustration, a company secretary ensures its compliance procedures are current and its staff is informed of their legal and regulatory responsibilities.
But there’s more. A company secretary helps manage risks, assists in corporate restructuring and mergers and acquisitions, and ensures accountability and transparency in the company’s operations.
In summary, they’re like the company’s public relations guru concerning laws and governance, ensuring your business reputation stays intact.
Q: Do every company need a company secretary?
A: According to the Companies Act of 2013, a company secretary must be appointed only by entities with a paid-up share capital of at least Rs. 10 lacs.
Q: What are the skills a company secretary must have?
A: A business secretary needs to have strong analytical, problem-solving, and communication abilities and a broad knowledge of legal and regulatory issues.
Q: How can a company secretary be removed?
A: A board meeting or general meeting resolution may be used to dismiss a corporate secretary.
Q: What are some restrictions of a company secretary?
A: A company secretary must be a member of the Institute of Company Secretaries of India and cannot be a director or an employee of the firm (ICSI). A CS is also prohibited from holding any other positions inside the organization or having any financial stake.
To sum up, a Company Secretary is a crucial asset to every business. They help the board of directors, make sure the business operates smoothly, and maintain compliance with all laws and regulations.
A company secretary is the unsung hero of the corporate world. They put in a lot of effort in the background to make sure the business adheres to all legal and regulatory obligations. Companies would find it difficult to manage the complicated realm of corporate governance without them.
We welcome reader feedback on the necessity of recruiting CS in organizations and its potential effects on the financial sector.