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Mandatory appointment of Company Secretary

A company secretary is a senior position in a private sector company or public sector organization. The company secretary is responsible for the efficient administration of a company, particularly regarding ensuring compliance with statutory and regulatory requirements and ensuring that decisions of the board of directors are implemented.

The company secretary ensures that an organization complies with relevant legislation and regulation and keeps board members informed of their legal responsibilities. Company secretaries are the company’s named representatives on legal documents, and it is their responsibility to ensure that the company and its directors operate within the law. It is also their responsibility to register and communicate with shareholders, ensure that dividends are paid, and maintain company records, such as lists of directors and shareholders, and annual accounts.

As they have such an important role in the top management of the company, their appointment is covered under the Companies Act, 2013. Let’s go through the important aspects as well as the procedure for the appointment of the Company Secretary (C.S.).

WHO IS A COMPANY SECRETARY?

As per Section 2(24) of The Companies Act 2013, ‘company secretary’ or ‘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 this Act.

WHY ARE THEY APPOINTED IN A COMPANY?

A Company Secretary (C.S.) of a company has the primary responsibility to ensure compliance with statutory and regulatory requirements and for ensuring that decisions of the board of directors are implemented. There are several laws, statutes, regulations, etc. applicable to the company, which a Company secretary looks after and comply thereon. In India, A company secretary needs to be a member of the Institute of Company Secretaries of India. Only then she/he is eligible to appointed as Company Secretary of any company.

WHO IS REQUIRED TO APPOINT THE COMPANY SECRETARY?

As per Section 203 of the Companies Act, 2013 read with Rule 8 & Rule 8A of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Every listed company and every other Public Company or Private Company having a paid-up share capital of ten crore rupees or more shall have Whole-time Company Secretary as Key Managerial personnel (KMP).

As per interpretation if any company not falling in the above category or ambit, a Company Secretary (C.S.) is not required to be appointed.

Though, a company can voluntarily comply with this provision. Note that a Company Secretary (C.S.) who is appointed as key Managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time.

WHAT ARE THE FORMS TO APPOINT A COMPANY SECRETARY (C.S.) IN A COMPANY?

All Companies are required to file E-Form DIR-12 for the appointment of a Company Secretary (C.S.). All Public Companies are also required to file Board Resolution in E-Form MGT-14 for the appointment of a Company Secretary as Key Managerial personnel (KMP). Both the above forms are required to be filled within 30 days from the date of the Board Meeting in which the appointment is approved.

WHAT IF COMPANY SECRETARY (C.S.) RESIGNS FROM THE COMPANY?

If a Company Secretary (C.S.) resigns, she/he can anytime resign from the company after giving notice as well as reason. The company will take the required steps for such resignation.
It should be noted that the resulting vacancy shall be filled-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.

WHAT IF THE COMPANY FAILS TO APPOINT A COMPANY SECRETARY (C.S.)?

Any company which is mandatorily required to appoint a Company Secretary (C.S.) if doesn’t appoint, such company shall be liable to a penalty of five lakh rupees, and every director and key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees and where the default is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such default continues but not exceeding five lakh rupees.

In the recent case of M/s. PITCHERS INTERNET PRIVATE LIMITED, the order of adjudicating officer dated 25-05-2022, ROC Delhi & Haryana has imposed a penalty of Rs.5,00,000/- on the Company and Rs.4,41,000/- on three Directors of the Company.

Encl: – ROC Order.

Disclaimer: This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. This article cannot be relied upon to cover the specific situation and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Affluence Advisory Private Limited to discuss these matters in the context of your particular circumstances. Affluence Advisory Private Limited, Its Partners, Directors, Employees, and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.

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