Company secretary

A company secretary is a senior position in a private sector company or public sector organisation. In large American and Canadian publicly-listed corporations, a company secretary is typically named a corporate secretary or secretary. The company secretary is resonsible 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.[1]

Despite the name, the role is not clerical or secretarial. The company secretary ensures that an organisation complies with relevant legislation and regulation, and keeps board members informed of their legal responsibilities. Company Secretaries are the company’s named representative 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, to ensure that dividends are paid and to maintain company records, such as lists of directors and shareholders, and annual accounts.

In many countries, private companies have traditionally been required by law to appoint one person as a company secretary, and this person will also usually be a senior board member.

Roles and responsibilities

Company secretaries in all sectors have high level responsibilities including governance structures and mechanisms, corporate conduct within an organisation's regulatory environment, board, shareholder and trustee meetings, compliance with legal, regulatory and listing requirements, the training and induction of non-executives and trustees, contact with regulatory and external bodies, reports and circulars to shareholders/trustees, management of employee benefits such as pensions and employee share schemes, insurance administration and organisation, the negotiation of contracts, risk management, property administration and organisation and the interpretation of financial accounts.

Company secretaries are the primary source of advice on the conduct of business and this can span everything from legal advice on conflicts of interest, through accounting advice on financial reports, to the development of strategy and corporate planning.

Among public companies in North America, providing advice on corporate governance issues is an increasingly important role for corporate secretary. Many shareholders, particularly institutional investors, view sound corporate governance as essential to board and company performance. They are quite vocal in encouraging boards to perform frequent corporate governance reviews and to issue written statements of corporate governance principles. The corporate secretary is usually the executive to assist directors in these efforts, providing information on the practices of other companies, and helping the board to tailor corporate governance principles and practices to fit the board's needs and expectations of investors. In some companies, the role of the corporate secretary as corporate governance adviser has been formalized, with a title such as Chief Governance Officer added to their existing title.[2]

In view of the important roles, the company secretary plays in business, PLCs and large companies require the company secretary to be suitably trained, experienced and professionally qualified for these responsibilities.

In the UK, the company secretary may be qualified by virtue of examination and membership of the Institute of Chartered Secretaries and Administrators (ICSA), which is the main qualification specifically for company secretaries. ICSA is the body dedicated to the advancement and recognition of professional administration based on a combination of degree-level studies, carefully vetted experience and sponsorship by two people of professional status. Only a person thus qualified is entitled to be designated a 'Chartered Secretary' or 'Chartered Company Secretary'. The Faculty of Secretaries and Administrators founded in 1930 is the second body of corporate secretaries in the United Kingdom and now has a strong emphasis on equality work and governance and its members are designated 'corporate secretaries' or 'certified public secretaries'. It is expected that company secretaries of publicly quoted companies will be professionally qualified through ICSA, one of the chartered professional bodies in the accountancy profession, or have appropriate training and experience through another body.

In India, the Institute of Company Secretaries of India (ICSI) regulates the profession of Company Secretaries. ICSI is a statutory professional body has been set-up by a special act of the parliament in 1980 and has also crossed the milestone of more than 55,000 associate members. The member of the ICSI called as Company Secretary. To be a member of the ICSI, one needs to be get enrolled with the Institute as a student, to rigorously undergo through three stage examination viz Foundation, Executive, and Professional, and also to enrolled for an internship either with the organization or by pursuing it within office established by an Individual (s).

As far as roles being occupied by such professional, the appointment of a Company Secretary in the organization regulates through the Companies Act 2013 by passing a Board resolution and discussion at the Nomination and Remuneration Committee and his roles also governed by the Act through section 205.

However, the profession of Company Secretary is reaching to its new height day by day in the Indian jurisdiction. The law governs his appointment since long time review and refines by the Ministry of Corporate Affairs from time to time with a view to supporting initiative taken by the Government of India "Ease of Doing Business in India (EODB)". The moment the law governing the appointment of Company Secretary shall be changed, the roles and responsibilities shall also be changed followed by a surge in the expectations from the profession. The MCA has recently notified a new amendment Act "Companies 2nd Amendment ACt 2017" from 26th January 2018 which has again unlocked the potential of the profession.

There are also new concepts have been launched which again bring the profession of Company Secretary at the pole position, accordingly expectations to do well in terms of ensuring good corporate governance has risen. The highlights of such concepts are:

1) Compulsory dematerialization -an electronic form of keeping shares in the company- of the physical shares held in the unlisted public companies before subscribing to any new issue of share capital by such companies. 2) Such companies also ensure that the shares of the white-collar employees (including Company Secretary) after 2nd October 2018 shall be converted to an electronic form before an issue of new shares of any class. 3) DIR 3 KYC - A special e-form launched by the MCA on 10th July 2018 to update the personal data of all directors have been allotted Director Identification Number on or before 31st March 2018 with a deadline to comply the new form by 15th September 2018. 4) Significant Beneficial Ownership ("SBO")

However, there are many other new concepts have been recently launched which has shaken up the Indian Companies Act 2013 in entirety in a positive manner.

Chartered Secretaries are employed as chairs, chief executives and non-executive directors, as well as executives and company secretaries. Some chartered secretaries are also known in their own companies as corporate secretarial executives/managers or corporate secretarial directors.

Chartered Secretaries are the sixth highest paid employees in the UK according to the Office for National Statistics Annual Survey of Hours and Earnings (March 2010).

Many corporate secretaries of North American public companies are lawyers and some serve as their corporation's general counsel. While this can be helpful in the execution of their duties it can also create ambiguity as to what is legal advice, protected by privilege, and what is business advice.[2] http://www.icsi.edu

United Kingdom

Since 8 April 2008 there has been no legal requirement for a private company in the UK to have a company secretary unless the company's articles of association state otherwise.[3] If a private company doesn't have a company secretary then the company secretarial duties and responsibilities fall upon the directors of the company. With the increase in the number of social enterprises and community interest companies there is often a demand for a company secretary in the voluntary and community sectors as well as ordinary private trading companies. A public company in the UK must still have a formally appointed company secretary.[4]

The exact responsibilities of the company secretary depend on the size and nature of the company and there is no statutory definition of what these are, but it generally includes some or all of the following:[5]

  • advising the board of directors on their legal and corporate responsibilities and matters of corporate governance;
  • organising the company’s board meetings and annual general meeting;
  • minuting board meetings;
  • ensuring company compliance with legal obligations;
  • managing and storing the company's records, e.g. re investments, property, payroll, insurance, accounting, taxation (VAT, PAYE, Corporation Tax); and
  • liaison between the company and its stakeholders and shareholders

India

In India, every listed company and other class of companies (i.e. non-listed public companies with share capital of 100 million (INR 10 Crore) & private Companies with the paid-up share capital of 50 million [5 crore] shall appoint a Qualified Company Secretary be classified as "Key Managerial Personnel" (a new concept of KMP has been launched through the Indian Companies Act 2013) to perform the Functions of under section 205 of the Companies Act, 2013 to be read with Rule 8 & 8A of Companies (Appointment and Remuneration of Key Managerial Personnel) Rules, 2014.

But later it is also clarified by the Ministry of Corporate Affairs that Company Secretary would be appointed as earlier i.e. a company having a paid up capital of 5 crores or more should appoint a whole time basis in its notification.

The notification is reproduced here under. —-

MINISTRY OF CORPORATE AFFAIRS NOTIFICATION

New Delhi, the 9th June, 2014 G.S.R. 390(E).—In exercise of the powers conferred by sub-section (1) of Section 203 of the Companies Act, 2013 (18 of 2013) read with clause (51) of Section 2 and Section 469 of the said Act, the Central Government hereby makes the following rules to amend the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, namely:— 1. (1) These rules may be called the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2014. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 after rule 8, the following rule shall be inserted, namely:— “8A. Appointment of Company Secretaries in companies not covered under rule 8.—A company other than a company covered under rule 8 which has a paid up share capital of five crore rupees or more shall have a whole-time company secretary.”

[F. No. 1/11/2013-CL-V] AMARDEEP SINGH BHATIA, Jt. Secy.

Statutory declarations of compliance under the various other provisions of the Companies Act, 1956 are also required to be certified by practicing company secretaries. Under the MCA 21 e filing regime, several forms (including some, exclusively) are required to be pre-certified by practicing company secretaries. The MCA 21 regime has ushered in a dramatic change in the role and profile of the profession, particularly, the practicing side.

The annual returns of companies listed on recognized stock exchanges shall be signed by a practicing company secretary.

Further, the Securities and Exchange Board of India (SEBI) also recognizes the Company Secretary as the Compliance Officer and authorizes practicing company secretaries to issue various certificates under its Regulations. Further, practicing Company Secretaries are also authorized to certify compliance of conditions of corporate governance in case of listed companies.

The Reserve Bank of India also authorizes company secretaries to issue various certificates.

The Institute of Company Secretaries of India is the premier professional body to develop and regulate the profession of Company Secretaries in India. It was set up by an Act of Parliament in 1980.

Companies Bill, 2012 has been passed by the parliament and has become Companies Act, 2013. National Company Law Tribunal(NCLT) has obtained the powers of a court and all matters relating to Company Law will be heard before it instead of before High Court(s). A Company Secretary shall be eligible to appear before NCLT. This has opened more opportunities for a Company Secretary.

Main functions of the company secretary in India

(a) to report to the Board about compliance applicable to the company; (b) to ensure that the company complies with the applicable standards; (c) to discharge such other duties as may be required;

Institute of Company Secretaries of India(ICSI)is the sole body in India, which provides company secretaryship course.

Bangladesh

China

In China, every listed company is required to have a board secretary. According to article 124 of 2005 Company Law, every listed company is required to have a secretary to the board of directors. The responsibilities of the board secretary include preparing meetings of shareholders and boards of directors, maintaining company records and shareholders information, dealing with information disclosure etc. Relevant listing rules in China further clarify that the secretary of the Board is a managerial position. Such listing rules discuss duties of board secretary in details. According to “Special Provisions of the State Council Concerning the Flotation and Listing Abroad of Stocks by Limited Stock Companies”, “Guidance for the Articles of Listed Company”, “Stock Listing Rules of the Shanghai Stock Exchange” and “Stock Listing Rules of the Shenzhen Stock Exchange”, the secretary of the Board is classified as the senior management team. From those listing rules, the board secretary, or the secretary of the board of directors, in China is comparable as the company secretary in many other countries.

South Africa

In South Africa, all public and state-owned company must appoint a company secretary. The roles and responsibilities of the company secretary are defined in the Companies Act, No 71 of 2008. For publicly listed companies, these roles were clarified and expanded by the King IV report.[6] In addition, non-profit companies that have voluntarily adopted the "Enhanced Accountability and Transparency" provisions of the Companies Act must appoint a company secretary whose role is comparable to that of a public company.[7]

Sri Lanka

In Sri Lanka, the Companies Act, No. 07 of 2007 requires that each registered company has a company secretary. A company secretary is required to be registered with the Department of Registrar of Companies, to function as a company secretary. Eligibility to function as a secretary are;

  • Sri Lankan citizen
  • An Attorney at law, a Chartered Accountant or any person demanded have followed a program of study by the Subject Minister.
  • Applicants with over 20 years experience in the company secretaries field may be appointed after an interview with the Registrar of Companies.

References

  1. ↑ What is a Company Secretary?
  2. 1 2 The Corporate Secretary - Duties and Responsibilities
  3. ↑ section 270 Companies Act 2006
  4. ↑ section 271 Companies Act 2006
  5. ↑ Roles and Responsibilities of a company secretary
  6. ↑ Moore Stephens South Africa. "The role of the Company Secretary". Retrieved 29 August 2017.
  7. ↑ Naidoo, Melanie (21 June 2012). "SOUTH AFRICA'S NEW COMPANIES ACT : Key features for non-profit companies". GAA Accounting. South African Institute of Chartered Accountants. Retrieved 29 August 2017.

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