Company secretary: Complete definition and the Appointment process

Company Secretaries are one of the key managerial personnel within a company that has many responsibilities to fulfill. It is the responsibility of a CS to ensure that the legal and compliance aspects of a company are taken care of. The Institute of Company Secretaries of India (ICSI) is the independent and proper authority that regulates and maintains the profession of Company Secretaries in the country. The CS is a member of the ICSI who is an individual who is a member of the society.

Among other responsibilities, the Company Secretaries has the responsibility of maintaining the company’s books of accounts, auditing the company’s tax returns, advising the board of directors on legal and financial risks to the company and ensuring that the company complies with the necessary regulations.

Appointment Process of a Company Secretary

In line with the Companies Act, 20131 (Act), several developments have been made in the corporate governance regime, including the enhancement of the role of the company secretary in ensuring corporate governance within the company.

As a result of their crucial role, the Act for the first time incorporated Company Secretaries into the category of “key managerial personnel”, as defined by Section 2(51)2 of the Act, along with the Managing Director, the Chief Executive Officer, the manager, and the whole-time director, in recognition of their critical role. In addition to the above, Section 2053 of the Act further provides for the various functions to be carried out by a Company Secretary.

This is a testament to the increasing importance of a Company Secretary in the corporate world today, particularly when it comes to ensuring compliance with corporate governance principles and practices by companies.

As specified in Section 203 of the Companies Act, 2013 (‘Act’) and Rule 8 and 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (‘Rules’), the following companies must appoint CS as Key Managerial Personnel (KMP):

  1. It is applicable to all listed companies with a paid-up share capital of more than Rs.10 crore.
  2. Public companies with a paid-up share capital of more than Rs.10 crore are considered to be public companies.
  3. Private limited companies with a paid-up share capital of more than Rs.10 crores are eligible to apply.
  4. An unlisted company with a paid-up share capital of over Rs.10 crore is considered to be unlisted.

In order to appoint a CS, the following steps need to be taken:

  • All directors shall be notified of the board meeting, and a resolution appointing a full-time company secretary should be passed.
  • Within 30 days of the company secretary’s appointment, notify the Registrar of Companies by filing forms MGT-14 and DIR-12.
  • Maintain a proper register of directors and key managerial personnel after the company secretary is appointed.
  • If the company shares are listed on a stock exchange, provide the information to the exchange.
  • Company secretaries cannot hold offices in more than one company, but they can hold offices in subsidiary companies.

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