Despite the name, the role of company secretary is not a secretarial or clerical one in the usual sense. In fact, a company secretary is typically â€˜Senior Managerial Personnelâ€™ in the corporate structure ensuring efficient administration of the company and certifying the companyâ€™s compliance with the provisions of Companies Act,2013 and other laws applicable on the company.
II. MEANING OF COMPANY SECRETARY
Meaning of company secretary is defined under Section 2 (24) of Companies Act, 2013: "Secretary means a company secretary defined under Section 2(1)(c) of Companies Act,1980"
Now as per Section 2(1)(c), Company Secretary is a person who is a member of Institute of Company Secretaries of India.
III. APPOINTMENT OF COMPANY SECRETARY
Appointment of a company secretary is made by certain class of companies on mandatory basis however other company may make an appointment of company secretary on voluntary basis in order to avoid any failure in compliance which can be very deliberating. A Company Secretary is appointed by the Company in accordance with Section 203 of CA,2013 and Rule8/8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
As per Rule 8: Appointment of a company secretary is made by every listed company and public company having paid up share capital of 10 Crore or more
As per Rule 8A: appointment of a company secretary is made by every company other than a company covered under Rule 8 having paid up share capital of % Crore or more is required to appoint a whole-time company secretary.
IN SHORT: Every Company (Public or Private) Having Paid Up Share Capital of 5 Crore or More Is Required To Appoint A Whole Time Company Secretary.
Appointment of Company Secretary in Bank:
As per the directions given by Reserve Bank of India: A company secretary is appointed by every Bank whether listed or otherwise on mandatory basis in their Board of Directors.
IV. PROCEDURE FOR APPOINTMENT OF COMPANY SECRETARY
Now that you are aware of what a "Company Secretary" is "Appointment of a Company Secretary is made by which Companies?" We may proceed to comprehend the detailed procedure of how a Company Secretary is appointed by the company.
1. Appointment of a company secretary is made by convening a Board Meeting after giving notice to all the directors of the Company as per Section 173 of Companies Act, 2013.
2. At the board meeting, place the proposal of appointment of company secretary with the details of the person finalized. Pass a resolution of appointment of company secretary thereby approving the terms and conditions of his appointment.
3. Once the Company Secretary is appointed, the company must file a return of â€˜Appointment of Company Secretaryâ€™ with the Registrar of Companies (ROC) in FORM DIR-12 within 30 days from the date on which company secretary is appointed by the company.
4. FORM MGT-14 is also required to be filed along with such fees as is specified under Companies (Registration of Offices and Fees) Rules, 2014.
5. Once a particular whole-time company secretary is appointed by the company, such Company Secretary shall be barred from holding the office of â€˜Whole Time CSâ€™ in any other company.
Exception: The company secretary so appointed in the holding company may hold the office of CS in its subsidiary company at the same time.
6. Make entries in the register of directors and key managerial personnel under section 170 of Companies Act,2013
7. Inform the stock exchange where the company is listed.
Company Secretary is covered in the definition of Key Managerial Personnel as per Section 2(51) of CA, 2013. Since, key managerial personnel are included in related party as defined in Section 2(76) of the companies act 2013, please verify whether the company secretary so appointed is involved in any related party transactions within the provisions of Section 188 of Companies Act, 2013. If yes, then comply with the requirements in this regard.
V. PROCEDURE FOR REMOVAL OF COMPANY SECRETARY/RESIGNATION BY COMPANY SECRETARY
Similar to how the company secretary is appointed by the company; the board of directors may decide to end his employment by passing a resolution at a board meeting. The board may record the termination in accordance with the earlier terms and conditions under which the initial appointment of a company secretary is made by the company.
1. Convene a board meeting after giving notice to all the directors of the company as per section 173 of Companies Act, 2013. Place the matter of removal/resignation of the Company Secretary and pass a resolution to the effect.
2. File form DIR-12 in electronic mode within 30 days with the registrar of companies together with the requisite filing fees. Evidence of cessation (for example resignation letter) is an optional attachment.
3. Inform the stock exchange where the company is listed.
4. Make entries in the register maintained for recording the particulars of Company Secretaries under Section 170.
5. Issue a general public notice, if it is so warranted, according to size and nature of the Company.
6. The resulting vacancy shall be filled up by the board at a meeting of the board of directors of the company within a period of six months from the date of such vacancy.
VI. PENAL PROVISION RELATING TO FAILURE IN APPOINTMENT OF COMPANY SECRETARY [SECTION 203 OF COMPANIES ACT, 2013]
If any company makes any default in complying with the provisions of Section 203 related to appointment of KMP in Company, then
1. Company shall be liable to a penalty of 5 Lakh Rupees; AND
2. Every Director and Key Managerial Personnel of the Company who is in default shall be liable to a penalty of Rs. 50,000
In case, the default is continuing in nature, then a further penalty of Rs. 1,000/- for each day after the first during which such default continues but not exceeding 5 Lakh Rupees.Â