Meaning of Company Secretary
According to the Companies Act, a company secretary means a company secretary as defined in sec 2(1)(c) of the company secretaries Act, 1980, who is appointed by a company to perform the functions of a company secretary under this Act (sec 2(24)).
According to sec 2(1)(c) of the companies secretaries Act 1980 “company secretary means a person who is a member of the Institute of company secretaries of India”
Thus, company secretary means an individual who is a member of the institute of company secretaries of India/ICSI and is appointed to perform the function of a company secretary under the companies Act.
A company secretary is an important organ of a company who performs various ministerial and administrative duties. It is mandatory for every company having a paid up share capital of 5 crore or more to appoint full-time company secretary who is member of Institute of company secretaries of India.
Appointment of Company Secretary
Section 2(24), 203, 204 of the companies act state the provisions regarding appointment of company secretary, which are as follows:
- Only a individual who is a member of Institute of company secretaries of India can be appointed as a company secretary.
- Every listed company under the companies act must have a full-time company secretary.
- Every Unlisted Company having a paid-up capital of 5 crore or more must also have a full-time secretary.
- Every Private company having a paid-up capital of 5 crore or more must also have a full-time secretary.
- A company Secretary is appointed by the resolution of the board.
- A company secretary is entitled to become the director of the company with the prior permission of the board.
- A company secretary is not allowed to hold office in more than one company.
- The position of Company Secretary must not be vacant for more than 6 months.
- In case of Default in complying with the above provisions the company shall be fined ranging from Rs. 1 – 5 Lakh
Duties of Company Secretary
The Company Secretary is an employee of a company and he must perform his duties with reasonable care. He may be dismissed on the grounds of disobeying, misconduct or permanent disability.
Statutory Duties of Company Secretary
According to company Act –
- To sign documents and proceedings requiring authentication by the company.
- To deliver registration and return of allotment to the Registrar
- To give notice to registrar for increase in the share capital
- To deliver share certificate of allotment on within 2 months after transfer
- To make entry for register of members of the share warrant
- To send annual return
- To make a statutory declaration for receiving certificate of commencement of business
- To send notice of general meeting to every member of the company
- To make statutory books
- To sign every balance sheet and P/L account in case of a non-banking financial company
- To prepare minutes of every General Meeting and Board Meeting within 30 days
- To file a resolution with the registrar
According to I T Act –
- To ensure proper income tax is deducted at source from the salary of employees
- To see that the certificate of TDS is issued
- To ensure that the tax deducted is deposited to government treasury
- To submit and verify various forms and returns
Under Indian Stamp Act –
To see that the documents like letter of allotment and share certificate etc. are properly stamped.
Under other Acts –
To Comply with other acts such as: FEMA, minimum Wages Act, Industrial dispute, Employee State Insurance Act etc.
General Duties of Company Secretary
- To comply with internal regulations and legislation
- Duty to disclose all information for inclusion in register of directors and secretary
- Duty to exercise due care and diligence
- To draft directors report
- Maintaining the statutory registers of the company
- Ensuring Board decisions are properly communicated
- Registration of share transfers and issuance of related share certificates
- Communicating with company shareholders
- Safe custody of company seal
- Certifying documents such as Certificate of Incorporation, Memorandum and Articles of Association
- Giving legal advice to Directors
- To act as an Information link
Liability of Company Secretary
It means that the Company Secretary will be liable as the officer in default for the non-compliance with the provisions of the company Act.
Liabilities of a company secretary can be classified into two categories-
1) Liabilities under the companies Act (Statutory Liabilities)
2) Contractual liabilities
Statutory liabilities of a Company Secretary
- Default in Complying with name requirements – Fine of Rs. 1000 every day during which the default continues that cannot exceed Rs. 1 Lakh.
- Default is filing the return on allotment – Fine Rs. 1000 every day during which the default continues or Rs. 1 lakh whichever is less
- Default in delivering Share Certificates/Debenture Certificates on time – Fine up to Rs. 5 lakh
- Default in filing annual return – Fine ranging from Rs. 50,000 to Rs. 5 lakh
- Default in holding Annual General Meeting – Fine up to Rs. 5000/- during which the default continues extending to Rs. 1 lakh
- Failure to record minutes of the meeting – Fine upto Rs. 500/-
- Default in providing the P/L and B/S at AGM – Fine of Rs. 25,00 extending up to Rs. 1 lakh or imprisonment up to 6 months or both
- Failure to provide notice about Board meeting – Fine upto Rs. 1000
- Failure to maintain the register of members – Fine Ranging from Rs. 50,000 to Rs. 3 Lakh
Contractual Liabilities of Company Secretary
- He is liable for any negligence on part of his duty. He may be dismissed.
- He must not do anything beyond his authority, if he does he will be personally liable for the loss
- He is under the obligation to not disclose any secret information about the company to outsiders
- He is liable for any secret profits made by him on account of his position
- If the Company Secretary commits any fraud, he must indemnify to the company for any loss occurred
Rights and Powers of Company Secretary
- He has the right to supervise and control the secretarial department of the company
- He has the right to issue share certificate of the company
- Being the principal officer he also has the right to sign official documents of the company
- He is empowered to perform all activities under various acts
- He has the right to be indemnified for any loss suffered by him in discharging his duties
Restrictions of Company Secretary
- He cannot enter into a contract on behalf of the company unless specifically authorised by the directors of the company
- He cannot borrow money in the name of the company
- He cannot call meetings which are related to 3rd parties
- He cannot acknowledge a debt against a suit against company
- He cannot register, transfer shares without the authority of Board of Directors