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
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
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