The Companies Act 2013 reiterated the need for a company secretary in both private and public companies. The responsibilities of the modern day company Secretaries have changed from that of simple note taker or administrative officer of the board to that of Board advisor or compliance officer. He is also have designated as the officer who have the responsibility for corporate governance.
The senior management including the Chairman and Board of directors relies on the company secretary to advice them not only on statutory duties under the law, corporate disclosures, exchange filings, SEBI compliances, FEMA compliances, RBI compliances and also compliances related to various laws, rules and regulations under state and central government. He is also responsible to for detailed compliances under corporate governance requirements, practices to ensure effective board processes.
A Company Secretary is considered to be a specialist in his domain and considered as a Key Managerial Personnel under Section 203 of the Companies Act 2013. Companies Act 2013 made it mandatory to appoint a company secretary for all companies with a paid up share capital of 10 crores or more. His appointment is also mandatory for every listed company under SEBI listing guidelines.
Statutory responsibilities
The Companies Act 2013, made it compulsory to appoint a company secretary as a key managerial personnel for every company which have paid up share capital of 10 crores or above. The provision does not make a different between different types of companies like public companies or private companies. This provisions clearly underlines the importance of the role of company secretary in the top management and in the decision making process. The Act also made it mandatory that the much of the compliance documentation need to be signed by a company secretary. Only an active member of the Institute of Company Secretaries of India can be appointed for the position of Company secretary.
If we look into various provisions of the Companies Act, 2013, SEBI Act and related regulations and various other legislations, it is clearly evident that the position of company secretary is more as of a compliance officer rather than an administrative officer. So for most of the violations made by the company in various compliances, the law make him as an officer in default. He is responsible or authorised to sign most of the statutory registers, filings with Registrar of companies, annual returns, issue of notices, proper keeping of statutory registers, providing proper facilities for inspection of documents and registers etc.
Corporate governance
In most of the discussions about the role of a company secretary, it is usually mentioned he as a compliances officer. But in reality, the role is more wide. He have the responsibility for developing and implementing good corporate governance processes in a corporate. A company secretary is considered to be right person who can advice the management in designing the best corporate governance practices, their implementation, keeping focused and also on evaluation of the effectiveness.
The board rooms facing lot of changes as the results of changing laws and of economic environments. The board look on to a company secretary to sharpen their skills and to avoid non compliances.
Governance at organisational level
Proper recording, documenting, safe keeping and communicating various corporate governance practices and arrangement in the company is the responsibility of a company secretary. A properly documented corporate governance best practices will help the board to have a clear view on the effectiveness of the corporate governance practices as well the need for timely updates. This will work as a tool to evaluate the effectiveness and also a tool for changes.
Supporting the Board
A company secretary is usually assigned with the duties of advicing the Chairman or Managing director on various governance matters who inturn will update that with the board.Together they should periodically review whether the Board and the company’s other governance processes are fit for purpose, and consider any improvements or initiatives that could strengthen the governance of the company. Frequent interaction with the board and the company secretary is vital for the company to have a robust governance system.
Board and committee processes
Companies Act 2013, makes it mandatory on some companies and advisory on all companies to have different committees of the board for the efficient management. These committees are made from specialist directors on their area, some of the examples are
Auditors committee
Remuneration and nomination committee
Corporate governance committee
Employee welfare committee, etc.
Company secretary plays a big role in ensuring that the committees are discharging their obligations and points of reference effectively and are documented properly. He support each and every committee with the information they need, documents they need and such other things they need to discharge their duties. He ensure the minutes are documented and the decisions are taken with proper information. This helps the directors to enhance the efficacy and efficiency in decision making.
Every directors have the full support of the Company Secretary for the efficient discharge of their responsibilities. He should keep a cordial professional relationship with the board, and , ensure impartial advice for the best interest of the company. He have a big role in the development of the company ensuring proper general meetings, board meetings, committee meetings etc and ensuring that the decisions taken at these meetings are properly documented and implemented. The role of company secretary is not just ending with documenting , he also need to ensure that the decisions are implemented by doing proper follow up and reporting.Further, the company secretary should take the lead in developing tailored induction plans for new directors and devising a training plan for individual directors and the Board. Although these tasks are ultimately the responsibility of the chairman, the company secretary can add value by fulfilling, or procuring the fulfilment of, these best practice governance requirements on behalf of the chairman.
Communication with stakeholders
Even if a company secretary is an officer of the company various stake holders looks on to him to ensure that the company is managed properly. Let it be shareholders, investors, lenders, financial institutions, etc., a company secretary act as a unique interface between them and the company. He plays an important role in the induction of a director also in the long term development of the board with continuous coaching and information updates. He is considered as the first point of contact between the outside world and the management.
Disclosure and reporting
In recent years there has been increased emphasis in the quality of corporate governance reporting and calls for increased transparency. The company secretary usually has responsibility for drafting the governance section of the company’s annual report and ensuring that all reports are made available to shareholders according to the relevant regulatory or listing requirements.
Increased burden of regulation
In the light of economic developments in recent years stakeholders of companies, particularly in the financial services sector, are increasingly concerned with the conduct of the affairs of the company and therefore it is essential that best practice is adhered to at all times and evidence is available to demonstrate same. In the recent past it is made obligatory for every company to get various documents pre certified by various professionals rather then reporting back by the authorities. This increases the requirement of higher standards in every activities of the company and company secretary have a big role to play in it. He ensure that the regulatory compliances are controlled and monitored properly with relevant obligations.
It is true to say that the role of the company secretary also includes keeping the Board informed of new legislation and how it applies to them. With this increased focus on corporate governance, the role of the company secretary has been extended such that the secretary is now seen as the guardian of the company’s compliance with legislative requirements and best practice.