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Appointment of Company Secretary in a Private Limited Company

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A Company Secretary is considered to be one of the important key managerial personnel (KMP) under the Companies Act 2013. The CS, being an officially recognised corporate officer, performs an important function in maintaining the organisation’s adherence to legal, regulatory and procedural standards through effective corporate governance and compliance. It is this role that contributes essentially to making the company’s operations transparent, accountable and trustworthy.

The Companies Act 2013 requires the incorporation of a company secretary in certain classes of companies, namely listed entities and public firms, at specified levels. As a KMP, the CS ensures liaison between the board of directors, shareholders and the regulatory bodies. Among such duties are the preparation of board meeting agendas, maintenance of statutory records, returns and the board’s general legal and compliance advice.

Beyond providing an assurance of compliance, the CS contributes to strategic decision-making, risk management and corporate social responsibility-related activities. By building a strong framework of governance, a CS protects the organisation from legal battles but also contributes toward improving the reputation of the organisation among its stakeholders. Such a role of a compliance officer and a strategic advisor bears testament to the importance of the CS in the corporate landscape.

Who is a Company Secretary and Which Companies Need to Appoint a Company Secretary?

Section 2(24) of the Companies Act 2013 provides that a company secretary or a secretary means a company secretary as defined in Section 2(1)(c) of the Company Secretaries Act, 1980.

As per Section 2(1)(c) of the Company Secretaries Act, 1980, “company secretary means a person who is a member of the Institute of Company Secretaries of India (ICSI)”.

A CS of a company is an efficient, qualified secretary who supervises and assures all aspects, keeping them legally and regularly guided under proper corporate governance guidelines. According to the Companies Act 2013, the liaison work is entrusted by a CS who ensures direct linkage with board members, shareholders, and even with the authorities or the concerned departmental offices at a high and central level of hierarchy for managing different duties entrusted. He provides legal and commercial support while ensuring that the memorandum and articles of association of the company, as well as other applicable laws, are adhered to. It is important to note that the role of a CS is crucial in addressing compliance and governance concerns.

In India, the appointment of a Company Secretary (CS) is governed by the provisions made in the Companies Act of 2013 and the rules and regulations that follow. The need to appoint a CS depends on the classification of the company.

Certain types of companies are specifically required to appoint a full-time Company Secretary as Key Managerial Personnel (KMP):

  1. Listed Companies: Every listed entity is obligated to appoint a full-time Company Secretary.
  2. Other Public Companies: Public companies, other than the listed companies, with a paid-up share capital of ₹10 crore or more shall have a Company Secretary.
  3. Private Companies: Private bodies with a paid-up share capital of ₹10 crore or more shall also have a full-time Company Secretary.

Failure to meet such criteria will require a company to appoint a Company Secretary qualified to assume office within six months of the existence of the vacancy. The CS must always be a member of the Institute of Company Secretaries of India, ICSI.

Non-compliance with the appointment of a CS may invite penalties under the Act, which may attract fines to be imposed on the company and its officers.

Appointment Of a Company Secretary in Private Limited Companies

The appointment of a Company Secretary is governed by Section 203 of the Companies Act of 2013, along with the applicable rules. In the case of private companies that have a paid-up share capital of ₹10 crore or more, the appointment of a Company Secretary is not only a legal requirement but also an important step towards improving corporate governance. Following the procedures in this document will ensure compliance by the company and enhance operational efficiency.

The preliminary and most important step is to validate the candidate’s qualifications. As it is one of the criteria for appointment as the Company Secretary that he is an Associate/Fellow member of ICSI, the membership status and Membership Number of this individual so chosen shall be correctly checked.

  1. Board Approval: The appointment should be approved by the Board of Directors. The proposal for the selection of the Company Secretary should be included in the agenda for the board meeting.
  2. Passing the Board Resolution: In the board meeting, the appointed CS will be formally approved by the directors. The terms and conditions of the appointment will also be detailed.
  3. Handing the Appointment Letter: The company will issue a formal appointment letter to the chosen candidate, detailing his role, terms and conditions.
  4. Notification to the Registrar of Companies (ROC): The company must send Form DIR-12 to the Registrar of Companies (ROC) within 30 days of the appointment. The submission of Form DIR-12 should be accompanied by a copy of the Board Resolution. A consent letter from the individual being appointed is also required. If relevant, an appointment letter should be attached.
  5. Updating Statutory Registers: The company should update its register of directors and key management personnel to capture the details of the Company Secretary as provided by Section 170(1) of the Act.
  6. Inclusion in the Board Report: The appointment of the Company Secretary should be presented in the company’s annual report.

Upon appointment, the Company Secretary shall ensure that the company complies with all the applicable provisions of the Companies Act 2013. The responsibility includes the maintenance of statutory registrations and records. The necessary documents and returns are to be filed with the ROC by the company secretary. Furthermore, the Company Secretary advises the Board on matters of governance and regulatory compliance.

Failure to appoint a Company Secretary when required may attract penalties under Section 203(5). The company shall be liable to a fine of up to ₹5 lakh. Defaulting officers may also be liable for a penalty of up to ₹50,000, along with ₹1,000 for every day of continued default.

Role and Significance of a Company Secretary in Private Companies

The Company Secretary has a very critical role in private companies, serving as a compliance officer, governance expert, and strategic consultant. This post is relevant because the company must comply with its legal and regulatory requirements but, at the same time, demonstrate high corporate governance standards. With private firms, a Company Secretary is more than a traditional compliance officer; they are a trusted advisor who helps in the well-functioning of a company, manages risk, and builds its reputation. It helps private organisations navigate the complexity of regulatory environments and sustainable growth.

  1. Compliance Officer: The company secretary adheres to the Companies Act, 2013, and other relevant laws (tax, labour, SEBI regulations) and prepares and records in the statutory form, returns and reports to the Registrar of Companies, including Forms AOC-4, MGT-7 and DIR-12. He maintains the statutory books of members and directors, which include the lists of directors or key management.
  2. Corporate Governance Facilitator: A company Secretary helps the Board of Directors at the best in corporate governance by providing information based on best global practices. Organising board, general and committee meetings according to the legal provisions is also part of his duties, along with providing drafts and true copies of the meeting notice, agenda, resolutions and minutes.
  3. Legal Advisor: He provides legal advisory on agreements, contracts, and corporate practices and helps the company not to violate any terms of the Memorandum of Association (MOA) and Articles of Association (AOA).
  4. Custodian of Records: He guards vital documents such as incorporation certificates, share certificates, and financial statements.
  5. Risk Mitigation: The company secretary identifies legal and compliance issues, takes preventive action, and ensures effective operations by managing regulatory filings and documents to prevent legal interruptions.
  6. Growth Enabler: He facilitates the growth of companies by capital formation, restructuring and diversification.
  7. Startup Support and MSMEs: A CS helps private businesses expand and grow by ensuring compliance with regulations, securing investment, and providing guidance on governance.
  8. Directors’ Interests: A company secretary ensures that directors and management perform their statutory commitments and reduce personal liability.

Conclusion

The appointment of a Company Secretary (CS) in a private company is statutorily required for certain types of businesses and is a strategic decision to ensure efficient management. Under the Companies Act 2013, a private limited company with a paid-up share capital of ₹10 crore or more is required to have a full-time CS. Besides fulfilling legal obligations, the CS is expected to ensure that the organisation operates within legal parameters, maintains transparency and upholds high standards of corporate governance.

The need for a CS has emerged from the growing complexity of regulatory environments and the need for risk management in the modern business world. The CS acts as a liaison for the company, between its stakeholders, and regulatory bodies, ensuring prompt compliance, protecting its reputation and reducing the danger of penalties. In private businesses, where resources would be more meagre compared to large corporations, the CS will play a great role in legal compliance, financial structuring and corporate decision-making.

The role of a CS includes providing advisory services on law matters, compliance, governance facilitation and providing strategic support that renders them the essential elements to support the company in its growth and sustainability. Lastly, the CS becomes more than a compliance officer because they serve as a trusted advisor who fosters business ethics and leads to the sustainable success of the organisation in the long term.

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About author
I am a qualified Company Secretary with a Bachelors in Law as well as Commerce. With my 5 years of experience in Legal & Secretarial. Have a knack for reading, writing and telling stories. I am creative and I love cooking. Travel is my go-to for peace and happiness.
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