Roles and Responsibilities of a Company Secretary

In India, the position of a CS is highly significant and it is their basic role of how they perceive the principles of corporate governance and the laws governing it in relation to the company’s operations. However, at the same time, it also fosters effective communication and understanding among the board of directors, the management and the shareholders. The profession is governed by the Institute of Company Secretaries of India. It is entrusted with the authority to certify and promote the continuous professional development of Company Secretaries (CS) in India.

Increasing regulatory scrutiny and requirements on corporate governance in the public as well as private sectors are likely to demand a high level of qualified Company Secretaries in India.

Need for Appointment of Company Secretary Under Companies Act 2013 and Company Secretaries Act 1980

A company secretary is a key managerial person and the complexity in the legal and regulatory framework for Indian companies necessitates the appointment of a Company Secretary (CS). CS limits the legal risks of the company by adopting extreme care in observance of the provisions of the laws, including the Companies Act of 2013 and SEBI Rules. With growth, the role of a CS will be invaluable for strategic guidance on what to do or not to do, especially with regard to governance matters and a legitimate system of compliance with the law. Taking into consideration these facts and considering the incredible level at which the monitoring operations of companies in India are witnessing an increase, the CS makes it possible for companies to work strictly within the confines of the law without raising any doubts from other parties.

Section 2(24) of the Companies Act 2013 defines a company secretary as a company secretary, as defined under Section 2(1)(c) of the Company Secretaries Act, 1980.

Section 2(1)(c) of the Company Secretaries Act, 1980 provides that a company secretary means a person who is a member of the Institute of the Company Secretaries of India’.

Section 2(51) of the Companies Act 2013 defines key managerial personnel as –

(i) chief executive officer (CEO), manager or managing director (MD),

(ii) company secretary,

(iii) whole-time director,

(iv) Chief financial officer (CFO)

(v) such other officers designated by the Board of Directors as key managerial personnel but are not more than one level below the directors in whole-time employment and

(vi) such other officers as may be prescribed.

Section 203 of the Companies Act, 2013, read with Rule 8 and Rule 8A of the Companies (Appointment of Key Managerial Personnel) Rules, 2014, lays down the specific companies that are mandatorily required to appoint a company secretary as a key managerial person –

(i) all listed companies,

(ii) all other public companies with a paid-up share capital of ten crores or more,

(iii) all private limited companies with a paid-up share capital of ten crores or more and

(iv) all other unlisted companies with paid-up share capital of ten crores or more.

Different Roles of a Company Secretary

A Company Secretary in India plays a multi-faceted and important role that a visible impact is created on the legal structure of a company as well as on its ability to perform with operational efficiency. The CS shall have multifaceted responsibilities in key areas for seamless integration of compliance, governance, and management.

1. Compliance Officer

The most critical part of being a CS is ensuring that the company complies with all the relevant laws and regulations. This includes Companies Act, 2013, SEBI regulation applicable to listed companies, and several labor, tax, and other environmental acts. The CS here looks after the legal documents and has the annual returns submitted in time with statutory obligations for the company. This can attract heavy penalties and the CS is significantly involved in risk reduction by keeping the company within statutory and other legal limits.

2. Corporate Governance Advisor

The CS plays an important role in ensuring proper implementation of corporate governance in running the company, focusing on transparency and totally aligned with the stakeholders’ and shareholders’ interests. They ensure that governance practices are held at their highest levels of integrity through guidance offered to the board of directors and senior management on matters of ethical standards, revisions in regulations, and legal updates. This involvement safeguards the decisions of the company from being commercially infeasible, illegal, or unethical, hence going ahead to ensure the trustworthiness of its shareholders.

3. Stakeholder Relationship Manager

CS maintains relationships between the organisation and all the shareholders, regulatory authorities, audit firms, and other relevant stakeholders so that there is effective two-way communication between the company and its external environments. In respect of listed companies, they also ensure adherence to the listing regulations and disclosure by SEBI in the spread of information among the shareholders relating to significant events, including the publication of financial results, payment of dividends, and issues related to mergers and acquisitions. The CS also streamlines the process of convening the shareholders’ meeting through the prior sending of notices and passing of appropriate motions to protect the rights of shareholders.

4. Board Meetings Facilitator

“Boards of Directors must conduct board meetings, committee meetings, and general meetings of members.” This should be done by the Company Secretary (CS) since organizing board meetings, committee meetings, and general meetings of members forms one of his or her principal administrative functions. This comprises the agenda of meetings, notice of meetings, circulation of board papers, and most importantly, ensuring that she or he delivers anything legal and or strategic issues to the board and the board members have all the information they so desire. After attending the meetings, she or he will also be responsible for typing the minutes and safeguarding the documents in such a manner that all the decisions passed are valid. No abrogation of the laws takes place. The position ensures that all the directives given by the board are followed in letter and spirit and that all legal aspects and document secrecy relating to the company are maintained.

5. Legal Advisor

Most organizations orient the role of the CS as in-house legal counsel who provides internal legal services on various issues. These include issues such as advisory services on mergers and acquisitions, joint ventures and partnerships, corporate and organizational restructuring, share transfer agreements, and superintending contracts. The CS takes care of the enterprise that is operated in relation to the enterprise and, more specifically, to the exciting part – how all the commercial agreements and activity and corporate actions are carried out lawfully. They help, at the same time, harmonize the internal processes when there is a threat of dispute, litigation or arbitration to protect the assets of the organization.

6. Regulatory Expert

The Company Secretary ensures that the organization keeps itself up-to-date with all the new laws, policies, or judicial interpretations which may affect the organization’s business. Due to this monitoring of the environment for regulation, the company is already trained to cope with the legal changes, where the changes can be done in due course.

Duties and Responsibilities of a Company Secretary

A Company Secretary in India performs various functions conferred on him by different legal regimes and the way a company operates. He must fulfil the requirements of the law, enhance corporate governance, and ensure that businesses operate with the law to the T. Major laws defining the role of a CS include the Companies Act, 2013, various rules and regulations of the Securities and Exchange Board of India (SEBI), and other relevant industry-specific laws and guidelines. The following subsections highlight in detail the functions and powers of a Company Secretary in different statutes and in the corporate milieu, its different aspects:

1. Company Law

1. Compliance with legal obligations – The Company Secretary has the responsibility of ensuring that all the provisions of the Companies Act 2013 are complied with and all forms, annual returns, financial statements, etc., file with the Registrar of Companies (ROC).
2. Statutory registers – Updating and maintaining the statutory registers according to the jurisdiction, applicability and compliance of the company is an important responsibility of Company Secretary and these statutory registers include the Register of Members, Register of Directors, Register of Charges and Register of Contracts and Arrangements related with directors.
3. Conduct meetings – There are so many duties of company secretaries, one of which is the duty to give notice for board meetings, general meetings and committee meetings that are to take place, set the agenda and oversee the proceedings to ensure quorum and voting for is carried out in accordance with the provisions of the Companies Act, 2013.
4. Meeting minutes – Preparing the minutes of the most recent meeting held, the company secretary ought to be in charge of preparing and keeping every meeting record, as well as the minutes of the shareholders’ board committees and other shareholders’ meetings called for by regulation.
5. Documents certification – Furthermore, as spelt in section 88 of the Companies Act, powers are vested in a company secretary for authenticated copies of documents, resolutions, and forms which are submitted to the Registrar of Companies.
6. Corporate governance – A Company Secretary (CS) has to ensure that the organisation complies with the principles of corporate governance outlined in the Companies Act, including the control of the composition of the board, appointment of non-executive directors and work of board committees.
7. Annual returns – As required by Section 92, a CS shall also assist in the filing of annual return of the company, which shall be signed by the CS as he verifies the facts contained in the return and provisions of the Act.
8. Corporate Social Responsibility (CSR) – Company Secretaries are concerned with the effective implementation of CSR compliance including the setting up of a CSR committee and would monitor the CSR activities and its budget within the company.

2. Security Law

1. A Company Secretary (CS) under Listing Obligations and Disclosure Requirements (LODR) shall, besides the requirements imposed by SEBI regarding the timebound discharge of such disclosures before the stock exchanges related to price-sensitive information, financial results, board decisions and other material events.
2. Shareholder Communication: The CS would administer shareholder relationship management, raise issues for them, and comply with investment protection as mandated by SEBI.
3. Corporations Governance Information: SEBI directs the corporations to present such information regarding their corporate governance in the annual reports. The CS should ensure that the information regarding board composition and meetings, audit committee meetings as well as interaction with various stakeholders is complete and accurate.
4. Observation of Insider Trading Prohibition Regulations: The CS is ensured that the regulations of SEBI in terms of insider trading IC and the iregulation of market abuses are adhered to and there should be a code of insider trading, monitoring the functions of the relevant persons and have it prevent from the abuse of unpublished price sensitive information.

3. The Foreign Exchange Management Act, 1999 (FEMA):

1. Filing and Reporting – The Company Secretary has critical functions like expediting all submissions such as but not limited to the Annual Return on Foreign Liabilities and Assets and Form FC-GPR that deals with share application money received from foreign citizens along with respective officers.
2. RBI Compliance – CS helps to maintain vigil over the company’s activities relating to RBI regulation for FDI, ECB, and all other foreign exchange transactions.
3. Monitoring Investment – The CS is responsible for the collation of information and the maintenance of records relating to every foreign investment inflows and outflows from the company, with adherence to sectoral caps and other FDI regulations applicable to the company.

4. Labour Laws

1. Employment Contracts – The CS has employment contracts aligned with labour laws relating to all aspects of them, such as payment, working hours, and ends, and rights associated with the end.
2. Legal Filings – CS ensures that the company fulfills the requirements of ESI, PF, and Gratuity Acts by creating and keeping proper documents.
3. Health and Safety Compliance – The CS ensures that the organization is in compliance with proper legislation governing health and safety of workers, especially in sectors where such provisions cannot be ruled out.

5. Taxation Laws

1. Tax returns – CS makes sure the income tax returns, the returns for goods and service tax (GST) and the tax audit of the organization are filed well within the date.
2. TDS Compliance – The CS ensures that the organization is compliant with the tax deducted at source provisions and is geared with all of its TDS returns for filing purposes.
3. Advisory Role – CS’s often advise the management on tax planning so that the organization remains in compliance with the law but pays as little taxes as is legally possible.

6. Industry Specific Laws

Since the company secretary has to ensure that the statute of the Reserve Bank of India is followed, in the case of the banking sector, the practice has been regulated by the Insurance Regulatory and Development Authority in the case of insurance. Companies that choose to operate within their environmentally sensitive area have the notable responsibility of ensuring that they respect environmental laws like the Environmental Protection Act 1986 and several other acts, as well as regulations related to pollution control.

7. Duties within the company

1. As a Strategic Advisor – The company secretary is in a good position to advise the board of directors and the top management on matters related to corporate governance, law and compliance-related risks. These help the organizational leaders make effective strategic decisions.
2. Board Support – The Company Secretary plays appropriate roles by providing legal and governance expertise to the chambers which enhance the making of decisions in accordance with the laws and business objectives.
3. Risk Management – There is a legal risk of operations, contracts, and corporate activity exposures that a CS will help in identifying and mitigating. This involves giving comfort about the position of the company and working towards reducing the risk of litigation occurring.
4. Contract Management – It is the function of a Company Secretary to scrutinize and prepare a set of agreements containing various legal provisions by safeguarding the company from legal injustices.
5. Corporate Restructuring – For mergers, acquisitions, and other such activities, A Company Secretary will facilitate such activities to take place without a hiccup by fulfilling the statutory and other related compliance.

Conclusion

From merely being an administrative body, the role of the Company Secretary has come to a paradigm shift to become the strategic adviser in matters related to corporate governance and legal compliance. Their area of expertise ensures that the institutions run within the parameters of the law, which encourages fair play, and the confidence of the stakeholders is preserved. This increased regulation of Indian business systems has gradually made the role of the Company Secretary appreciated in relation to sorting out legal issues and improving systems of governance, thereby making it an important function in both private and public sectors.

A Company Secretary (CS) stands at the core of the legal structure and the corporate politics of any organization, and in such roles, they form an essential group in terms of the responsibilities for compliance and governance advisory. One of the important functions lies in the diversity of the legal environment, not only for decision-making but also in risk management and stakeholder relations. It’s quite a tough job, of course, especially with the growing emphasis on corporate governance and compliance with laws, regulations, and policies these days in India. Indeed, it has stretched the role of CS over the years and forms an integral part of the organization’s functioning today.