ROLE OF COMPANY SECRETARY Knowledge Workshop On “Understanding New Regime of Company Law in India”

INTRODUCTION  The new Companies Act, 2013 has strengthened the position of Company Secretary (CS) and has elevated the status as “Key Managerial Personnel”.  Besides ensuring compliances under various laws, CS has to assist the management in taking a total view of all issues arising in the company. CS is not merely a luxury for companies but a necessity for corporate governance and compliances.  The Act expects the CS to play a wider role in terms of guiding the activities of a company, in addition to certifying its compliance- oriented actions. “ Understanding New Regime of Company Law”

Key provisions having directly impact on the role of CS Key provisions having directly impact on the role of CS “ Understanding New Regime of Company Law” Signing of Annual Return Certification of Annual Return Section 92 - Annual Return Section Secretarial Standards Section Appointment of Whole-time Key Managerial Personnel Section Secretarial Audit ( a) Declaration of Compliance at the time of Incorporation (Section 7) (b) Professional Assistance to Company Liquidator (Section 291) (c)Qualifications of Members of NCLT (Section 409) (d) Appearance before NCLT (Section 432) (e) Others Other provisions KEY PROVISIONS

“ Understanding New Regime of Company Law” Annual Return Section 92 Every Company shall prepare annual return containing the particulars as they stood on the close of the Financial Year:  Registered Office and principal business activity  Particulars of holding, subsidiary and associate Companies  Shares, debentures and other securities and shareholding pattern  Indebtedness  Details of members and debentures holders along with changes therein during the year  Promoters, directors and key managerial persons along with changes therein during the year  Details of meeting of members or class thereof, board and its committees along with attendance detail  Remuneration of the directors and key managerial persons  Penalty or punishment imposed on the company, its directors or officers and details of compounding of offence and appeals made against such penalty or punishment, etc.  Details of Foreign Institutional Investors  Other matter as may be prescribed.

 Signing of Annual Return  Annual Return is required to be signed by a Director and the Company Secretary or where there is no company secretary, by a company secretary in practice.  Annual return of a small company and one person company shall be signed by the company secretary or where there is no company secretary, by the director of the company  Certification of Annual Return  The annual returns of Listed Company and a Company having paid-up share capital of Rs. 5 crore or more and turnover of Rs. 25 crore or more shall be certified by a Company Secretary in practice. The certification shall be to the effect that the company has complied with the provisions of the Act. “ Understanding New Regime of Company Law”

SECRETARIAL STANDARDS Section 118  Every company shall observe Secretarial Standards with respect to general and board meetings as specified by the ICSI and approved by the Central Government.  In case of contravention of this section, penalty for company and every officer of the company, who is in default, shall be Rs /- and Rs. 5000/- respectively. “ Understanding New Regime of Company Law”

 Every listed company and other company having a paid-up share capital of Rs.5 crore or more shall appoint the following :- (i) Managing Director, or Chief Executive Officer or Manager and in their absence, a whole-time director; (i) Managing Director, or Chief Executive Officer or Manager and in their absence, a whole-time director; (ii) Company Secretary; and (ii) Company Secretary; and (iii) Chief Financial Officer (iii) Chief Financial Officer  Every whole time key managerial person of a company shall be appointed by means of board resolution containing the terms and conditions of the appointment including the remuneration.  The clause also provides that whole-time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time.  For the Whole-time key managerial personnel holding office in more than one company as on the date of commencement of this act, a transitional period of 6 months has been provided, to opt for one company wherein he wishes to continue to hold as a KMP.  If the office of KMP is vacated, the resulting vacancy shall be filled at the meeting of the board, within a period of 6 months, from the date of such vacancy. “ Understanding New Regime of Company Law” Appointment of Whole-Time Key Managerial Personnel (Section 203)

PENALTY PROVISIONS  For the Company: Rs. 1 lac – 5 lacs  For Every Director and KMP of the company, who is in default:  fine which may extend to Rs. 50,000/-  and where the contravention is a continuing one: with a further fine which may extend to Rs. 1000/-for every day till the contravention continues. with a further fine which may extend to Rs. 1000/-for every day till the contravention continues. “ Understanding New Regime of Company Law”

SECRETARIAL AUDIT SECTION 204  Every listed company and every public company, having a paid-up share capital of Rs.100 crore or more, shall annex with its Board’s Report a “Secretarial Audit Report”, given by a Company Secretary in practice.  If any qualifications or observations or other remarks are made by the Company Secretary in practice, the Board shall provide explanation for the same in its report.  In case of contravention of this section,  a company or  any officer of the company or  the company secretary in practice will be subject to penalties prescribed under this Act. [ Fine which shall not be less than Rs.1 lakh but which may extend to Rs. 5 lakh ] “ Understanding New Regime of Company Law”

 Rationale behind Introducing Secretarial Audit: The introduction of Secretarial Audit proves that Government is committed to improved corporate compliance and governance. This provision highlights the enhanced role the company secretaries in practice are expected to play under the Act.  Functions of Company Secretary  To report to the Board about compliance with the provisions of this Act, the rules made there under and other laws applicable to the company;  To ensure that the company complies with the applicable secretarial standards;  To discharge such other duties as may be prescribed.

“ Understanding New Regime of Company Law” OTHER PROVISIONS Other provisions giving recognition to the CS in practice are: Other provisions giving recognition to the CS in practice are:  (a)Declaration of Compliance at the time of Incorporation (Section 7) A Company Secretary in practice engaged for the incorporation of a company shall be competent to give a declaration that all requirements of the Act and rules in respect of registration and the matters precedent or incidental thereto have been complied with.  (b)Professional Assistance to Company Liquidator (Section 291) With the sanction of the NCLT, the Company Liquidator may appoint one or more professionals, including Company Secretaries, to assist him in the performance of his duties and functions under the Act.  (c)Qualifications of Members of NCLT (Section 409) A Company Secretary in practice is eligible to become a Technical Member of National Company Law tribunal, if he/ she is in practice for at least fifteen years.  (d)Appearance before NCLT (Section 432) A party to any proceedings or appeal before the NCLT or the Appellate Tribunal may authorize amongst others, a Company Secretary, to present the case before the NCLT or the Appellate Tribunal, as the case may be.  (e)Others In addition to the areas listed above, Company Secretaries can also play a key role in the fields of Valuation, Corporate Restructuring, Winding Up and in certification of areas of Compliances specified in the Act.