Definition: Company Secretary (CS) refers to an individual who is a member of ICSI and possesses the requisite qualifications as stated under the law. His/Her position in the organizational hierarchy is pivotal. A CS occupies a high status and position in an organization. To be specific, his/her position is almost equivalent to managing director or general manager.
The company appoints a CS to perform such duties that the Companies Act prescribes in this regard. He/She is responsible for performing the secretarial work.
In short, a Company Secretary is a connecting thread between the company and:
- Board of Directors (BOD)
- External parties like creditors, suppliers, debtors, etc.
Moreover, the CS makes certain the procedures of the board are duly complied with. Also, he/she reviews them at timely intervals. Further, a CS advises the Chairman and Directors on responsibilities under different laws.
The Institute of Company Secretaries of India (ICSI) is among the top professional body in the country. It is set up under the Company Secretaries Act, 1980 of Parliament. It works under the Ministry of Corporate Affairs (MCA), Government of India. This institute is set up with the aim of developing and regulating the profession of the Companies Secretary.
The headquarters of the institute is in New Delhi. In addition, it has four Regional Councils in New Delhi, Mumbai, Chennai and Kolkata. Also, it has 69 Chapters present across the nation.
Functions of Company Secretary
Functions that a CS performs cover:
- Maintenance of books and registers as per the requirements of the Company’s Act
- Issue of Share Certificates
- Certification of Meetings
- Organizing and attending meetings
- Drafting minutes
Points to Note
- The company can appoint only an individual as a CS. This means that no firm or body corporate can be appointed as a Company Secretary.
- He must have the prescribed qualifications. By ‘prescribed qualification‘ we mean the individual must be:
- Graduate in any discipline and
- Member of ICSI.
- He/She is a whole-time officer of the company.
- A CS needs to follow all the duties that the Companies Act sets down in this regard.
- He/she must undertake all the ministerial and administrative duties which are delegated to him/her.
All the companies with paid-up share capital of ₹ 25 lakhs or above must appoint a whole-time secretary. Such a company can also appoint their director as a secretary. But for this, it requires prior approval of the company through a special resolution. Here, one should note that if a company has only two directors, none of them can become a secretary. Also, an individual can hold the office of a secretary only in one such company.
What about the companies having paid-up share capital of less than ₹ 25 lakhs?
Well, for such companies it is not mandatory to appoint a company secretary. Nevertheless, practically every company appoints a company secretary. For this purpose, the company must include a provision in the Articles of Association (AOA) of the company.
Who appoints the first secretary?
The promoters of the company appoint the first secretary of the company. He/She is the one who assists in performing the preliminary work, regarding the formation of the company. The name of the first secretary is added to the Articles of Association of the company as pro-tem secretary. The term ‘pro-tem secretary‘ means secretary for the time being.
Because the appointment of the pro-tem secretary is made before the incorporation of the company, the secretary gets the confirmation of the appointment at the first board meeting held after the incorporation. To appoint the secretary, the board passes a resolution at the meeting. After that he/she enters into a fresh contract with the company.
The contract of service between the company and the secretary contains the terms and conditions. Besides, it states the following:
- Date of Agreement
- Appointment duration
- Nature of Appointment
- Salary and Grade
- Notice period for resignation
Removal or Dismissal
As the appointment of the company secretary requires the passing of a resolution by the Board of Directors, the company’s Board or Managing Director can remove the company secretary if he/she has the authority for the same. Also, the company’s AOA comprises provisions which empower the board for dismissal or removal. The contract of service usually covers the manner in which the secretary can be removed.
Moreover, the common law which applies to the relationship between master and service governs the removal of the secretary. Further, the company must issue a notice as per the terms and conditions of the employment.
However, the removal of a secretary is also possible without prior notice, in the cases of:
- Permanent Disability
Further, on termination of the services of the secretary, the company needs to submit a notification to the Registrar of Companies. The filing of notification should be in the stipulated form within a period of 30 days from termination.
Who is a practising Company Secretary?
On the completion of the CS course from the ICSI, an individual has two alternatives:
- He/She can join a company as a secretary by accepting full-time employment or
- He/She may opt for independent practice. A CS can do so individually or in partnership, with one or more such members of the institute in practice or with the members of ICAI or ICMAI, i.e. practising CA or CMA.
Therefore, we could say that a practising company secretary is an individual who opts for independent practice, after completion of the course.
A word from Business Jargons
All in all, a Company Secretary is an executive officer of the company who holds a higher position and undertakes onerous and responsible tasks.