Company Secretary: Qualification, Appointment, Position, Rights, Liabilities and Dismissal
10/07/2020Qualification of Company Secretary
A company secretary needs to be multi-skilled as he has to perform duties that are, complex in nature and wide in scope. He should have the qualification and qualities to act efficiently presented below:
- Educational Qualifications
- Professional Qualifications
- Personal Qualities
- Educational qualifications of company secretary
- A company secretary has to deal with many people of name and fame. So he must have higher education for better understanding.
- He represents the company to the outside world and therefore he should have language proficiency to be well conversant.
- He should be updated with wide general knowledge relevant to run the company activities.
- Professional qualifications of company secretary
- A company secretary requires specialized knowledge of secretarial practice to deal with notice, agenda, resolution, minutes of a meeting. He must know about office correspondence for communication.
- A company secretary must have sufficient knowledge of companies Act, Industrial & Commercial law, and the law of income tax, stamp Act, Accounting principles, and rules of Securities and Exchange Commission (SEC) to deal with legal and statutory affairs.
- A company secretary should have a better understanding of money and capital market, foreign exchange and socio-economic conditions to deal with trading and financing.
- He requires proper knowledge to work with a computer for document preservation and future use of data or information.
- To maintain a good relationship with all stakeholders a company secretary should have knowledge of human relations.
- Personal qualities of company secretary
A company secretary is a high profile officer and therefore he should be a person to have below qualities:
- Honesty & Integrity
- Loyalty and courtesy
- Punctuality
- Tactfulness and cautiousness
- Sense of discipline and responsibility
- Professional minded
Process of Appointment of Company Secretary under the Companies Act 2013
- Call for a Board meeting. The notice for this meeting must include that appointment of Company Secretary is to be discussed, as per the Companies Act 2013. The Terms and Conditions of such an appointment. Along with the other matters that are to be discussed during that meeting.
- The person proposed to be appointed as the Company Secretary is required to give his consent in writing.
- Once the Board Resolution is cleared, a Form MGT-14 is to be filed within 30 days of the passing of Board Resolution along with the CTC and Consent Letter.
- In the case of listed companies, inform the Stock Exchange, where the shares of the company are listed, that such a board meeting is going to take place. This must be done prior to the date when this meeting is to be held.
- Update this Stock Exchange, within 15 minutes of the board meeting closure, about the result. This is to be done by mail or fax.
- The details about the appointed Company Secretary must be filed with the relevant Registrar of Companies (ROC) within 30 days of the appointment. Form DIR-12 is the appropriate form to File ROC Compliance in this regard.
- Pay the fees as applicable with the Form DIR-12.
- Enter the requisite details in the Register of Directors or Secretaries.
Mandatory Appointment
The Companies Act makes it compulsory for all listed companies and other companies with a paid-up share capital of Rs. 5 crores or more to appoint a specified list of full-time Key Managerial Personnel (KMP), which includes a Company Secretary. The following KMPs should be a part of its ranks:
- Managing Director/Chief Executive Officer/Manager (and in their absence, a whole-time director).
- Company Secretary
- Chief Financial Officer (CFO)
Position of Company Secretary
Our company Act 1994 does not define the legal status or position of the company secretary. However various decisions of the court and role-play of the company secretary provide the below matters as the legal status of the company secretary:
- Secretary is an officer
According to section 2(ii) of the company Act 1994, a Company secretary is an officer of the company. He supervises all ministerial and administrative activities. He performs every correspondence on behalf of a company. So, he is a responsible officer of the company.
- Secretary is a servant
A company secretary performs all duties as per authority given by the board. He can exercise such power only which is delegated to him. Therefore he is a servant of the company.
- Secretary is an advisor
The company secretary gives important advice to the board of directors and supplies relevant information or data required to make a policy of the company. Also, he advises on time-bound changes to cope with current socio-economic challenges.
- Secretary is co-ordination
He coordinates the activities of various departments and units and keeps liaison with the directors, staff and other stockholders of the company.
- Secretary is an administrator
A company secretary is considered as the chief administrative officer, of the company. He regularly makes representation and enters into” contracts on behalf of the company. He is solely responsible for the board of directors for the smooth running of the office work.
- Secretary is an agent
A company secretary is also regarded as an agent of the company as he signs a contract on behalf of the company.
Rights of Company Secretary
- Firstly, he can supervise, control and he can direct subordinate officers and employee.
- Secondly, he can sign and authenticate the proceeding of meetings.
- He has a right to blow the whistle whenever he finds necessary.
- He can attend the meetings of the shareholders and the Board of Directors.
- He can sign any contract/agreement on behalf of the company.
- Lastly, at the time of liquidation, he can claim his dues like a creditor.
Liabilities of Company Secretary
Liabilities of Company Secretary differentiate into two categories
- Statutory liabilities
A company secretary is legally bound to the following liabilities:
- Register all files and documents of the company.
- Arrange a statutory meeting and preparing the statutory report and submit it to the Registrar of the joint-stock company in due time.
- Arrange an annual general meeting in due time.
- Sending notice of the meeting to the participant.
- Writing minutes of various meetings and maintaining minute books.
- Supplying a relevant copy of minutes to the shareholders.
- Directors, shareholders, and debenture holder’s registrar maintaining.
- Submitting/financial statements of the Company to the Registrar of Joint Stock Company.
- Issuing share certificates, dividend warrant, and bonus share certificates to the shareholders.
- Deducting income tax from the employee salary and pay a dividend to the shareholders.
- Appointing company auditor and arranging an audit of books of account of the company.
- Never enter into any contract or distribute any share and debenture until the board of directors authorizes it. Also never take any loan in the name of the company.
- Submitting income tax returns and ensures the use of required company seal and stamp.
- Contractual liabilities
Such liabilities arise from his service contract made with the company. Which are given below:-
- Abide by all terms and conditions of the service contract.
- Follow the order instructions and act as per the authorization of the board of directors.
- Maintain secrecy of the company affairs.
- Perform duties with due care and skills.
- Never act beyond his authority and not to make any secret profit through any illegal activity.
Removal or Dismissal of Company Secretary
A company secretary has a great role in every stage of company formation. But a company need to dismissal a secretary some time. They are mainly accountable for the professional management of a company, in relation to ensuring observance with constitutional and authoritarian requirements and ensuring that the Board decisions are efficiently implemented. We are going to describe those reasons for dismissal of a company secretary. He can be removed by giving the due notice in writing or compensation in lieu thereof.
A company secretary can be dismissed or removed by the board of directors in the following circumstances:
- On the ground of disqualification
A company secretary is an employee of the company. He is generally appointed for a certain period. Employee-Employer affiliation exists between a company secretary and the company. Whenever a person is appointed as company secretary, an employer-employee relationship exists between him and the company. If the board of directors is not satisfied with the work of the secretary, they can terminate him subject to serving a written notice to the secretary as is mentioned in the contract of service. If the board of directors is not pleased with the performance of the company secretary, they can eliminate him giving prior written notice.
- On the charge with irregularities
A company secretary may be dismissed without notice if he is charged with willful disobedience, misconduct, moral turpitude, negligence of duties, permanent disabilities, etc. A company secretary can be fired at any time without any prior written notice if he has been proved:
- As a fraud
- To break the code of conduct
- To have moral erosion
- To neglect duties intentionally
- To have permanent inability
- Lack of confidence and interpersonal skill
- On the ground of winding up of the company
At the time of winding up of the company, the company secretary will be discharged as like as other employees of the company. During winding up of a company, the company secretary is discharged like other employees. An employee-employer relationship exists between a company secretary and the company. If the board of directors is not satisfied with the performance of the company secretary, they can remove him from giving prior written notice. If winding up takes place before the termination of the fixed term, he can argue compensation for the break of contract.
- Convene Board Meeting
After giving become aware of to all directors, a Board Meeting should be convened in order to take decisions of removing the accessible Company Secretary. If company secretaries are named in the Articles of Association it also needs to be altered.
- Intimate the Secretary
The Secretary to be removed shall be intimated concerning Board decisions & should be asked to give a demonstration to the Board within 15 days of intimation Convene Board Meeting 2nd Time.
- End of the contract of the company secretary
A company secretary is selected for a permanent term. If the board of directors does not renovate the agreement then his agreement ends up routinely.
[…] VIEW […]
[…] VIEW […]