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Role and need of company secretary under Companies Act 2013

Role and need of company secretary under Companies Act 2013

The present Companies Act has strengthened the role of company secretaries. Some of the key areas that have directly impact the role of company secretaries in employment or in practice due to this Act are as follows:

  1. Introduction of secretarial audit

Secretarial Audit is the process to check whether the company is adhering to the legal and procedural requirements and a process to monitor the company’s compliance with the requirements of the stated laws. The objective behind the introduction of secretarial audit is to improve corporate governance and compliance.

According to Section 204 of the Companies Act 2013, it is the duty of the Company Secretary in practice to perform secretarial audit of every listed company and any such other class of prescribed companies. The Central Government has prescribed the such other class of prescribed companies as-

  • Every public company with a paid-up share capital of Rs. 50 Crore or more.
  • Every public company with a turnover of Rs. 250 Crore or more.
  1. Secretarial standards

The objective behind the formulation of secretarial standards is to integrate, harmonize and standardization of diverse secretarial practices. The Companies Act, 2013 under Section 118 has made the compliance of Secretarial Standards compulsory on meeting of the Board of Directors and on general meetings.

  1. Annual return

Annual return is a comprehensive document contains information regarding share capital, directors, shareholders, changes in directorships etc about the company. Under the old Companies Act of 1956 the annual return of the listed companies are required to be signed by the company secretary in practice. The new Companies Act, 2013 under Section 92 has widened this requirement by providing that annual returns of companies having such paid up capital and turnover to be signed and certified by the company secretaries in practice.

  1. Appointment of whole-time key managerial personnel

Under Section 203 of the new Companies Act, 2013, the companies has to compulsorily appoint the whole time Key Managerial Personnel in respect of certain class of companies as prescribed by the Central Government to ensure good corporate governance and regulation. The company shall have the following whole-time Key Managerial Personnel (KMP):

  • Managing Director, or Chief Executive Officer or manager and in their absence, a whole-time director.
  • Company Secretary.
  • Chief Financial Officer.

So this made the appointment of whole-time Company Secretary mandatory for better efficiency.

  1. Functions of company secretary

According to Section 205 of the Companies Act, 2013 the Company Secretary shall discharge following functions and duties, this is the first time that the duties of the company secretary have been specified in the company law:

  • To report to the Board about the compliance with the provisions of this Act.
  • To ensure that the company complies with the applicable secretarial standards.
  • To provide to the directors of the company the guidance they require in discharging their duties, responsibilities and powers.
  • To facilitate the convening of meetings and attend Board, committee and general meetings and maintain the minutes of these meetings.
  • To obtain approvals from the Board, general meeting, the government and such other authorities as required under the provisions of the Act.
  • To assist the Board in the conduct of the affairs of the company.
  • To assist and advise the Board in ensuring good corporate governance and in complying with the corporate governance requirements and best practices.

Role and need of company secretary under Companies Act 2013

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