Company secretary

According to the Companies Act, 1956 sec2 “Secretary means an individual, firm or body corporate appointed to perform the duties which may be performed by a secretary under this Act and any other purely ministerial or administrative duties.”

A firm or even a company can act as the secretary of a company. In fact, the secretarial service in the modern set up of companies commences right from the times the documents are drafted for incorporating a company and ends only when the company goes out of its existence.

According to the Companies Act, a company secretary means a company secretary as defined in sec 2(1)(c) of the company secretaries Act, 1980, who is appointed by a company to perform the functions of a company secretary under this Act (sec 2(24)).

According to sec 2(1)(c) of the companies secretaries Act 1980 “company secretary means a person who is a member of the Institute of company secretaries of India”

Thus, company secretary means an individual who is a member of the Institute of company secretaries of India/ICSI and is appointed to perform the function of a company secretary under the Companies Act.

A company secretary is an important organ of a company who performs various ministerial and administrative duties. It is mandatory for every company having a paid-up share capital of 5 crores or more to appoint full-time company secretary who is the member of the Institute of company secretaries of India.

Appointment of Company Secretary

Section 2(24), 203, 204 of the companies act to state the provisions regarding the appointment of company secretary, which are as follows:

1. Only an individual who is a member of the Institute of company secretaries of India can be appointed as a company secretary.

2. Every listed company under the companies act must have a full-time company secretary.

3. Every Unlisted Company having a paid-up capital of 5 crores or more must also have a full-time secretary.

4. The private company has a paid-up capital of 5 crores or more must also have a full-time secretary.

5. A company Secretary is appointed by the resolution of the board.

6. A company secretary is entitled to become the director of the company with the prior permission of the board.

7. A company secretary is not allowed to hold office in more than one company.

8. The position of Company Secretary must not be vacant for more than 6 months.

9. In the case of Default in complying with the above provisions the company shall be fined ranging from Rs. 1 – 5 Lakh

Duties of Company Secretary:-

1) Statutory or Legal Duties:- Under the Companies Act 1956, he has to prepare and file the number of return, documents, notices, and statements with the Registrar of Joint-stock companies. He has to maintain a number of registers such as Register of Members, Register

2) Duties to the directors of the company:- A secretary being the servant of the directors has to look after the correspondence with directors, arranging board Meetings, Keeping minutes and executing the orders and instruction of the Board of Directors. In a company’s business, the secretary is in charge of ministerial and administrative functions while the directors are in charge of directors, control and management.

3) Duties to the Shareholder and the public:- The the secretary has to act as medium or communication between the director on one side and shareholders, creditors, and debentures holders on the other. The company communication through its secretary with the outside world. The secretary has to organize and supervise correspondence with shareholders. He has also to look after the interest and convenience of the share brokers and their clients and the requirements of the Stock Exchange.

4) Duties towards the office and the staff:- The secretary has to organize and the central office of the company. It is his duty to maintain the property, the statutory books, and a book of Accounts. He has to get this work done through his subordinates. Annual Reports of Directors and other special secretarial reports are prepared and brought out by the secretary. He has under him share department, correspondence department. Filling and records department, accounts and statistics department.

And other duties

Statutory Duties of Company Secretary

According to company Act –

· To sign documents and proceedings requiring authentication by the company.

· To deliver registration and return of allotment to the Registrar

· To give notice to the registrar for an increase in the share capital

· To deliver share certificate of allotment on within 2 months after the transfer

· To make an entry for register of members of the share warrant

· To send annual return

· To make a statutory declaration for receiving a certificate of commencement of business

· To send notice of general meeting to every member of the company

· To make statutory books

· To sign every balance sheet and P/L account in case of a non-banking financial company

· To prepare minutes of every General Meeting and Board Meeting within 30 days

· To file a resolution with the registrar

According to the IT Act –

· To ensure proper income tax is deducted at source from the salary of employees

· To see that the certificate of TDS is issued

· To ensure that the tax deducted is deposited to the government treasury

· To submit and verify various forms and returns

Under the Indian Stamp Act –

To see that the documents like a letter of allotment and share certificate etc. are properly stamped.

Under other Acts –

To Comply with other acts such as FEMA, the Minimum Wages Act, The industrial dispute, Employee State Insurance Act etc.

Liability of Company Secretary

It means that the Company Secretary will be liable as the officer in default for the non-compliance with the provisions of the Company Act.

Liabilities of a company secretary can be classified into two categories-

1) Liabilities under the Companies Act (Statutory Liabilities)

2) Contractual liabilities

Statutory liabilities of a Company Secretary

1. Default in Complying with name requirements – Fine of Rs. 1000 every day during which the default continues that cannot exceed Rs. 1 Lakh.

2. The default is filing the return on the allotment – Fine Rs. 1000 every day during which the default continues or Rs. 1 lakh whichever is less

3. Default in delivering Share Certificates/Debenture Certificates on time – Fine up to Rs. 5 lakh

4. Default in filing an annual return – Fine ranging from Rs. 50,000 to Rs. 5 lakh

5. Default in holding Annual General Meeting – Fine up to Rs. 5000/- during which the default continues extending to Rs. 1 lakh

6. Failure to record minutes of the meeting – Fine up to Rs. 500/-

7. Default in providing the P/L and B/S at AGM – Fine of Rs. 25,00 extending up to Rs. 1 lakh or imprisonment up to 6 months or both

8. Failure to provide notice about Board meeting – Fine up to Rs. 1000

9. Failure to maintain the register of members – Fine Ranging from Rs. 50,000 to Rs. 3 Lakh

Contractual Liabilities of Company Secretary

1. He is liable for any negligence on part of his duty. He may be dismissed.

2. He must not do anything beyond his authority, if he does he will be personally liable for the loss

3. He is under the obligation to not disclose any secret information about the company to outsiders

4. He is liable for any secret profits made by him on account of his position

5. If the Company Secretary commits any fraud, he must indemnify to the company for any loss occurred

Rights and Powers of Company Secretary

1. He has the right to supervise and control the secretarial department of the company

2. He has the right to issue share certificate of the company

3. Being the principal officer he also has the right to sign official documents of the company

4. He is empowered to perform all activities under various acts

5. He has the right to be indemnified for any loss suffered by him in discharging his duties

Restrictions of Company Secretary

1. He cannot enter into a contract on behalf of the company unless specifically authorized by the directors of the company

2. He cannot borrow money in the name of the company

3. He cannot call meetings which are related to 3rd parties

4. He cannot acknowledge a debt against a suit against the company

5. He cannot register, transfer shares without the authority of the Board of Directors

General Duties of Company Secretary

To comply with internal regulations and legislation
Duty to disclose all information for inclusion in the register of directors and secretary
Duty to exercise due care and diligence
To draft directors report
Maintaining the statutory registers of the company
Ensuring Board decisions are properly communicated
Registration of share transfers and issuance of related share certificates
Communicating with company shareholders
Safe custody of company seal
Certifying documents such as Certificate of Incorporation, Memorandum, and Articles of Association
Giving legal advice to Directors
To act as an Information link

Qualification of the company secretary:-

1) Sound General Education:- He should have a sound general education, good command over the English language, as also on some foreign languages as it will enable him to prepare and draft reports, resolution minutes and correspondence briefly, clearly and to the point.

2) Office Administration and Business Methods:- He should possess a sound practical knowledge of the rules regarding efficient office administration as also of different methods of filling, indexing, duplicating and the working of labor-saving devices and the ways of controlling the staff and apportioning the office work between them so that matters may be dealt with speedily.

3) Knowledge of Accounts and Finance:- He must be well versed in Book-keeping and Accountancy, the income-tax and practice and also must have the knowledge of preparing budgets and also the collection and proper presentation of statistics. He must also have knowledge of Modern Banking and Exchange and investment Markets.

4) Legal Knowledge

5) Knowledge of Trade

6) Good and Winning Personality

7) Wide Reading

Company Report

Meaning

Report writing is a technique of giving information to the shareholders regarding specific matters during a specific time. It is compulsory that directors, auditors have to give their report of during particulars years according to the Companies Act.

Definition:

1) According to Webster’s dictionary, to reports are, to give information obtained by investigation, it is a formal statement of the result of an investigation”

2) According to Jacobson, “Report writing is a formal statement of the result of an investigation on which definite information is made available by person instructed to do so.”

3) According to John Michell, “Report is a written statement of the facts of a situation projects processor tests.”

Kinds of Reports / Types of Reports / Classification of Reports

In Routine Reports

a) Factual Reports

b) Analytical Reports

c) Financial Reports

d) Progress Reports

Explain Types of Reports

1) Statutory Report: It is a report set out by a company before meeting giving necessary details regarding contracts entered by a company, financial transactions, management, issue of share etc.

The Statutory Reports must be sent all the member of a company, at least 21 days before the meeting.

The content of Statutory Reports

A ) The total number of share allotment, distinguishing those issued for cash and otherwise than cash, as well as details about partly paid shares, the extent to which they are so paid.

B) The total amount of cash received by the company in respect of the shares allotted.

C) An abstract of the Receipts and payment up to the date within seven days of the report and balance in hand.

D) The receipts of the company from shares and debentures and other sources.

F) Account or estimate of the preliminary expenses.

G) Any commission or discount paid or to be paid on the issue of shares or debentures.

H) The name, addresses, and occupations of the directors, auditors, managing directors or manager or secretary.

I) The particulars of any contract to be submitted to the meeting for approval etc.

Annual Reports

An annual report is prepared at the end of every financial year. it is prepared before the Annual General Meeting. This reports prepared by the directors. To prepare an annual report is compulsory as per the act. it is known as Director's report.

A secretary has to help directors in preparing these reports. A copy of the annual report is sent to every member 21 days prior along with the notice of the Annual General Meeting. It gives information about the progress made by the company during the financial year.