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COMPANY SECRETARIES

SECTION 383A OF THE COMPANIES ACT

Introduction

A Company Secretary may in simple terms be defined as ‘amateur’ advocate. Albeit not in real terms is a Company Secretary an ‘amateur’ but the importance lies in the fact that he performs the role of an advocate in a company in ‘commercial sense’. Invariably, the general perception of an advocate is that he/she takes the side of law and do not think in business sense. However, a Company Secretary gives a different dimension. He/she may be considered as a lawyer in commercial sense whose primary job is to help the Directors to carry on business within legal realms framed.

We’ll understand a little more about this under the following two heads:

In the eyes of Law

General perspective

Appointment of Company Secretary Even though table A of Schedule I to the Companies Act provides that the Board may appoint the Company Secretary and in the event the Board appoints so, only the Board can remove him, neither the Companies Act, 1956 nor the regulations concerning Company Secretaries provide the modus operandi of Company Secretary’s appointment. (So the question as to whether it is the company or the Board that has the authority/ responsibility to appoint the CS remains open to interpretation). However, given the importance that law places on Company Secretaries as well as the role being played, it is ideal that a Company Secretary is appointed by the Board of Directors. Since, it is not compulsory that a Board Meeting has to be held for such appointment, a resolution passed by circulation is equally valid. This is reiterated by the Secretarial Standards issued by the Institute of Company Secretaries of India. Section 383A of the Companies Act can be considered as a stepping stone to the Professional growth however it is left to the Professionals themselves to cement their place in this dynamic Corporate World.

What holds Company Secretary a unique to the Professional realm? As indicated above, Company Secretary is an advocate in commercial sense. Given his knowledge of accounting and taxation aspects as well, he/she helps in filling the vacuum of financial literacy in explaining certain aspects to the Board, which the members of the Board not necessarily be aware of. The uniqueness of a Company Secretary is his/her knowledge of various vicissitudes to the dynamic needs of business besides the capability to handle any situations, and his unique position in that he deals with the Board of Directors more than any other non-director officer of the company, and has the responsibility to sign the financials of the Company, along with the .Directors So where does the corporate stands in utilizing the services of Company Secretary? Company Secretaries are still being dealt with as ‘Cost Centre’ whose primary responsibility is being restricted to ensure compliance with Companies Act as well as Listing Agreement with Stock Exchanges. However, there are companies which are able to make better utilization of their services and reap better benefits therefrom in terms of quality of compliances as well as profit making. It is important to educate the people associated with the Company Secretaries position to understand their real worth and for Company Secretaries themselves to elevate their stature from a mere law administrator.