Role Of Company Secretary – CS Foundation Business Law Notes

Introduction:

  • The ICSI (Institute of Company Secretaries of India) is a premier national professional body established under an Act of Parliament namely the Company Secretaries Act, 1980.
  • Functions under the administrative control of the Ministry of Corporate Affairs, Government of India.
  • Has been set up to develop and regulate the profession of company secretaries.
  • It has headquarters in New Delhi and 4 regional Councils at Chennai, Kolkata, Mumbai, and New Delhi, and 68 Chapters spread all over India.
  • Has set up Centre for Corporate Governance, Research and Training (ICSI-CCGRT) at Navi Mumbai.
  • Conducts examination at 85 centers across the country and one overseas center in Dubai.
  • Company Secretaries are knowledgeable professionals who guide, advise the strategy maker of entities.
  • CS as a professional certifies and verifies the trustworthiness of the affairs of a corporation.
  • The skills and attributes of a good Company Secretary may include humanity humility, high intelligence, and understanding of agendas, negotiation, and resilience.
  • The professionals are required to demonstrate not only Intelligence Quotient (IQ) but also Emotional Quotient (EQ).

Role Company Secretary under Companies Act, 2013 Key Managerial Personnel:

  • Along with the Chief Executive Officer/Managing Director/Whole-time Director and Chief Financial Officer, “Company Secretary” has also been brought within the ambit of KMP giving them the long-deserved recognition of KMP of the company.

Companies Mandatorily Required to Appoint Key Managerial Personnel:

  • As per Section 203 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the following class of companies namely;
  • Every listed company.
  • Every other public company having a paid-up share capital of ₹ 10 crores or more.
  • Further, as per recently notified Rule 8A of the Companies Rule 2014, a company other than a company covered under rule 8 that has a paid-up( share capital of 5 crore rupees or more shall have a whole-time company secretary.

Functions of Company Secretary (Section 205):

  • to report to the Board about compliance with the provisions of this Act,
  • to ensure that the company complies with the applicable secretarial standards; and
  • to discharge such other duties as may be prescribed.

Duties of Company Secretaries

  • Act as a vital link between the company and its Board of Directors, Shareholders and Stakeholders, and Regulatory authorities.
  • Plays a key role in ensuring the Board procedures are followed by regularly revised.
  • Provides the board with guidance as to its duties responsibilities and power under various laws, rules, and regulations.
  • Act as a compliance officer.
  • Is an important member of the corporate management team and acts as conscience seeker of the company. The signing of Annual Return (Section 92):
  • The annual return is filled by CS and the director. In the case where no company secretary is appointed by the company, then by CS in practice. (OPC is an exception to it)
  • In the case of a listed company and other prescribed companies, even if the annual return is signed by Companies Secretary in Employment, it is further required to be certified by CS in Whole-Time Practice.

Role Of Company Secretary – CS Foundation Business Law Notes chapter 13 Img 1

  • This prescribed claim is under the Companies (Management and Administration) Rule, 2014.

Company Secretary in Practice
1. Secretarial Audit:

  • Every listed company and a company belonging to another class of companies are required to give a secretarial audit report, by a company secretary in practice.
  • As per the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014, the other class of companies shall be as under:
  • Every public company having a paid-up share capital of 50 crore rupees or more.
  • Every public company having a turnover of two hundred fifty crore rupees or more.

Act as Scrutinizer in E-voting:

  • Every company having not less than one thousand members shall provide to its member’s facility to exercise their right to vote on a resolution proposed to be considered at a general meeting by electronic means.
  1. Appointment as Administrator (Section 259)
  2. Company liquidators (Section 275)
  3. Professional assistance to company liquidator (Section 291)
  4. Qualification of Tribunal (Section 409)

Insolvency and Bankruptcy Code 2016:
Recognition of Company Secretary in practice to act as insolvency practitioner under the code.

Securities Laws:

  • Appearance before Securities Appellate Tribunal: Practicing Company Secretary has been authorized to appear as authorized representative before the Securities Appellate Tribunal (SAT) under SEBI Act, 1992 and Depositories Act, 1996.
  • Reconciliation of Share Capital Audit
  • Audit of Capital Market Intermediaries:
  • It is in this direction that SEBI has authorized practicing company secretaries to undertake internal audits of various capital market intermediaries.

Limited Liability Partnership Act, 2008:

  • The annual return of LLP having a turnover of more than 5 crore rupees.
  • Contribution of more than 50 lakh rupees shall be accompanied by a certificate from a Company Secretary in Practice. Rule 25(2) of LLP

Rules, 2009. Special Economic Zones Act & Rules, 2006

  • Company Secretary in Practice has been authorized to appear as authorized representative before the board. Rule 16 of SEZ Rule, 2006.

Telecom Regulatory Authority of India Act, 1997

  • Company Secretary in Practice has been authorized to appear as authorized representative before the Telecom Disputes Settlement and. & Appellate Tribunal.

Competition Act, 2002

  • Company Secretaries in Practice act as authorized representatives before the Competition Commission of India and Competition Appellate Tribunal.

Real Estate (Regulation and Development) Act, 2016

  • “Practising Companies Secretary” act as authorized representative before the Appellate Tribunal or the Regulatory Authority or the adjudicating officer.

Foreign Exchange Management Act, 1999

  • “Practising Companies Secretary” authorized to issue No objection tax clearance certificate regarding the transfer of capital contribution/profit shares of an limited liability partnership from resident to non¬resident/non-resident to the resident.

Multiple Choice Questions

Question 1.
Companies Secretary is defined under:
(a) clause (c) of sub-section (2) of Section 1 of the Company Secretaries Act, 1980.
(b) clause (c) of sub-section (1) of Section 2 of the Company Secretaries Act, 1980.
(c) clause (d) subsection (1) of Section 3 of the Company Act, 2013.
(d) None of the above.
Answer:
(b) clause (c) of sub-section (1) of Section 2 of the Company Secretaries Act, 1980.

Question 2.
The ICSI is a premier national professional body established under
(a) Act of Parliament
(b) Act of Central Government
(c) Companies Act, 2013
(d) Both (a) and (b)
Answer:
(a) Act of Parliament

Question 3.
Company Secretary is not the Key Managerial Personnel of the Company.
(a) False
(b) True
(c) Partly True
(d) Can’t Say
Answer:
(a) False

Question 4.
The ICSI functions under the administrative jurisdiction of
(a) Ministry of State Affair
(b) Central Government
(c) Ministry of Corporate Affair
(d) Both (b) and (c)
Answer:
(c) Ministry of Corporate Affair

Question 5.
The role of Company Secretary is :
(a) Arbitrator
(b) Lawyer
(c) Both (a) and (b)
(d) Can’t say
Answer:
(a) Arbitrator

Question 6.
Secretarial Audit is defined under:
(a) Section (204)
(b) Section 2 (31)
(c) Section (205)
(d) Section (208)
Answer:
(a) Section (204)

Question 7.
The secretarial Audit report should be prepared by
(a) Every listed company
(b) Every Public Company having a paid-up share capital of 50 crore rupees or more
(c) Every Public Company having a turnover of 250 crores or more
(d) All of the above
Answer:
(d) All of the above

Question 8.
The Role of Scrutinizer is played by
(a) Charted Accountant
(b) Companies Secretary in practice
(c) Advocate
(d) All of the above.
Answer:
(d) All of the above.

Question 9.
A Company Secretary in practice is not eligible to become a Technical Member of NCLT.
(a) True
(b) False
(c) Partly True
(d) Partly False
Answer:
(b) False

Question 10.
A practicing company secretary can be a member of NCLT if he is practicing for at least:
(a) 10 years
(b) 5 years
(c) 15 years
(d) 20 years.
Answer:
(c) 15 years

Question 11.
Company Secretary has been recognized to represent before various Regulators, and Authorities under which Act?
(a) SEBI Act, 1992
(b) LLP Act, 2008
(c) Telecom Regulatory Authority of Indian Act, 1997
(d) All of the above
Answer:
(d) All of the above

Question 12.
Power/duties of Auditors apply ______________ to Company Secretary in practice conducting secretarial audit.
(a) Matadis Mutandis
(b) Mutatis Mutandis
(c) Mutatis Mutants
(d) None of the above.
Answer:
(b) Mutatis Mutandis

Question 13.
Full form of SEBI:
(a) Securities and Exchange Board of India
(b) Shares and Exchange Board of India
(c) Securities and Employment Board of India
(d) Both (a) and (c)
Answer:
(a) Securities and Exchange Board of India

Question 14.
The vision of Institute of Company Secretaries Board of India is :
(a) To be a global leader in promoting good corporate governance
(b) To develop high caliber professionals facilitating good corporate governance.
(c) Speak the truth abide by the law.
(d) To lead the world.
Answer:
(a) To be a global leader in promoting good corporate governance

Question 15.
Companies Secretary is a :
(a) Solution Provider
(b) Business Manager
(c) Strategist
(d) All of the above.
Answer:
(d) All of the above.

Question 16.
Work of a Practicing Company Secretary is of:
(a) Secretarial Audit
(b) Pre-certification of e-form
(c) Duty to report fraud
(d) All of the above.
Answer:
(d) All of the above.

Question 17.
Stock exchange and every company shall provide the facility to its members to exercise right to vote if it has:
(a) not less than one thousand members
(b) not less than ten thousand members
(c) not more than one thousand members
(d) not more than ten thousand members.
Answer:
(a) not less than one thousand members

Question 18.
Function of Company Secretary is defined under:
(a) Section 205
(b) Section 2 sub-section (1) clause (c) of Companies Secretary Act, 1980.
(c) Both (a) and (b)
(d) None of these.
Answer:
(a) Section 205

Question 19.
The Abbreviation ‘BIFR’ with reference to Sick Companies in India means:
(a) Board for Indian Financial Reserves
(b) Board for Industrial and Financial Resources
(c) Board for Industrial and Financial Reconstruction
(d) Board for International Fund Reserve
Answer:
(c) The Abbreviation ‘BIFR’ which is related to Sick Companies in India means -Board for Industrial and Financial Reconstruction.

Question 20.
Functions of a Company Secretary to is defined under:
(a) Section 208
(b) Section 227
(c) Section 205
(d) Section 116
Answer:
(c) Functions of a company secretary are defined under Section 205 of the Companies Act, 2013.

Question 21.
Legal works of a company is done by:
(a) CS in practice
(b) CS in employment
(c) Advocate
(d) All of the above
Answer:
(d) In the functioning of business, which may relate to compliance of the law, ethical code of conduct sensitivity to the environment, etc. Company Secretary in practice, in employment, and advocate play, is a very important role in legal works.

Question 22. ____________ has authorised Practicising Company Secretary to undertake internal audit of various capital market intermediaries.
(a) SEBI
(b) Central Government
(c) Audit Committee
(d) Comptroller and Auditor General of India
Answer:
(a) SEBI (Stock Exchange Board of India) has authorized the Practicing Company Secretary to undertake internal audits of various capital market intermediaries.

Question 23.
Which act as a repository of all Digital Signature Certificate (DSC):
(a) MCA (Ministry of Corporate Affairs)
(b) Government
(c) Both ‘A’ and ‘B’
(d) Controller
Answer:
(d) Controller Act as a repository of all Digital Signature Certificate (DSC) as per Section 20 of Information Technology Act, 2000.

CS Foundation Business Environment and Law Notes