In today's scenario, where technology, Artificial Intelligence is at its peak, the importance of Corporate Governance gaining for creating a Trust & Confidence among all the stakeholders is also increasing. The downside of technology is the massive no. of frauds which further leads to the adoption of high-level compliance functions and monitoring mechanisms in every organization.
Let's now take a look at the role of a Company Secretary for creating the required compliance environment in an organization for its Long term + Sustainable development.
COMPANY SECRETARY ROLE AS PER COMPANIES ACT
As per Section 205 of the Companies Act, 2013, Company Secretary is entrusted with the following functions-
(a) to report to the Board about compliance with the provisions of this Act, the rules made thereunder;
(b) to ensure that the company complies with the applicable secretarial standards;
As per the rule, the following duties has been entrusted-
• to provide to the directors of the company, collectively and individually, such guidance as they may require, with regard to 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 represent before various regulators, and other authorities under the Act in connection with the discharge of various duties under 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; and
• to discharge such other duties as have been specified under the Act or rules; and • such other duties as may be assigned by the Board from time to time.
COMPLIANCE OFFICER AS PER SEBI
(1) A listed entity shall appoint a qualified company secretary as the compliance officer.
(2) The compliance officer of the listed entity shall be responsible for:
• ensuring conformity with the regulatory provisions applicable to the listed entity in letter and spirit;
• co-ordination with and reporting to the Board recognized stock exchange(s) and depositories with respect to compliance with rules, regulations and other directives of these authorities in a manner as specified from time to time.
• ensuring that the correct procedures have been followed that would result in the correctness, authenticity and comprehensiveness of the information, statements and reports filed by the listed entity under these regulations.
• monitoring email address of grievance redressal division as designated by the listed entity for the purpose of registering complaints by investors.
COMPLIANCE OFFICER AS PER RBI
To bring the effective compliance culture, independent corporate compliance function and a strong compliance risk management programme at bank and group level, RBI has issued guidelines on Compliance functions in banks and Role of Chief Compliance Officer (CCO) in order to bring uniformity in approach followed by different banks.
Duties and Responsibilities of the Compliance Function
• To apprise the Board and senior management on regulations, rules and standards and any further developments.
• To provide clarification on any compliance-related issues.
• To conduct an assessment of the compliance risk (at least once a year) and to develop a risk-oriented activity plan for compliance assessment. The activity plan should be submitted to the ACB for approval and be made available to the internal audit.
• To report promptly to the Board / ACB / MD & CEO about any major changes/observations relating to the compliance risk.
• To periodically report on compliance failures/breaches to the Board/ACB and circulating to the concerned functional heads.
• To monitor and periodically test compliance by performing sufficient and representative compliance testing. The results of the compliance testing should be placed on Board/ACB/MD & CEO.
• To examine sustenance of compliance as an integral part of compliance testing and annual compliance assessment exercise.
• To ensure compliance of Supervisory observations made by RBI and/or any other directions in both letter and spirit in a time-bound and sustainable manner.
A question generally arises - what is the exact expectation from the Compliance Officer as different groups/departments in the organization are responsible to ensure compliance to different statutory requirements. RBI has clarified the same by mentioning adherence to applicable statutory provisions and regulations needs to be the responsibility of each staff member of the Organization and it is the work of the compliance officer to ensure the same. The compliance officer may be responsible for monitoring compliance with the regulations, internal policies and procedures and reporting to Management. The concerned departments would hold the prime responsibility for their respective areas, which should be clearly outlined, while compliance officer would need to ensure overall oversight.
The above-mentioned clarity issued by RBI has given light on defining the clear-cut role of a Compliance Officer in any Organization.
The best practices Company Secretary may follow:
- Drafting of compliance checklist for all department based on internal and external policies and requirement;
- Taking the periodical Certificate of Compliance from all the Departments;
- Drafting the various Policies and Procedure and ensure the compliance of the same in a true spirit;
- Surprise audit of the different departments on their status of Compliance;
- Communicate the Law, Policies, Rules and Regulation from the low to top-level Management;
- Update time to time Responsible Officers w.r.t. any changes occurred in between.
The Company Secretary has a vital role to play in this Modern era and we have to go an extra mile to enhance further the quality and standards of professionalism. Going ahead of oversight of compliance and taking up all activities to strictly ensure adherence to statutory requirements – would be the role of a Company Secretary. A combination of both the activities to balance the law.
The Institute is taking a step ahead with every passing day to improve the quality of the professional and we as professionals under Institute should hold on to the same by putting efforts in the same direction.
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