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End of CS?

Max Payne (employed) (2574 Points)

24 August 2009

Dear Friends,

I came to know that in the new companies amendment bill, there is no equivalent or corresponding provision for Section 383A.. No compulsory appointment of a CS.

I also came to know that CAs, MDs, and advocates are now empowered to sign lot of documents..

Please share your knowledge here in this matter. What does it open up for CAs and what has been shut down for Company secretaries?

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8 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 24 August 2009

Hi Gopal,

Your observation is correct. But there is nothing to worry as far as profession is concerned. Reason being todays corporate environment is so complex regarding legal issues and various laws that it is simply not possible to continue your business without a Law professional like CS.

But i am sure this is gonna be a big issue in coming times...

So don't worry & just carry on...All the Best

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K S Kiran (Computer Software) (114 Points)
Replied 24 August 2009

Dear Gopal..

In Companies Bill 2009, concept of KMP was introduced and Company Secretary is one of them alongwith MD and CFO. So virtually it is an appreciating fact for the profession...

Kanchi Agarwal (Technical Support & Student) (479 Points)
Replied 25 August 2009

Originally posted by :K Siva Kiran
"	Dear Gopal.. In Companies Bill 2009, concept of KMP was introduced and Company Secretary is one of them alongwith MD and CFO. So virtually it is an appreciating fact for the profession...	"

We should see the positive side of it...

Sarabjeet Kaur (CS) (196 Points)
Replied 25 August 2009

Dear All,

I also agree wid Mr. Gopal. It is true that concept of KMP is introduced in newly proposed Companies Bill, 2009. My view is that our institute should take steps for protecting the interests of all the Members which are in employment. I belong to Chandigarh. Here the scope of CS is not much as compared to Delhi and Mumbai, as there is very less number of Companies whose paid up capital is more than Rs. 5 Crores. If that mandatory requirement is also not there then I doubt that Companies would employ any Company Secretaries rather they will designate CA, CEO , CFO or MD as KMP and there purpose will solve...

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 25 August 2009

Dear All,

Under Companies Bill, 2009 the Concept of KMP is introduced and as per bill Company Secretary is required to be appointed as under:-

“Key Managerial Personnel (KMP), in relation to a company, means—

(i) the Managing Director, the Chief Executive Officer or the Manager and where there is no Managing Director or Manager, a whole-time director or directors;

(ii) the Company Secretary; and

(iii) the Chief Financial Officer;” [clause 2(zza) .

Every company belonging to such class or descriptttion of companies as may be prescribed shall have Whole-Time Key Managerial Personnel. [clause 178 (1)] .

Every Company Secretary being a KMP shall be appointed by a resolution of the Board which shall contain the terms and conditions of appointment ncluding the remuneration. If any vacancy in the office of KMP is created, the same shall be filled up by the Board at a meeting of the Board within a period of six months from the date of such vacancy. [clause 178 (2) & (4)] .

If a company does not appoint a Company Secretary, the penalty proposed is : On company – one lakh rupees On every director and KMP who is in default – 25,000 rupees for each such default.

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Max Payne (employed) (2574 Points)
Replied 25 August 2009

Dear Friends,

espiecially Ankur Srivastava Sir,

“Key Managerial Personnel (KMP), in relation to a company, means—

(i) the Managing Director, the Chief Executive Officer or the Manager and where there is no Managing Director or Manager, a whole-time director or directors;

(ii) the Company Secretary; and

(iii) the Chief Financial Officer;” [clause 2(zza) .

"Every company belonging to such class or descriptttttion of companies as may be prescribed shall have Whole-Time Key Managerial Personnel. [clause 178 (1)] ."

Yes that is precisely what all my confusion is about. Has the company secretary's status been relegated?

The provision is to have full time KMPs, not CS per se. The Company secretary's role is being equated with CFO? What does an MBA from IIM or Harvard have anything to do with secretarial compliances???

Also rumours that the companies having 25 crores as paid up capital and reserves shall only be required to appoint a whole time CS.... Thats 25,00,00,000. How many companies in India have a balance sheet as big...??? What happens when we see leveraged capital structures???

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CS MD Osman Akthar (Company Secretary & CA(Final)) (78 Points)
Replied 08 September 2009

Dear Frnzzz,

There will be no end to CS prof,,,

1. Key ManagerialPersonnel (Clause 178)

(a) Definition

As per clause 178, every company belonging to such class or descripttion of companies as may be prescribed shall have Whole-Time Key Managerial Personnel (KMP).

A Company Secretary is a KMP, as defined in clause 2(zza):

Clause 2 (zza) -

“Key Managerial Personnel, in relation to a company, means—

(i) the Managing Director, the Chief Executive Officer or the Manager and where there is no Managing Director or Manager, a whole-time director or directors;

(ii) the Company Secretary; and

(iii) the Chief Financial Officer;”

This means, a Company Secretary has been recognized as a Key Managerial Personnelalong with the Chief Executive Officer and Chief Financial Officer and is required to be appointed in every company belonging to such class or descripttion of companies as may be prescribed.

No qualification has been prescribed for appointment of CFO whereas for appointment as a Company Secretary, the person has to be a Member of the Institute of Company Secretaries of India.

(b) Manner of Appointment

Every Company Secretary being a Key Managerial Personnel is to be appointed by a resolution of the Board which shall contain the terms and conditions of appointment including the remuneration.

(c) Vacancy

If any vacancy in the office of Key Managerial Personnel is created, the same shall be filled up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.

(d) Defence

The defences available at present under section 383A of the Companies Act, 1956 for non-appointment of a Company Secretary have been done away with.

(e) Penalty

If a company does not appoint a Company Secretary, the penalty proposed is :

On company – one lakh rupees

On every director and KMP who is in default – 25,000 rupees for each such default.

2. Annual Return (Clause 82)

The scope of Annual Return has been widened. It now includes, besides the existing disclosures, the disclosures related to Corporate Governance practices in the company as well as certification of compliances and disclosures. Further the Annual Return of every company is now required to be signed by a Director and a Company Secretary, or where there is no Company Secretary, by a Company Secretary in whole-time practice.

It means that the annual return of every company, whether private or public, listed or unlisted, (except one person and small companies), will be required to be signed by either Company Secretary in employment or the Company Secretary in practice.

In case of listed companies and companies having such paid-up capital and turnover as may be prescribed, the Annual Return is also to be signed by a Company Secretary in whole-time practice certifying that the annual return states the facts correctly and adequately and that the company has complied with all the provisions of the Act, in the prescribed form.

It means, that in case of a listed company, even if the Annual Return is signed by the Company Secretary in employment of the Company, it will further be required to be signed by the Company Secretary in whole-time practice. Also, in case of a company having such paid-up capital and turnover as may be prescribed even if the company is not listed, the Annual Return will also be required to be signed by the Company Secretary in whole-time practice. Further the Company Secretary in whole-time practice will not only certify that the annual return states the facts correctly and adequately but also that the company has complied with all the provisions of the Act i.e. give a compliance certificate.

In relation to a One Person Company and Small Company, the annual return is to be signed by the Company Secretary, or where there is no Company Secretary, by one director of the company.

Clause 82(2) provides that an extract of the Annual Return shall form part of Board’s Report.

3. Recognition to Secretarial Standards (Clause 107)

Clause 107 of the Companies Bill makes it mandatory for every company to observe such Secretarial Standards as may be prescribed with respect to General and Board Meetings.

If implies that due processes as laid down in the Secretarial Standards will have to be followed thereby enhancing the role of Company Secretaries.

4. Report on General Meetings (Clause 109)

Every listed public company shall prepare in the prescribed manner a report on each Annual General Meeting which shall be filed with the Registrar within 30 days of the conclusion of the AGM.

For the first time, the concept of Report on AGM has been introduced in respect of listed public companies which enhances the role of Company Secretaries whether in employment or in practice.

5. Registered Valuers [Clause 219(2)]

Company Secretaries along with other professionals have been recognized for being appointed as registered valuers.

6. Appointment as Administrator (Clause 234)

Company Secretaries along with other professionals have been recognized for being appointed as Interim/Company Administrator from the panel to be maintained by the Central Government, in respect of rehabilitation of revival and sick companies.

7. Company Liquidators (Clause 250)

Company Secretaries have been recognized to be appointed as Provisional Liquidator or the Company Liquidator, from a panel to be maintained by the Central Government.

8. Professional assistance to Company Liquidator (Clause 266)

The Company Liquidator may, with the sanction of the Tribunal, appoint one or more professionals including Company Secretaries to assist him in the performance of his duties and functions under the Act.

9. Qualifications of Tribunal (Clause 370)

A Company Secretary in practice is eligible to become a Technical Member of National Company law Tribunal, if he is practising for at least twenty years.

10. Adjudication of penalties (Clause 413)

Clause 413 provides for appointment of adjudicating officers for adjudging penalty under the provisions of Companies Bill. The adjudicating officer shall have power by an order to impose penalty on the company and the officer who is in default for non-compliance or default after giving a reasonable opportunity of being heard. Any person aggrieved by an order will have a right to prefer an appeal to the Regional Director.

This would greatly enhance role of Company Secretaries both in employment as well as in practice as they would be called upon to represent the companies before the Registrar/Regional Director in such matters.

11. Enhancement of Penalties

The Companies Bill, 2009 has proposed enhanced penalties with maximum and minimum quantum of penalty for each offence with deterrence for repeated defaults. This would result in better compliance of law by companies through more and more reliance on services of professionals like Company Secretaries.

12. Duties and Liabilities of Directors

The role and responsibility of the directors are proposed to be specifically laid down. With the duties and responsibilities specifically attached to them, the directors would look forward to the advice and assistance of professionals like Company Secretaries in the discharge of their duties.

13. Enhanced Disclosures

To promote good governance, detailed disclosures are contemplated under the Act, for compliance of which the companies would look forward to professionals including Company Secretaries.

14. Insolvency, Rehabilitation, Liquidation and Winding Up

Revised framework for regulation of mergers and amalgamations, insolvency, rehabilitation, liquidation and winding up of companies offers great scope for Companies Secretaries not only to act as liquidator/administ rator but also to represent the various stakeholders before the Tribunal.