Unit 4

Company Secretary
Definition of a Company Secretary:
A Company Secretary means “a person who is a member of the Institute of
Company Secretaries of India”. [Sec. 2 (i) (c) of the Company Secretaries Act, 1980],
According to Section 2(45) of the Companies Act, 1956, “Secretary means any
individual possessing the prescribed qualifications, appointed to perform the duties
which may be performed by a secretary under this Act and any other ministerial or
administrative duties”.
Qualifications of the Secretary:
Since the amendment of the Companies Act in 1994, only a person having
prescribed qualifications can be appointed secretary of a company. Apart from the
statutory qualifications, he should also have other qualifications as may be necessary
to conduct the affairs of the company.
Statutory Qualifications:
According to Section 2(45) of the Companies Act, as amended in 1994, a
Company Secretary must possess the qualifications prescribed by the Central Govt.
from time to time.
a) In case of a company having a paid-up share capital of Rs. 50 lakhs or more, the
Secretary must be a member of the Institute of Company Secretaries of India
incorporated under the Companies Act, and licensed under Sec. 25 of that Act.
A person who is a member of the Institute of Chartered Secretaries of London
shall also be eligible for appointment as Secretary of such a company.
b) In the case of any other company, one or more of the following qualifications
shall have to be possessed by the Secretary:
i. Qualifications specified in clause (a) above;
ii. A degree in law granted by any university.
iii. Membership of the Institute of Chartered Accountants of India.
iv. Membership of the Institute of Cost and Works Accountants of India.
v. A post-graduate degree or diploma in Management granted by any
university or the Indian Institute of Management.
vi. A post-graduate degree is Commerce granted by any university.
 vii. A diploma in Company Law granted by any Indian Law Institute.
Other Qualifications:
In order to be a Company Secretary, statutory qualifications are not enough.
A Company Secretary should also possess the following special qualifications:
1. Knowledge of Company Law:
The Secretary must know the detailed provisions of the Companies Act and its
implications. He must have knowledge of the rules of meetings.
2. Knowledge of Mercantile Law:
Most of the companies carry on their business as mercantile firms and have to
act according to different provisions of Mercantile Law including the Contract Act,
Sale of Goods Act, Negotiable Instruments Act, MRTP Act, Insurance Act etc.
The company also faces problems of labour, trademarks, patents, copyrights
and so on. Therefore, the Secretary must have a sound knowledge of Labour Laws,
Factories Act, ESI Act, Mercantile Laws and Patent, Copyright and Trade Mark Laws.
3. Knowledge of Economics:
In order to handle economic problems of the company, the Secretary should
have a sound knowledge of Economics—theoretical and practical—general money
market, capital market and financial institutions.
4. General Knowledge:
The Secretary must have a sound general knowledge. He must have thorough
acquaintance with social, political and economic conditions of the country.
5. Smarter with High IQ:
The Secretary must be smart, unbiased, and must have high IQ, presence of
mind and amiable personality.

Appointment:
a) The First Secretary of a company is generally appointed by promoters and
his name may be mentioned in the Articles of Association.
b) If the First Secretary is appointed subsequently, it has to be done by the
Board of Directors by passing a resolution in their meeting.
c) The terms and conditions of appointment should be mentioned in the
resolution of the Board meeting.
 d) A Director may also be appointed as a Secretary.
e) Every list company under companies act must have a full-time company
secretary.
f) Every Unlisted company having share capital of 5 crore or more must also
have a full-time company secretary.
g) A company secretary is not allowed to hold office in more than one
company.
h) The position of company secretary must not be vacant for more than 6
months. If the default continues the company will be fined from Rs 1 lakh
to 5 lakh.

Dismissal:
The Secretary is a servant of the company and his dismissal is governed by the
normal law applicable to master and servant. The Secretary can ordinarily be
dismissed by the Board of Directors. He may be removed in the following manner:
i. By giving a written notice;
ii. On the expiry of the tenure of service;
iii. In such manner as prescribed by the Articles of Association of the
company.
The Secretary may also be removed without notice for:
i. Willful misconduct;
ii. Willful disobedience to order of the manner;
iii. Negligence of duty;
iv. Permanent disability; and
v. Moral turpitude.
Duties of the Company Secretary:
Duties of the Company Secretary may be discussed under two headings.
(i) Statutory Duties and
(ii) General Duties.
1.Statutory Duties:
According to Companies Act:
The Companies Act has specified the following duties of the Company Secretary
a. To sign documents and proceedings requiring authentications by
the company
b. To deliver registration and return of allotment to the registrar.
c. To give notice to registrar for increase in the share capital.
d. To deliver share certificate of allotment on within 2 months after
transfer.
e. To make entry for register of members of the share warrant.
f. To send the annual return.
g. To make statutory declaration for receiving certificate of
commencement.
h. To send notice of general meeting to every member of the company.
i. To make statutory books.
j. To sign every balance sheet and P&L a/c in case of non- banking
financial company.
k. To prepare minutes of every general meeting and board meeting
within 30 days.
l. To file a resolution with the registrar.

According to IT Act:
According to Indian Stamp Act:

According to Other Act:

2.General Duties:

Rights and Liabilities of the Company Secretary:

Rights of a Company Secretary emanate from the Companies Act on the one
hand and his service contract on the other. Rights which emanate from the
Companies Act are known as statutory rights and rights which emanate from his
service contract are known as contractual rights.
Rights of the Company Secretary
a. As the head of the secretarial department, the Secretary has the right to
control, direct and supervise the activities of the department.
b. As the principal executive officer of the company the Secretary has the
right to sign documents which require authentication of the company.
c. The Secretary has the right to get remuneration from the Company. As an
officer of the company he has the right to claim two months’ salary as a
preferential creditor at the time of winding-up of the company.
 d. The Secretary has the right to claim damages and compensation when his
service is terminated before the expiry of his terms as per service
contract.
e. The Secretary has the right to inspect the books maintained by the
secretarial department.
Liabilities:
Liabilities of a Company Secretary emanate from various statutes and service
contracts. The Secretary has two sets of liabilities—statutory liabilities and
contractual liabilities.
Statutory Liabilities:
The Company Secretary may be held liable for many penalties under the
Companies Act if he makes any default in complying with its provisions.
The Company Secretary may be held liable for:
1) Default in holding Statutory Meeting and filing and circulating the Statutory Re-
port to the Registrar of Companies and members of the company;
2) Default in holding the Annual General Meeting of the Company;
3) Failure to give due notice of Board Meetings;
4) Failure to record the minutes of the Board and General Meetings;
5) Failure to maintain Director ‘Members’ and Debenture holders’ Registers and
Index;
6) Failure in registering resolutions and agreements which need to be registered;
7) Failure to make entries in the register of members on the issue of a share war-
rant;
8) Default in filing with the Registrar particulars of any change created by the
company;
9) Failure to file with the Registrar copies of the annual Balance Sheet, Profit and
Loss Account, annual returns, statements, certificates, etc.;
10) Failure in circulating resolutions for which members have given notice;
11) Failure in delivering share certificates, debentures etc. within 3 months of
the date of allotment and within 2 months of the application for registration of
transfer of shares;
 12) Failure in painting or affixing the name of the company outside every
office and place of business;
13) Non-compliance with the provisions of the Act relating to the appointment
of auditors, audit of accounts and auditor’s report;
14) Like any officer of the company, the Secretary will be punishable with
imprisonment for falsifying the books of the company and making willfully and
knowingly a material false statement in the Balance Sheet, or, in certain
returns, reports, certificates or other documents of the company.
Under the Income Tax Act, the Company Secretary is liable for:
1. Failure to deduct income tax from salaries of employees at source;
2. Failure to deduct income tax from dividend payable to shareholders;
3. Failure to deposit tax deducted at source to the Income Tax Authority;
4. Failure to pay corporate tax in time.
Under the Stamp Act, the Company Secretary is liable for:
1. Failure to verify whether the requisite stamps are affixed to various documents.
Under the Registration Act, the Company Secretary is liable for:
1. Non-compliance with the rules and procedures of registration.
2. Non-payment of registration charges under the MRTP, FERA, Shops and
Establishment Act. The Secretary may incur personal liability for default of any
provision of the respective Acts.
Contractual Liabilities:
The Company Secretary also has certain liabilities arising out of his contract of
service with the company for
1. Disclosure of official secrets;
2. Acts done beyond the limits of his authority;
3. Acts of omission and commission in violation of the rules and fraud in course of
employment;
4. Making breach of trust;
5. Discharging duties without reasonable care and skill.
Role of Secretary Before, After and At the Meetings:
The Secretary of the company has to deal with all kinds of meetings of the
company. There are different types of company meetings—Statutory Meeting, Annual
General Meeting, Board Meeting, Extraordinary General Meeting, meeting of
debenture holders etc. In all these cases, the Secretary has to arrange for everything
in connection with the meeting.
The Role of the Secretary can be discussed under three stages:
(i) Before the meeting.
(ii) At the meeting.
(iii) After the meeting.
Role of Secretary before the Meeting:
a. To fix up the date of the meeting in consultation with the Chairman;
b. To prepare the agenda of the meeting;
c. To issue notices to the members entitled to attend the meeting;
d. To arrange for convening the meeting;
e. To append the proxy forms;
f. To send the notice of holding the Annual General Meeting to the auditors of the
company;
g. To draft and circulate the Director’s Report, Statutory Report and Chairman’s
speech.
Role of Secretary at the Meeting:
a. To record the attendance in the Attendance Register;
b. To distribute relevant papers and documents amongst the members;
c. To read out the notice of the meeting and the minutes of the last meeting;
d. To read out the Audit Report, the Director’s Report or any other report in the
meeting;
e. To help the Chairman in conducting the meeting smoothly;
f. To take notes of the proceedings of the meeting;
g. To draft the resolutions.
Role of Secretary after the Meeting:
As soon as the meeting is over, he should draft the proceedings of the meeting
and get them signed by the Chairman.
a. He should arrange to file the Statutory Report, Annual Returns along with
Director’s Report and Audit Report (in case of AGM) with the Registrar of
Companies.
b. If any special resolution is adopted, a copy of such resolution should be filed
with the Registrar of Companies.
c. He has to execute decisions of the meeting.
d. He has to send press reports for publication.
e. Lastly, he has to arrange for refreshments for members immediately after the
meeting.