Importance of Company Law and Role of Company Secretary in a Company
This article was last updated on 15 April 2020.
There have been considerable changes in Company Law in the last few years. And the changes have put more responsibility on the shoulders of Director. A Company has to comply with a lot of procedures as covered under Companies Act. Listing Agreement, SEBI Act and Regulations. Moreover, Corporate Governance is now actively being implemented in various corporate houses and is going to be compulsory by the Government in a phased manner.
It is essential that Directors are aware of existing, new proposed legislation and take the best advice on how to meet its requirements. Director must have access to the best advice on how to meet its requirements. This is important commercially as well as legally. For example, Directors should ensure the Articles of Association reflect not only the Law but also the Company’s needs and best practices. Director must also have the necessary technical assistance to cope with internal reorganizations, buyouts, mergers and acquisitions. Our role is not only to give constructive advice on matters of Company Law but also to ensure that routine but vitally important details are not overlooked. In addition the late filing of Accounts, Annual Return & other documents at Registers of Companies can lead to the imposition of substantial late filing penalties upon a Company and the possibility of criminal action against the Director.
Now the question arises, who is responsible to the Directors?
Every Company requires an officer who will be responsible to the Director for securing its compliance with Company Law; this is the Company Secretary. He should be available to the Board for day to day advice on such matters. Both the importance of the Company Secretary and the level of his or her responsibilities are increasing as a result of the new Law and the emphasis being placed on upon Corporate Governance. As a result all Companies should have access to a qualified Company Secretary. Very large Companies may be able to fully justify the employment of a full time Company Secretary but by using our services any Company can obtain the best advice on all aspects of Company Law and Company Secretarial practice whenever it is needed. The Company Secretary is also Known as KMP in the Companies Act 2013 and his appointment is been mandatory by the Law for the Companies having Paid up Capital of more than Rs. Ten Crore or more which in itsself tell the importance of Company Secretary
As per Section 205 of Companies Act, 2013 describes the functions of Company Secretary:
The functions of the Company secretary shall include,—
(a) to report to the Board about compliance with the provisions of this Act, the rules made thereunder and other Laws applicable to the Company;
(b) to ensure that the Company complies with the applicable secretarial standards;
(c) to discharge such other duties as may be prescribed in rule 10 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
The duties of Company Secretary shall also discharge, the following duties, namely:-
(1) to provide to the Director of the Company, collectively and individually, such guidance as they may require, with regard to their duties, responsibilities and powers;
(2) to facilitate the convening of meetings and attend Board, committee and general meetings and maintain the minutes of these meetings;
(3) to obtain approvals from the Board, general meeting, the government and such other authorities as required under the provisions of the Act;
(4) to represent before various regulators, and other authorities under the Act in connection with discharge of various duties under the Act;
(5) to assist the Board in the conduct of the affairs of the Company;
(6) to assist and advise the Board in ensuring good corporate governance and in complying with the corporate governance requirements and best practices; and
(7) to discharge such other duties as have been specified under the Act or rules; and
(8) such other duties as may be assigned by the Board from time to time.
The secretary is the main administrator of the Company; s/he ensures that all regulatory and mandatory documents are timely filed either with the Registrar of Companies or the Registry in the location where your Company is registered. In short, a professional secretary will make sure that you comply with all due diligence, statutory, and jurisdictional requirements.
Security and Exchange Board of India recognized the importance of the Company secretary in listed Companies to get assured best practices and good governance into the Companies. Hence, it is mandatory as per Regulation 6(1) of SEBI (Listing Obligation and Disclosure Requirement) Regulation, 2015 that a listed entity shall appoint a qualified Company secretary as the compliance officer.
The Company secretary manages and informs Director about all matters regarding the development, changes, implementing of Company legislation, regulations and best practice in the jurisdiction where the Company is registered. The secretary will also advise on the effects to the Director(s) of any legislative changes.