The Indian corporate sector is aided and assisted by three powerful professional entities namely, the Institute of Charted Accountants of India, The Institute of Cost & Works Accountants of India and the Institute of Company Secretaries of India. The charted accountants mainly confine themselves to the field of accounts and taxation, the cost accountants to the field of cost accounting & audit, but the company secretaries are in the field of corporate laws and secretarial practice.
Need for professionals like Company Secretaries:
The world economic order is undergoing radical changes in recent years. This might be due to new economic policy adopted by various countries and the world or might be due to WTO agreements made by the member countries and also may be due to advancements in the field of IT & other sector .The world today has become a small village; the trade barriers between countries have been removed. As a result, sky is the limit for MNC’s and business giants for advancement of commercial activity. India is no exception to this new phenomenon. Today Indian economy is totally globalized, liberalized and privatized. This change has occurred since the adoption of new economic and trade policy in 1991. Since then a number of radical changes have taken place in our industrial, foreign trade, fiscal & banking policy, etc. As a result the Indian economy is witnessing entry of MNCs, banking and financial institutions. There is phenomenal growth and increase in the volume of exports and imports. The growth of all these activities calls for specially trained manpower and professionals to handle the corporate world’s affairs effectively. While BBAs/MBAs availability is ample in recent years, but supply of professionals like Company Secretaries is acutely short.
Secretarial standards and regulations: Dr. J.J. Irani Committee submitted its report concept paper to the central government to recast the company laws to provide a framework for self regulation & good corporate governance; promote international competitiveness and address the concerns of stake holders. Dr. Irani committee report has made suggestions to reform & update the basic corporate legal framework essential for sustainable economic reforms, right accountability and transparency coupled with self-regulation and responsibility. The committee recognizes the key role of chief executive officer, chief financial officer and company secretary. The burden of responsibility and accountability to all stakeholders will vest on the shoulders of these three categories of professionals. Secretarial standards issued by the Institute of Company Secretaries of India are getting wide recognition and acceptability amongst corporates. It is extremely encouraging to note that all the companies have started adherence to appointment of approved secretarial personnel on their board and their board reports are now certified through them.
Importance of the profession of a company secretary:
Government has begun to rely on certified professionals in the corporate sector for certification requirement as they have confidence and trust in these professionals. It has practically become impossible for the government to check compliances of provisions of several legislations enacted by it due to decentralization of powers and deregulation of rules in the light of ever expanding economy and globalization.
A professional company secretary today has become a functional necessity, both from the point of view of the company to ensure that all its legal formalities are complied with & from government’s angle, to ensure that a professionally qualified person is entrusted with the responsibility of overseeing the requirements of objectives of Companies Act 1956 & other corporate laws. Thus the compliance factor increases the demand for company secretaries, abundantly. The Institute of Company Secretaries of India, New Delhi (ICSI) has undertaken various initiatives to better the future roles of a company secretary and globalization of this profession.
Role of company secretary in the corporate world:
The role of a CS is to assist and aid the corporate sector to function effectively & efficiently within the legal framework of various corporate, mercantile, industrial, labour, economic, social, environmental and other existing as well as future laws.
Professional services to be provided by a CS helps to sustain the growth & momentum of a company as also to retain good-will, image and reputation for which he/she has to keep abreast of current new developments taking place on an ongoing basis at the global level by updating his/her knowledge base constantly and acquiring new skills and expertiseness. Contemporary happenings on the corporate front like takeover bids, mergers[ e.g.: Global Trust Bank merged with the Oriental Bank of Commerce] de-mergers, amalgamations, acquisitions, restructuring of operations, revival of viable sick units, diversifications, modernizations, all these and other functions increasingly need continuous and complex advices, guidance and assistance of a qualified person like a CS. The present day companies not only try to survive from the competition but tend to grow within legal framework of company laws & expand their business by serving the varying and conflict needs of different interest groups such as share-holders, debtors, creditors, depositors, employees, customers, labor/employed unions, governments, local bodies, consumer associations, environmental and religious groups, political parties and last but not the least, the general public. Liberalization & de-regulation measures initiated by the government have made corporates to attain commanding heights of an economy. The interaction between all these groups is possible only with the intervention & services involved of a CS. The latest trends in e-commerce will also play a very vital role in world economic order and hence new opportunities are bound to arise for involvement of a CS for advice and regulatory rules.
Functions of a company secretary:
The company secretary acts in three-fold capacity, namely;
a) As an agent of the board of directors of the company.
b) As an officer-in-charge of secretarial work.
c) As a chief business executive or chief administrative officer of the company, including accounts, taxation and legal sections, etc.
All the above three functions will possibly be performed by a company secretary for small or medium sized companies. In big companies there could be chief accountant or a personnel manager or legal officer who may be in charge of the functions relating to accounts, personnel and law who may report to the secretary or could report directly to the chief executive of the organization. He is today considered as a general specialist. In view of the importance of the role that a company secretary plays a variety of responsibilities in respect of both statutory requirements and administrative responsibilities for which a professional qualification is highly desirable. One of the important tasks of a company secretary is collection of data and analysis of information and its presentation to the board in accurate and concise form in terms of reports and presentations to the board. The problems of modern corporations are gigantic and with the business processes becoming more and more complex, the problems are assuming enormous proportions. The company secretary with his all round expertise co-ordinates the various processes and ensures the smooth functioning of the company. The company secretary is the pivot on which the whole corporate machinery revolves. A Company secretary is a ‘Principal Officer’ of a company under section 2(35) of the Income-Tax Act, 1961. He is also required to perform the various duties specified in the Industrial Disputes Act, 1947, the Employees State Insurance Act, 1948, the Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Factories Act, 1948, the Provident Fund Act, 1952, Foreign Exchange Management Act (FEMA), 1999, Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, the Securities and exchange Board of India Act, 1962, (SEBI), the Securities Contracts (regulation) Act, 1956 and the Depositories Act, 1866, etc. The status of a company secretary as the chief administrative head of an organization, wherever applicable, bestows upon him/her, the duty of planning, organizing, directing and coordinating the office work effectively.
The work involves recruiting of new employees, informing the employees about the company’s policies and decisions concerning them. The following points highlight the role and functions of a company secretary: The company secretary’s profession has two faces namely, one set of professionals who are under whole time employment in corporate sector & another of professionals in whole time practice. To become a company secretary one has to pass the following programme examinations conducted by ‘The Institute of Company Secretaries of India, New Delhi’[ICSI],
1. Foundation (exempted for graduates)
Just as a modern government cannot be run without a secretariat (IAS officers), similarly no modern company management can function without a company secretary. The joint stock companies carry on the bulk of corporate activities in India. As on date there are approximately more than 3 lakh companies with an aggregate paid-up capital of above Rs. 55,000/-, growing at the rate of 13 % p.a. This reveals the importance of joint stock companies & its activities need the regulating help with a host of laws and bye laws enacted from time to time by the government. Corporate management necessarily relies on the company secretaries for professionalism in their management & outlook. The company secretary ensures that board procedures of the company are followed & complied. He/she provides guidance to the chairman and directors in fulfilling their responsibilities of complying with various laws. He/she provides multi disciplinary professional services & thereby commands a very high position in the company hierarchy. After passing the above mentioned examinations one has to undergo pre membership apprenticeship training of 15 months & practical training of 4 months; only then the candidate will be enrolled as a member of the institute. A person is entitled to practice as a whole/part time practitioner on obtaining a certificate of practice from ICSI. Section 383- A of Companies Act 1956 envisages that every company having paid up capital of Rs. 10 lakhs or more but less than 5 crore has to engage the services of a company secretary in whole time practice for issue of their compliance certificates. A company secretary is a vital link between the company and various authorities.
Ideal qualities expected of a good company secretary:
The corporate sector looks upon the company secretary as a reliable, efficient, competent and knowledge based person. A company secretary (CS) possesses inherent competence to handle any type of complicated work, has good communication skills, is willing to update his/her knowledge base, acquires expertise and new skills, has the ability to interact with the other top notch professionals and also has strong social commitments and values and ethical behavior, has the ability to set up organizational structures, and help the clients etc. etc. A model CS would have professional code of conduct of a high order. He/she must establish integrity, credibility, possess independent and professional acumen, have the ability to interact with the managements of not only his/her client-company but also with registrar of co-operative societies, banks and other bodies, etc. He/she would act as a catalyst in bringing about a change in the attitudes of the management towards compliances of various provisions of laws and discharging corporate sector’s responsibilities towards shareholders, members, creditors, consumers, employees, government & society at large. He/she must be a watchdog and conscience keeper of his/her client/company. A company secretary is a vital link between the company and its board of directors, shareholders, government & other regulatory authorities. A CS ensures that board procedures are followed and regularly reviewed by the respective company and provides guidance to the chairman and the directors for complying with their responsibilities under various laws.
Future prospects for a company secretary:
A qualified company secretary has an opening in employment or as a practicing independent professional.
a) Pursuant to section 383-A of the companies act, 1956, companies with a paid-up share capital of Rs. 5 crores or more have to compulsorily appoint a whole time company secretary who must be a member of the Institute of Company Secretaries of India.
b) All the companies seeking listing on stock exchanges are also required to appoint a whole time company secretary. A company secretary in practice/employment is recognized to issue certificates and attest documents under Companies Act, 1956.
c) Membership of the institute is recognized for appointment to superior posts and services under central government/boards/banks, etc.
d) Membership of the institute is an essential qualification for the recruitment to Grade-I to IV in the accounts branch of the Indian Company Law service.
Every organization whose affairs are conducted by boards, councils and other corporate structures, be it a co-operative society, trust, association, federation, government authority, commission, board or the like, finds it useful to appoint a qualified company secretary in key administrative positions. According to a survey, there are more than 50,000 jobs available for perspective company secretaries across the country, by 2020.
ii) Self Employment (Practice)
After obtaining a “certificate of practice” from the institute, members of the institute can opt for independent practice also. The National Company Law tribunal now being set up by the Central government will open new and challenging yet rewarding areas of practice to the practicing company secretaries.
How to prepare for the course?
The course is primarily a distance education/learning course. Different examination plans are open for;
The foundation course has been introduced for senior secondary (10+2 or equivalent) pass students from any stream except fine arts*, desiring to join the company secretaryship course.
All graduates and post-graduates excluding fine arts* are eligible to be registered for executive course directly. However graduates and post-graduates who have not studied any of the subjects prescribed for the foundation course of the institute would be required to undergo satisfactorily course of postal or oral tuition for the subjects before becoming eligible for undergoing coaching for the executive examination. Both commerce and non-commerce students are eligible to get themselves registered for the course. While commerce students are enrolled straight away for the executive level, the non-commerce students are first required to undergo the postal coaching for the papers forming part of the foundation course, which they have not studied at the graduation level. Examinations are held in June and December every year at 66 examination centers spread across the country and also at one overseas centre at Dubai.
(* Fine Arts are Music, Dance, Drawing, etc.etc)
Scheme for completion of company secretaryship course:
The Institute of Company Secretaries of India (ISCI) constituted under an act of parliament Company Secretaries act, 1980 is the only recognized professional body in India to develop and regulate the profession of company secretaries in India to award the certificate, bestowing the designation of a company secretary. In 1960, the government of India formed an advisory committee to standardize the basic qualification needed for the company seretaryship course and also to conduct the company secretaryship examination. At present the institute has more than nineteen thousand members with also 5 lakhs students registered to appear for various examinations.
To become a company secretary one has to pass the following examinations conducted by the institute of Company Secretaries of India (ICSI).
1. Foundation (exempted for graduates)
After passing the above mentioned examinations one has to undergo 15 months’ pre-membership apprenticeship training either in a approved company or through a practicing company secretary & also 4 months practical training; only then a candidate will be registered as the member of the institute. The under-graduate candidates admitted in the foundation course are required to undergo a course of compulsory postal tuition imparted by the institute from their headquarters, at New Delhi. The students are provided with study materials and test papers for various subjects. After going through the study materials and the recommended books the students are required to submit to the institute, the response sheets in respect of these test papers written under the examination conditions. The qualifying marks in each response sheet are 40 percent. If the candidate does not secure the qualifying marks in a response sheet, he/she should resubmit the same. The last date for submission of response sheets is 28th February for those appearing in June examination and 31st August for December Examination, every year.
On successfully completing the postal tuition in a subject the student is supplied with suggested answers for that subject and on satisfactory completion of coaching in all the subjects, he/she is issued with a coaching completion certificate; after obtaining this, the candidates are then allowed to appear for the foundation examination.
To further benefit the students with postal tuitions, oral tuitions are also conducted at various ICSI chapters/centers as well as approved private coaching classes spread over the country. Oral tuitions conducted by the regional councils or chapters/satellite of the ICSI which is in addition to and not in substitution of the compulsory postal tuition. Every registered student is required to undergo a course of compulsory postal tuitions imparted by the ICSI. The students are provided with study materials and test papers for various subjects. A student completing oral tuition is, however, not required to submit to the ICSI the response sheets to test papers to ICSI which are required to be submitted under compulsory postal tuition scheme. He/she is issued with a coaching completion certificate; then only the candidates qualify for appearing at the written examination.
Students have to acquire adequate practical knowledge and prepare themselves for the examination. Intensive and individualized training process to be adequate as well provides flexible opportunity for learning; through the correspondence course one can really reach the doors of the individuals, but cannot ignore the advantages of the direct teaching method through the medium of classroom teaching. As a matter of fact, both these techniques can be used as complementary to each other.
Check list of activities where a CS is called upon to perform various duties.
1) Corporate Governance and secretarial services:
a) Corporate governance services:
Advising on good governance practices and compliance of corporate governance norms as prescribed under various corporate, securities and other business laws and regulations and guidelines made there under.
b) Corporate Secretarial services:
# Promotion, formation and interpretation of companies and matters related there with.
# Filing, registering any document including forms, returns and applications by and on behalf of the company as an authorized representative.
# Maintenance of secretarial records, statuary books and registers.
# Arranging board/general meetings and preparing minutes thereof.
# All work relating to shares, their transfer and transmission.
c) Secretarial/compliance audit and certification services:
# Secretarial/compliance audit.
# Compliance certificate for companies not required to employ a whole time secretary.
# Signing of annual returns.
# Other declarations, attestations and certificates under the Companies act, 1956.
(2) CORPORATE LAWS ADVISORY AND REPRESENTATION SERVICES:
a) Corporate Laws Advisory Services:
# SEBI act, SCRA and rules and regulations made there under.
# Foreign exchange management act (FEMA).
# Consumer’s protection act.
# Depositories act.
# Environmental and pollution control laws.
# Labour and industrial laws.
# Co-operative societies act.
# Mergers and amalgamations and strategic alliances.
# Foreign collaborations and joint ventures.
# Setting up subsidiaries abroad.
# Competition policy and anti competitive practices.
# IPR protection, management, valuation and audit.
# Drafting of legal documents.
b) Representation Services:
Representing on behalf of a company and other persons before;
# Company law board.
# National company law tribunal.
# Competition commission of India.
# Securities appellate tribunal.
# Register of companies.
# Consumer forums.
# Telecom disputes settlement and appellate tribunal.
# Other quasi-judicial bodies and tribunals.
c) Arbitration and conciliation services:
* Advising on arbitration, negotiation and conciliation in commercial disputes between the parties
* Acting as arbitrator/conciliator in domestic and international commercial disputes.
* Drafting arbitration/conciliation agreement/clause.
(3) Financial markets services
a) Public issue, listing and securities management:
* Advisor/consultant in issue of shares and other securities.
* Preparation of projects reports and feasibility studies.
* Syndication of loans from banks & financial institutions.
* Drafting of prospectus/offer for sale/letter of offer/other documents related to issue of securities and obtaining various approvals in association with lead managers.
* Loan documentation, registration of charges, status and search reports.
* Listing of securities/delisting of securities with recognized stock exchange.
* Private placement of shares and other securities.
* Buy-back of shares and other securities.
* Raising funds from internationals markets-ADR/GDR/ECB.
b) Takeover Code and Insider Trading:
* Ensuring compliance of the takeover regulations and any other laws or rules as may be application in this regard.
* Acting as compliance officer and ensuing compliance with SEBI (Prohibition of Insider training) regulation, 1992 including maintenance of various documents.
c) SECURITIES COMPLIANCE AND CERTIFICATION SERVICES
* Compliance with rules and regulations in the securities market particularly;
* Internal audit of depository participants.
* Certification under SEBI (DIP) guidelines.
* Audit in relations to conciliations of shares.
* Certificate in respect of compliance of private limited and unlisted public company (Buy Back Securities) rules.
(4) Finance and accounting services
* Internal Audit.
* Secretary to audit committee.
* Working capital and liquidity management.
* Determination of an appropriate capital structure.
* Analysis of capital investment proposals.
* Business valuations prior to merges and/or acquisitions.
* Loan syndication.
* Budgetary controls.
* Accounting and compilation of financial statement.
(5) Taxation services
* Advisory services to companies on tax management and tax planning under income tax, excise and customs laws.
* Preparing/reviewing various returns and reports required foe compliance with the tax laws and regulations.
* Representing companies and other persons before the tax authorities and tribunals.
(6) INTERNATIONAL A TRADE AND W.T.O. SERVICES
* Advising on all matters related to IPRS and TRIPs agreement of WTO.
* Advising on matters relating to anti-dumping, subsidies and countervailing duties.
* International commercial arbitration.
* Advising on and issuing certificates on import export policy and procedures.
* Advising on intellectual property licensing and drafting of agreement.
* Acting as registered trademark agent.
(7) Management services
a) General / Strategic management
* Advising on legal structure of the organization.
* Business policy, strategy and planning.
* Formulation of the organizational structure.
* Acting as management representative to obtain ISI/ISO certifications.
b) Corporate communications and public relations
* Communication with shareholders, stakeholders, government and regulators, authorities etc.
* Advisory services for brand equity and image building & good will build-up.
(c) Human Resources Management
* Manpower planning and development.
* Audit of the HR functions.
* Performance appraisals of the human resource at command.
* Motivation and remuneration strategies.
* Industrial relations.
* Office management, work studies and performance standards.
* Advising on industrial and labor laws.
(d) Information Technology
* Compliance with cyber laws.
* Conducting board meetings through video-conferencing and tele conferencing
* Advising on software copyright and licensing.
* Development of management reports and controls.
* Exploring online platform & market place & online payment systems to market the company’s products.
* Maintenance of statuary records in electronic form.
* Sending notices to shareholders by electronic mode.
* Filing of tax returns/balance sheets/forms/documents in electronic form with the income tax authorities, registrar of companies and other statuary authorities.