Company secretary's extended Role

The companies Bill, 2012 as passed in both the houses of parliament and has been assented as the Companies Act, 2013, has conferred a wider interpretation to its recognition of Role of a Company secretaries in the corporate world and redefined its scope.

The ministry of corporate affairs deserves praise for bringing a new companies Act, by replacing the old act of 1956, and showcasing a broad corporate responsibility model. There are several innovative clauses in keeping with the Globalized Economy. The scope of the Company secretary has been promoted to renowned pedestal by not only focusing upon his traditionally acknowledged role but also by bestowing upon him the responsibility of widened Compliance functions. The Role of company secretary had been an arduous one. In the previous act it was defined under section 2(45) as 'secretary', "who is an individual to perform the duties of secretary and any other purely ministerial or administrative duties". The companies act, 2013 under section 203(1) has accorded an exalted status to them, bracketing it as a key managerial person along with high dignitaries. His appointment is now being culminated only through the resolution passed in the Board meetings.

The profession of company secretaries has climbed the top of the professional ladder in these 57 years, a situation never contemplated by the Founding fathers. Far from being described as a subordinate officer, he is now promoted to a key managerial personnel, superseding his recognized role as principle officer. In the early 19th century the functions of the CS as contemplated by the acts were administrative and not managerial, and the secretary should not assume an executive or managerial power in absence of express authority. Lord Esher, M.R. in Barnett v. south London Tramways co. (1887) 18 Q.B.D.815 held that view that a secretary is a mere servant. Even in 1928 the House of Lords in J.C.Houghton and company V. nothard, Lowe and Wells ltd (1928) L.R.(A.C.)1 reaffirmed the earlier view that as an arrangement which was entered into by the company was not ratified by the company through its Board, it was not authorized by the respondent company.
From 1887 to 1906 courts had uniformly taken the view that a CS fulfils a very humble role and had no authority to make any contract on behalf of the company. A striking departure was made in Panorama Developments(guildford) ltd V. Fidelis furnishing (1971) when Lord Denning and Lord Justice Salmon enhanced the CS status by stating, "Times have changed; a company secretary is a much more important person nowadays that he was in 1887. He is an officer of the company with extensive duties and responsibilities. He is no longer a mere clerk. He is certainly entitled to sign contracts in the administrative side of the company's affairs.

A new act is a beginning of a new era. The Role of Company secretary under the New Act:- The Role has been defined in section 204. And other ancillary roles has been mentioned under various other sections discussed below:-

1]introduction of secretarial Audit (Section 204):- Earlier his role was confined of being an administrative clerk to be compulsorily appointed by the companies having paid up capital of more than Rs.20 lakh. Now it has been elevated a ladder by making it a personnel of key managerial position.
Based on the recommendations made by parliamentary standing committee, secretarial Audit is introduced for the first time in India, This is a new concept never implemented in any other country so far. Under the section every listed company is required to attach with its Board's report a report of secretarial Audit, to be conducted by company secretary in practice. If any other remarks are made by CS in his report, the Board has to take cognizance of such remarks and provide explanation for the same. Penal provisions are being provided in case of non-compliance with this.
The introduction of the concept of secretarial audit proves the commitment of the Government towards establishing corporate governance. Provisions enhanced the expected role of company secretaries.

2]Secretariat standards (section 118):- The act recognizes the secretarial standards specified by ICSI. It is only a beginning of a new Dawn, where not only financial standards but also non-financial standards have been prioritized and given statutory recognition. Section 118(10) makes it mandatory for every company to observe the secretarial standards with respect to Board meetings and general meetings as lined by ICSI.

3]appointment of whole-time key Managerial personnel (section 203) :- For ensuring good corporate Governance and regulation, the role of senior management for managing company's affairs is very crucial. In order to make sure that companies are effectively managed, section 203 provides for compulsory appointment of Key Managerial Personnel (KMP) in respect of certain class of companies prescribed by the Government. A company secretary is covered under KMP.

4]functions of company secretary:-
For the first time, the functions of a company secretary has been mentioned in the companies act. He has to report to the Board about the compliance of the provisions, rules and other laws applicable to the company. He has to make sure that company complies with the secretarial standards, as issued by ICSI and to be approved by the central Government. Other duties are prescribed in the rules to be framed by the Government. This provision casts an overwhelming responsibility of CS in employment in the discharge of their duties and they are expected to deliver a proactive role to meet the expectations of the Respective companies and their regulating authorities.

Apart from these main roles, some other duties and jobs acceded with company secretary under the new act includes like acting as a profession to give assistance to the liquidator of a company at the time of winding up of the company (section 291). They are now empowered to represent a party to any proceedings or appeal before the Tribunal or the Appellate Tribunal as the case may be (section 432).
If during the tenure of their duties, a practicing profession has faith that an offense involving fraud is being committed by a company, it is duty to report such frauds. Section 143(2) clearly mentions that ,"Notwithstanding anything contained in this section, if an auditor of a company, in the course of the performance of his duties as auditor, has reason to believe that an offense involving fraud is being or has been committed against the company by the officers or employees of the company, he shall immediately report the matter to the central Government within such time and in such manner as may be prescribed". As per section 143(14), the provisions of 143 shall mutatis mutandis apply to a company secretary by virtue of his being positioning as a secretarial auditor for a company under section 204.

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