How do you appoint a Company Secretary?

Meaning of Company Secretary

A company secretary, as per the Companies Act, means a company secretary as defined under sec 2(1)(c) of the company secretaries Act, 1980, who is appointed by a company to perform the functions of a company secretary under this Act (sec 2(24)).

Company secretary, as per the section sec 2(1)(c) of the companies secretaries Act 1980,  means a person who is a member of the Institute of company secretaries of India”

Thus, company secretary, being an individual, is a member of the institute of company secretaries of India/ICSI and is appointed under the companies Act to perform the functions of a company secretary.

Appointment of Company Secretary

Section 2(24), 203, 204 of the companies act state the provisions regarding appointment of the company secretary, which are as follows:

  • An individual who is a member of ICSI can be appointed as a company secretary.
  • Every listed company must have a full-time company secretary.
  • For Unlisted Company having a paid-up capital of 5 crores or more must also have a full-time secretary
  • Private companies having a paid-up capital of 5 crores or more must also have a full-time secretary.
  • CS is appointed by the resolution of the board.
  • It is entitled to become the director of the company with the prior permission of the board.
  • CS is not allowed to hold office in more than one company.
  • CS must not be vacant for more than 6 months.

Duties of Company Secretary

  • The CS is an employee of a company and he must perform his duties with reasonable care. 
  • He may be removed on the grounds of disobeying, misconduct or permanent disability.

Statutory Duties of Company Secretary

According to company Act –

  • Documents and proceedings requiring authentication by the company shall be signed by him.
  • To deliver registration and return of allotment to the Registrar.
  • Notice to the registrar for any increase in share capital shall be given by him.
  • To deliver a share certificate within 2 months of allotment. 
  • To make an entry for register of members of the share warrant.
  • To send an annual return.
  • After receiving the certificate of commencement of business he shall make a statutory declaration.
  • Notice of the general meeting shall be sent by him to every member of the company.
  • To make statutory books.
  • In the case of a non-banking financial company, every balance sheet and P/L account shall be signed by him.
  • To file a resolution with the registrar.

Restrictions on a Company Secretary

A Company Secretary shall not:
  • Sign/Agree to a contract on  Company’s behalf, except on the endorsement by the Board of Directors.
  • Borrow any money in the name of the company.
  • Call meetings connected with third parties.
  • Acknowledge a debt against the suit filed against the company.
  • Register or transfer any shares without being endorsed by the Board of Directors.

Time-frame for Appointment

There is no specific time-frame assigned for the appointment of a Company Secretary, Companies are advised to appoint a Company Secretary as in the very next Board Meeting.

The newly incorporated companies may appoint in the first board meeting.

Process of Appointment

The terms and conditions of the appointment must be endorsed by the board of directors before any such appointment, and the acceptance for the role should have consented to the Company Secretary in writing. The details of the appointed Company Secretary must be furnished in the register and submitted to the ROC.

Details are to be furnished and submitted within 30 days of such an appointment in Form DIR-12. 

Form MGT 14 must be filed within 30 days of the passing of Board Resolution with the CTC and Consent Letter.

Offences and Penalties

Fails to appoint a CS, or for that matter any KMPs, it would be liable to remit a fine of not less than one lakh but restricted to five lakhs.

 In addition to this, every director and KMP of the Company would be punished with a fine of INR 1000 for every day of such default.

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