How does a Company Secretary on job ensure compliances as he/she doesn’t have any power, but only duties and responsibilities?
A company secretary is a crucial link between the company and its Board of Directors, investors, shareholders, government and regulatory authorities. Being a multidisciplinary professional, a company secretary has to ensure the proper compliance of all the rules and regulations applicable to a company. Although a company secretary does not have any power but is delegated with a number of duties and responsibilities. Hence has a key role to play in ensuring that board procedures are followed and regularly reviewed. The Chairman and the Board look upon to the company secretary for guidance on what their responsibilities are under the rules and regulations to which they are subject to and on how these responsibilities should be discharged.
With the increasing focus in recent years on corporate governance, the role of the company secretary has gained importance. In many ways, a company secretary is now seen as the guardian of the company’s proper compliance with both the law and best practice. The CS of the company has the responsibility to ensure that the company and the directors operate within the law. He/she advises the Board of Directors on their legal and corporate responsibilities and on the matter of corporate governance.
As said earlier a company secretary has no power to invest/borrow money, make policy decisions, negotiate on contracts etc. but to see whether all these things are taking place in the right manner and legally is the duty of the company secretary. For example, he/she cannot register a transfer of shares without the sanction of Board but he has to keep a check that all rules related to share transfer are duly complied with when it is actually being done. A company secretary ensure proper corporate compliance by ensuring the following-
- Arranging various meetings such as Annual General Meeting, Board Meetings, and Committee Meetings etc.
- Recording minutes of the meetings
- Maintaining statutory records and registers
- Maintaining the company records such as the company’s general information, directors interest, uploading annual returns, etc. on the MCA portal
- Preparation of compliance certificates
- Company contribution towards Corporate Social Responsibility if the company falls into the prescribed criteria
- Fulfilling other such requirements mandated in any law which is applicable to the company
A company secretary has been recognized as a Key Managerial Personnel and thus has a direct link with the Board and the directors of the company. A company secretary has a vast knowledge of all the laws applicable to a company whether it is company law, SEBI and FEMA compliances, Income tax etc. He/she manages to comply with the same by informing the Board and the directors about the applicability of such laws from time to time. Along with that to ensure proper compliance and smooth functioning of the company, it is an utmost requirement of a company secretary to keep himself updated with the amendments, circulars, and notifications which the Government issues.
A company secretary can do nothing without the permission of Board and the directors of the company unless and otherwise he/she has been vested with the powers to do so in any circumstance. For instance, he/she has no power to call the meeting of a company or to commence proceedings on behalf of the company without the resolution of the directors, nor can he alter the register of members, but any such action may be ratified by the directors. Although a company secretary has some statutory powers like signing annual returns, verifying e-forms etc.
To sum up, we can say that a company secretary commands a high position in the value chain and acts as a conscience seeker of the company.