COMPANY SECRETARIES IN COMPANIES BILL, 2011

CS. Bilu Balakrishnan

Mr Veerappa Moily introduced the Companies Bill. Several corporate governance and disclosure norms were included in the Bill to avoid recurrence of corporate scandals such as the alleged accounting fraud by the promoters of the erstwhile Satyam Computer in 2009. 2011 Corporate Affairs Minister. 2011. protection of minority shareholders. provision for class action suits. mandatory rotation of auditors and audit firms. 2011 have 29 Chapters & 448 Sections . regulation of related-party transactions.COMPANIES BILL. The Bill aims at the modernisation of corporate regulation. 2011 in Parliament Lok Sabha. The New Companies Bill. enhanced accountability. Additional disclosure norms for companies. It will herald an era of e-governance. The Bill was cleared by the Cabinet on November 24. enhancement of penalties and a mandatory slot for a woman director on company boards are all new proposals included in the Bill. 2011 on Wednesday the 14th December. and corporate social responsibility (CSR) among companies registered in the country.

Views / Comments: newcompanylaw@ciermail. and an infringement of the copyright of the author. This presentation intents to have a birds eye view of what is in the cards for the CS profession. Copyright 2011 Corporate Intelligence Education & Research (CIER) Online Branding Partner: CS STUDENTS’ ONLINE CLUB Reporting Partner: ACSEC-INEWS . 2011 as introduced in Parliament.com Presentation Series 01 on New Company Law in India This presentation includes the major provisions pertaining to company secretary profession. This presentation document is Open Source. 2011 The Company Secretary (CS in short) profession has lot more in the new Bill. Alteration of this presentation in any form is an offence. any individual can host the same in websites / blogs.COMPANY SECRETARIES & COMPANIES BILL. and a comparison with the provisions of existing Companies Act 1956 vis-à-vis Companies Bill 2011 All contents prepared from the proposed Companies Bill. Please refer to any updates from time-to-time.

a valuer. . 1980 who is appointed by a company to perform the functions of a company secretary under this Act.CS IN DEFINITIONS Definition of CS: 2 (24) “company secretary” or “secretary” means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act. a company secretary. Definition of CS in Practice: 2 (25) “company secretary in practice” means a company secretary who is deemed to be in practice under sub-section (2) of section 2 of the Company Secretaries Act. a cost accountant and any other person who has the power or authority to issue a certificate in pursuance of any law for the time being in force. 1980. Definition of Expert: 2 (38) “expert” includes an engineer. a chartered accountant.

(iii) the Chief Financial Officer if the Board of Directors appoints him. (ii) the company secretary. and (iv) such other officer as may be prescribed.CS IN DEFINITIONS (CONT. in relation to a company.) Definition of Key Managerial Personnel: 2 (51) “key managerial personnel”. . means— (i) the Chief Executive Officer or the managing director or the manager.

CS IN DEFINITIONS (CONT. means— (i) the Chief Executive Officer or the managing director or the manager. (iii) the Chief Financial Officer if the Board of Directors appoints him. in relation to a company.) Definition of Key Managerial Personnel: 2 (51) “key managerial personnel”. and (iv) such other officer as may be prescribed. . (ii) the company secretary.

CS ROLE IN INCORPORATION & PROSPECTUS DOCUMENT OF A COMPANY 7. or by or on behalf of any person who is or has been engaged or interested in the formation of a public company. (1) There shall be filed with the Registrar within whose jurisdiction the registered office of a company is proposed to be situated. namely:— (a) the memorandum and articles of the company duly signed by all the subscribers to the memorandum in such manner as may be prescribed. (b) a declaration in the prescribed form by an advocate. if any. who is engaged in the formation of the company. (1) Every prospectus issued by or on behalf of a public company either with reference to its formation or subsequently. the following documents and information for registration. shall be dated and signed and shall— (a) state the following information. trustees. underwriters and such other persons as may be prescribed. . Chief Financial Officer. company secretary. a chartered accountant. that all the requirements of this Act and the rules made thereunder in Respect………………… 26. cost accountant or company secretary in practice. bankers. namely:— (i) names and addresses of the registered office of the company. auditors. manager or secretary of the company. and by a person named in the articles as a director. legal advisers.

(1) Every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood on the close of the financial year regarding……… and signed by a director and the company secretary. by the director of the company. or where there is no company secretary. he shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees. by a company secretary in practice: Provided that in relation to One Person Company and small company. filed by a listed company or. or where there is no company secretary. (2) The annual return.CS ROLE IN ANNUAL RETURN OF A COMPANY 92. the annual return shall be signed by the company secretary. ………………………. …………………… (6) If a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder. . stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of this Act. by a company having such paid-up capital and turnover as may be prescribed. shall be certified by a company secretary in practice in the prescribed form.

. key managerial personnel.COMPLIANCE WITH SECRETARIAL STANDARDS OF THE ICSI 118. all appointments of directors. the meeting shall be deemed to have been duly called and held. shall be deemed to be valid. to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned. (1) Every company shall cause minutes of the proceedings of every general meeting of any class of shareholders or creditors. until the contrary is proved. ………………………. auditors or company secretary in practice. and approved as such by the Central Government. 1980. and all proceedings thereat to have duly taken place. or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered……………………………………………… (8) Where the minutes have been kept in accordance with sub-section (1) then. and every resolution passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board. (10) Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act. and the resolutions passed by postal ballot to have been duly passed and in particular. …………………….

the resulting vacancy shall be filled-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy. or Chief Executive Officer or manager and in their absence. (3) A whole-time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time: Provided that nothing contained in this sub-section shall disentitle a key managerial personnel from being a director of any company with the permission of the Board: ………………………(4) If the office of any whole-time key managerial personnel is vacated. a whole-time director. (2) Every whole-time key managerial personnel of a company shall be appointed by means of a resolution of the Board containing the terms and conditions of the appointment including the remuneration. .MANDATORY APPOINTMENT OF COMPANY SECRETARY AS A KEY MANAGERIAL PERSONNEL 203. (1) Every company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel. and (ii) company secretary: Provided that unless the articles of such a company provide otherwise.— (i) managing director. an individual shall not be the chairperson of the company as well as the managing director or Chief Executive Officer of the company at the same time.

.SECRETARIAL AUDIT FOR BIGGER COMPANIES 204. shall explain in full any qualification or observation or other remarks made by the company secretary in practice in his report under sub-section (1). in their report made in terms of sub-section (3) of section 134. in such form as may be prescribed. (4) If a company or any officer of the company or the company secretary in practice. given by a company secretary in practice. a secretarial audit report. the company. every officer of the company or the company secretary in practice. shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. (3) The Board of Directors. contravenes the provisions of this section. (2) It shall be the duty of the company to give all assistance and facilities to the company secretary in practice. who is in default. (1) Every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Board’s report made in terms of sub-section (3) of section 134. for auditing the secretarial and related records of the company.

— (a) to report to the Board about compliance with the provisions of this Act.—For the purpose of this section. (2) The provisions contained in section 204 and section 205 shall not affect the duties and functions of the Board of Directors. or any other law for the time being in force. managing director or whole-time director under this Act. (b) to ensure that the company complies with the applicable secretarial standards. the expression ―secretarial standards” means secretarial standards issued by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act. Explanation. (c) to discharge such other duties as may be prescribed. chairperson. (1) The functions of the company secretary shall include. the rules made thereunder and other laws applicable to the company. .FUNCTIONS OF A COMPANY SECRETARY 205. 1980 and approved by the Central Government.

file a statement in such form and within such time as may be prescribed with the Registrar every year duly certified by a chartered accountant or a cost accountant or a company secretary in practice indicating whether the scheme is being complied with in accordance with the orders of the Tribunal or not. ……………………. (7) Every company in relation to which the order is made shall. .COMPANY SECRETARY IN MERGERS & AMALGAMATION 232. (1) Where an application is made to the Tribunal under section 230 for the sanctioning of a compromise or an arrangement proposed between a company and any such persons as are mentioned in that section. until the completion of the scheme. and it is shown to the Tribunal— …………….

or (b) is. or has. in practice as a cost accountant for at least fifteen years. a presiding officer of a Labour Court. or (d) is. conduct of affairs. or such other disciplines related to management.COMPANY SECRETARY AS A TECHNICAL MEMBER OF NATIONAL COMPANY LAW TRIBUNAL (NCLT) 409 (3) A person shall not be qualified for appointment as a Technical Member unless he— (a) has. revival. Tribunal or National Tribunal constituted under the Industrial Disputes Act. of not less than fifteen years. investment. for at least fifteen years been a member of the Indian Corporate Law Service or Indian Legal Service out of which at least three years shall be in the pay scale of Joint Secretary to the Government of India or equivalent or above in that service. been. accountancy. in practice as a company secretary for at least fifteen years. 1947. in practice as a chartered accountant for at least fifteen years. labour matters. or has been. or (e) is a person of proven ability. or (c) is. . in law. or has been. integrity and standing having special knowledge and experience. industrial finance. or (f) is or has been for at least five years. industrial management or administration. rehabilitation and winding up of companies. industrial reconstruction.

1956 AND COMPANIES BILL.MAJOR COMPARISON OF PROVISIONS RELATING TO COMPANY SECRETARY IN COMPANIES ACT. 2011 .

00.383A Appointment limit Rs.Penalty of Rs.000.Companies Act 1956   Companies Bill.50.500 per day        No provision for Secretarial Audit No provision for compliance with Secretarial Standards of ICSI   .2 (45) Definition of PCS in Sec.000.00.000 to Rs.5 Cores paid-up capital Appointment exemption route available A statutory position Penalty for non-appointment of secretary Rs. 2011  Definition of CS in Sec.2(45A) Definition of CS in Clause 2 (24) – more simple and specific Definition of PCSP in Clause 2 (25) – Conceptually No change Appointment dealt in Clause 203 as a Key Managerial Personnel ―Certain classes‖ of companies – limit will be notified in Rules No exemption route A more managerial position with statutory backup Company – Penalty of Rs. Secretarial Audit mandatory for all listed companies. and for continuing offence – Penalty of Rs.000 per day. 1.204) All companies shall comply with Secretarial Standards of ICSI relating to Board & General Meeting (Cl. and such other companies to be prescribed (Cl. Director & every Key Managerial Personnel .118(10))       Appointment dealt in Sec.5.1.

Annual Return to be signed by a director and the company secretary. shall be certified by a company secretary in practice in the prescribed form. Concept of Compliance Certificate from practicing company secretary re-casted in a new form – clubbed with Annual Return Certification of a listed company and such other companies as may be prescribed. by a company secretary in practice:  Companies having a minimum paid-up capital and up to Rs. . file a statement in such form and within such time as may be prescribed with the Registrar every year duly certified by a chartered accountant or a cost accountant or a company secretary in practice indicating whether the scheme is being complied with in accordance with the orders of the Tribunal or not. until the completion of the scheme. if any. And if there is no secretary then by two directors. ―92 (2) The annual return.”   No express certification in Mergers & Amalgamation – Compliance with Scheme Every company in relation to which the order is made shall. by a company having such paidup capital and turnover as may be prescribed.5 cores a Compliance Certificate from PCS is required. 2011  Annual Return Signing by a director and a Secretary. stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of this Act.Companies Act 1956  Companies Bill. or where there is no company secretary. filed by a listed company or.

2011 CS.COMPANY SECRETARIES IN COMPANIES BILL. Bilu Balakrishnan Copyright 2011 Corporate Intelligence Education & Research (CIER) Views / Comments: newcompanylaw@ciermail.com Presentation Series 01 on New Company Law in India .

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