RECOMMENDATIONS ON THE COMPANIES BILL, 2009 WITH REGARD TO THE PROFESSION OF COMPANY SECRETARIES By: Vinayak S Khanvalkar Vice President

1

Appointment of Company Secretary

Companies Act, 1956

• Section 383A(1)- Every company

prescribed

Secretary.

having such paid up share capital as may be

shall have a whole-time Company At present the paid-up capital prescribed is Rs.5 crore and above.

Companies Bill, 2009

• Clause 178(1) - Every company belonging to such class or

description of companies as may be prescribed

shall have whole time key managerial personnel. A Company Secretary is a KMP along with the Managing Director, the Chief Executive Officer and the Chief Financial Officer.

2

Penalty for non-compliance

Companies Act, 1956 Companies Bill, 2009

• Section 383A(1A)- the company and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues.

• •

Clause 178(5)

Penalty on company – one lakh rupees On every director and KMP who is in default – 25,000 rupees, for each default.

3

Signing of Annual Return

Companies Act, 1956 Companies Bill, 2009

• •

Annual Return of listed companies to be signed by PCS also.

No provision.

• •

Annual Return of listed companies also to be signed by PCS.

AR of a company having such paid-up capital and turnover as may be prescribed – also to be signed by PCS.

4

Compliance Certificate

Companies Bill, 2009

• Clause 82(1) –annual return to contain inter alia matters related to certification of compliances, disclosures.

• An extract of the Annual Return to form part of the Board’s Report.

5

Secretarial Standards

Companies Bill, 2009

Clause 107(10)- Every company to observe such secretarial standards as may be prescribed w.r.t.

General and Board Meetings.

6

Report on General Meetings

Companies Bill, 2009

• • Clause 109 (1) Every listed public company to prepare a report on each annual general meeting. Report to be filed with ROC within 30 days 7

Members of Tribunal

Companies Bill, 2009

• Clause 370(3) - Company Secretary in practice for at least twenty years is qualified for appointment as Technical Member of NCLT. 8

SECRETARIAL AUDIT

• • • The corporate sector is governed by a complex web of laws, rules and regulations viz. Company Law, Competition Law, Economic Laws, Securities and Capital Market Laws, etc.

Financial Audit only deals with financial aspects of a company and cost audit with costing aspects.

Therefore, there is a need for Secretarial Audit which will give an independent assurance of compliance of varied laws.

9

SUGGESTIONS TO IMPROVE CORPORATE GOVERNANCE

• • • The position of Chairman and MD should be held by different persons Designation of an Independent Director as Lead Independent Director Report on Corporate Governance to include the following: – Composition of the Board – Composition of various committees – Terms of reference of various committees – Criteria for determination of independence – Directors Remuneration Report – – Statement on performance evaluation of directors Report on impact analysis on shareholders – Sustainability Report 10

Thank You

11