cs in companies bill 2011

8/3/2019 CS in Companies Bill 2011

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COMPANY SECRETARIESIN COMPANIES BILL, 2011

CS. Bilu Balakrishnan


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COMPANIES BILL, 2011

Corporate Affairs Minister, Mr Veerappa Moily introduced the Companies Bill, 2011 on Wednesdaythe 14th December, 2011 in Parliament Lok Sabha. The Bill was cleared by the Cabinet onNovember 24, 2011.

The Bill aims at the modernisation of corporate regulation. It will herald an era of e-governance,enhanced accountability, and corporate social responsibility (CSR) among companies registeredin the country. Several corporate governance and disclosure norms were included in the Bill toavoid recurrence of corporate scandals such as the alleged accounting fraud by the promoters ofthe erstwhile Satyam Computer in 2009. Additional disclosure norms for companies, mandatoryrotation of auditors and audit f irms, regulation of related-party transactions, protection of minorityshareholders, provision for class action suits, enhancement of penalties and a mandatory slot fora woman director on company boards are all new proposals included in the Bill.

The New Companies Bill, 2011 have 29 Chapters & 448 Sections


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COMPANY SECRETARIES& COMPANIES BILL, 2011

The Company Secretary (CS in short) profession has lot more inthe new Bill. This presentation intents to have a birds eye view ofwhat is in the cards for the CS profession.

Views / Comments: [email protected]

Presentation Series 01 on New Company Law in India

This presentation includes the major provisions pertaining to companysecretary profession, and a comparison with the provisions of existing

Companies Act 1956 vis--vis Companies Bill 2011

All contents prepared from the proposed Companies Bill, 2011 asintroduced in Parliament. Please refer to any updates from time-to-time.

This presentation document is Open Source, any individual can host thesame in websites / blogs. Alteration of this presentation in any form is an

offence, and an infringement of the copyright of the author.

Copyright 2011 Corporate Intelligence Education & Research (CIER)

Online Branding Partner: CS STUDENTS ONLINE CLUBReporting Partner: ACSEC-INEWS


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CS IN DEFINITIONS

Definition of CS:

2 (24)company secretaryorsecretarymeans a company secretary as definedin clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 whois appointed by a company to perform the functions of a company secretary under thisAct;

Definition of CS in Practice:

2 (25)companysecretary inpracticemeans a company secretary who is deemedto be in practice under sub-section (2) of section 2 of the Company Secretaries Act,1980;

Definition of Expert:

2 (38)expert includes an engineer, a valuer, a chartered accountant, a company

secretary, a cost accountant and any other person who has the power or authority toissue a certificate in pursuance of any law for the time being in force;


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CS IN DEFINITIONS (CONT.)

Definition of Key Managerial Personnel:

2 (51)key managerial personnel, in relation to a company, means

(i) the Chief Executive Officer or the managing director or the manager;(ii) the company secretary;(iii) the Chief Financial Officer if the Board of Directors appoints him;and(iv) such other officer as may be prescribed;


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CS IN DEFINITIONS (CONT.)

Definition of Key Managerial Personnel:

2 (51)key managerial personnel, in relation to a company, means

(i) the Chief Executive Officer or the managing director or the manager;(ii) the company secretary;(iii) the Chief Financial Officer if the Board of Directors appoints him;and(iv) such other officer as may be prescribed;


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CS ROLE IN INCORPORATION & PROSPECTUSDOCUMENT OF A COMPANY

7. (1) There shall be filed with the Registrar within whose jurisdiction the registeredoffice of a company is proposed to be situated, the following documents and information forregistration, namely:

(a) the memorandum and articles of the company duly signed by all thesubscribers to the memorandum in such manner as may be prescribed;

(b) a declaration in the prescribed form by an advocate, a chartered accountant,cost accountant or company secretary in practice, who is engaged in the formation ofthe company, and by a person named in the articles as a director, manager or secretaryof the company, that all the requirements of this Act and the rules made thereunder inRespect

26. (1) Every prospectus issued by or on behalf of a public company either withreference to its formation or subsequently, or by or on behalf of any person who is or has

been engaged or interested in the formation of a public company, shall be dated and signedand shall

(a) state the following information, namely:

(i) names and addresses of the registered office of the company, companysecretary, Chief Financial Officer, auditors, legal advisers, bankers, trustees, ifany, underwriters and such other persons as may be prescribed;


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CS ROLE IN ANNUAL RETURN OF A COMPANY

92. (1) Every company shall prepare a return (hereinafter referred to as the annualreturn) in the prescribed form containing the particulars as they stood on the close of thefinancial year regarding

and signed by a director and the company secretary, or where there is no companysecretary, by a company secretary in practice:

Provided that in relation to One Person Company and small company, the annualreturn shall be signed by the company secretary, or where there is no company secretary, bythe director of the company.

(2) The annual return, filed by a listed company or, by a company having such paid-upcapital and turnover as may be prescribed, shall be certified by a company secretary inpractice in the prescribed form, stating that the annual return discloses the facts correctlyand adequately and that the company has complied with all the provisions of this Act..

(6) If a company secretary in practice certifies the annual return otherwise than inconformity with the requirements of this section or the rules made thereunder, he shall bepunishable with fine which shall not be less than fifty thousand rupees but which mayextend to five lakh rupees.


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COMPLIANCE WITHSECRETARIAL STANDARDS OF THE ICSI

118. (1) Every company shall cause minutes of the proceedings of every generalmeeting of any class of shareholders or creditors, and every resolution passed by postalballot and every meeting of its Board of Directors or of every committee of the Board, to beprepared and signed in such manner as may be prescribed and kept within thirty days of theconclusion of every such meeting concerned, or passing of resolution by postal ballot inbooks kept for that purpose with their pages consecutivelynumbered

(8) Where the minutes have been kept in accordance with sub-section (1) then, untilthe contrary is proved, the meeting shall be deemed to have been duly called and held, andall proceedings thereat to have duly taken place, and the resolutions passed by postal ballotto have been duly passed and in particular, all appointments of directors, key managerialpersonnel, auditors or company secretary in practice, shall be deemed to be valid..

.

(10) Every company shall observe secretarial standards with respect to general andBoard meetings specified by the Institute of Company Secretaries of India constitutedunder section 3 of the Company Secretaries Act, 1980, and approved as such by the CentralGovernment.


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MANDATORY APPOINTMENT OF COMPANY SECRETARY ASA KEY MANAGERIAL PERSONNEL

203. (1) Every company belonging to such class or classes of companies as may beprescribed shall have the following whole-time key managerial personnel,

(i) managing director, or Chief Executive Officer or manager and in their absence,a whole-time director; and(ii) company secretary:

Provided that unless the articles of such a company provide otherwise, an individualshall not be the chairperson of the company as well as the managing director or ChiefExecutive Officer of the company at the same time.

(2) Every whole-time key managerial personnel of a company shall be appointed bymeans of a resolution of the Board containing the terms and conditions of the appointmentincluding the remuneration.

(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 keymanagerial personnel from being a director of any company with the permission of theBoard:(4) If the office of any whole-time key managerial personnel is vacated, theresulting vacancy shall be filled-up by the Board at a meeting of the Board within a periodof six months from the date of such vacancy.


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SECRETARIAL AUDIT FOR BIGGER COMPANIES

204. (1) Every listed company and a company belonging to other class of companiesas may be prescribed shall annex with its Boards report made in terms of sub-section (3) ofsection 134, a secretarial audit report, given by a company secretary in practice, in such formas may be prescribed.

(2) It shall be the duty of the company to give all assistance and facilities to thecompany secretary in practice, for auditing the secretarial and related records of thecompany.

(3) The Board of Directors, in their report made in terms of sub-section (3) ofsection 134, shall explain in full any qualification or observation or other remarks made bythe company secretary in practice in his report under sub-section (1).

(4) If a company or any officer of the company or the company secretary in practice,contravenes the provisions of this section, the company, every officer of the company or thecompany secretary in practice, who is in default, shall be punishable with fine which shall not

be less than one lakh rupees but which may extend to five lakh rupees.


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FUNCTIONS OF A COMPANY SECRETARY

205. (1) The functions of the company secretary shall include,

(a) to report to the Board about compliance with the provisions of this Act, therules made thereunder and other laws applicable to the company;

(b) to ensure that the company complies with the applicable secretarial standards;

(c) to discharge such other duties as may be prescribed.

Explanation.For the purpose of this section, the expression secretarial standardsmeans secretarial standards issued by the Institute of Company Secretaries of Indiaconstituted under section 3 of the Company Secretaries Act, 1980 and approved by the CentralGovernment.

(2) The provisions contained in section 204 and section 205 shall not affect the dutiesand functions of the Board of Directors, chairperson, managing director or whole-time

director under this Act, or any other law for the time being in force.


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COMPANY SECRETARY IN MERGERS & AMALGAMATION

232. (1) Where an application is made to the Tribunal under section 230 for thesanctioning of a compromise or an arrangement proposed between a company and anysuch persons as are mentioned in that section, and it is shown to the Tribunal.

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(7) Every company in relation to which the order is made shall, until the completionof the scheme, file a statement in such form and within such time as may be prescribed withthe Registrar every year duly certified by a chartered accountant or a cost accountant or acompany secretary in practice indicating whether the scheme is being complied with inaccordance with the orders of the Tribunal or not.


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COMPANY SECRETARY AS A TECHNICAL MEMBER OFNATIONAL COMPANY LAW TRIBUNAL (NCLT)

409 (3) A person shall not be qualified for appointment as a Technical Member unless he(a) has, for at least fifteen years been a member of the Indian Corporate LawService or Indian Legal Service out of which at least three years shall be in the payscale of Joint Secretary to the Government of India or equivalent or above in thatservice; or

(b) is, or has been, in practice as a chartered accountant for at least fifteen years;or(c) is, or has, been, in practice as a cost accountant for at least fifteen years; or

(d) is, or has been, in practice as a company secretary for at least fifteen years; or

(e) is a person of proven ability, integrity and standing having special knowledgeand experience, of not less than fifteen years, in law, industrial finance, industrialmanagement or administration, industrial reconstruction, investment, accountancy,labour matters, or such other disciplines related to management, conduct of affairs,

revival, rehabilitation and winding up of companies; or

(f) is or has been for at least five years, a presiding officer of a Labour Court,Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947.


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MAJOR COMPARISON OF PROVISIONS RELATING TOCOMPANY SECRETARY IN COMPANIES ACT, 1956 AND

COMPANIES BILL, 2011


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Definition of CS in Sec.2 (45)

Definition of PCS in Sec.2(45A)

Definition of CS in Clause 2 (24) more simpleand specific

Definition of PCSP in Clause 2 (25)Conceptually No change

Companies Act 1956 Companies Bill, 2011

Appointment dealt in Sec.383A

Appointment limit Rs.5 Cores paid-up capital

Appointment exemption route available

A statutory position Penalty for non-appointment of secretary -

Rs.500 per day

Appointment dealt in Clause 203 as a KeyManagerial Personnel

Certain classes of companies limit will benotified in Rules

No exemption route

A more managerial position with statutorybackup

Company Penalty of Rs.1,00,000 toRs.5,00,000; Director & every Key ManagerialPersonnel - Penalty of Rs.50,000, and forcontinuing offence Penalty of Rs. 1,000 perday.

No provision for Secretarial Audit

No provision for compliance with SecretarialStandards of ICSI

Secretarial Audit mandatory for all listedcompanies, and such other companies to beprescribed (Cl.204)

All companies shall comply with SecretarialStandards of ICSI relating to Board & GeneralMeeting (Cl.118(10))


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Annual Return Signing by a director and aSecretary, if any. And if there is no secretary

then by two directors.

Annual Return to be signed by a director andthe company secretary, or where there is no

company secretary, by a company secretary inpractice:

Companies Act 1956 Companies Bill, 2011

Companies having a minimum paid-up capitaland up to Rs.5 cores a Compliance Certificatefrom PCS is required.

Concept of Compliance Certificate frompracticing company secretary re-casted in anew form clubbed with Annual ReturnCertification of a listed company and such

other companies as may be prescribed.92 (2) The annual return, filed by a listedcompany or, by a company having such paid-

up capital and turnover as may be prescribed,

shall be certified by a company secretary in

practicein the prescribed form, stating that theannual return discloses the facts correctlyand adequately andthat the company hascomplied with all the provisions of this Act.

No express certification in Mergers &Amalgamation Compliance with Scheme

Every company in relation to which the order is madeshall, until the completion of the scheme, file astatement in such form and within such time as may beprescribed with the Registrar every year duly certified bya chartered accountant or a cost accountant or acompany secretary in practice indicating whetherthe scheme is being complied with in accordance

with the orders of the Tribunal or not.


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COMPANY SECRETARIESIN COMPANIES BILL, 2011

CS. Bilu Balakrishnan

Copyright 2011 Corporate Intelligence Education & Research

(CIER)

Views / Comments: [email protected]

Presentation Series 01 on New Company Law in India
mailto:[email protected]:[email protected]

cs in companies bill 2011

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