Presentedby:C.S.NesarAhmadImmediatePastPresident:InstituteofCompanySecretaries

ofIndia(ICSI)&

CorporateSecretariesInternationalAssociation(CSIA)

FounderPresident:UniserveKnowledgeFoundationpresident@ukfglobal.org

Role of a Company Secretary in the Global Environment

INTRODUCTIONINTRODUCTION

Historically CS role has been of a Compliance officer related toSecretarial compliances, Statutory compliances and Due diligence and audit

Due to the various changes and introduction of various new laws like he enactment of Depositories Act, 1996, Companies (Amendment) Act, 1996, Take over code, Securities have (Amendment) Act, 1995, changes in securities contracts (Regulation) Act, 1956, increased powers to SEBI, Forex Management, foreign collaboration and joint venture agreements, have all activated the corporate sector to a large extent due to which the role of CS has evolved over these years and continues to evolve due to changes.

INTRODUCTIONINTRODUCTION

Due to globalization The Corporate sector has recognized the role of company secretaries. Corporate managements are constituted by corporate executives of multi discipline professionals having dynamism and vision for the effective role of moulding and shaping the corporate sector under any demanding situation.

INTRODUCTIONINTRODUCTION

With the increased professionalization of corporate management in the context of modern corporate culture, company secretaries play a key role in guiding and shaping the distinct corporate entity, engaging him. He is often looked upon as a Senior Management Professional who is expected to discharge a wide range of responsibilities.

INTRODUCTIONINTRODUCTION

In a decentralized and liberalised economic and legal environment, the role of a company secretary assumes greater significance and arduous responsibility.

A company secretary is no more now a company law secretary. Though compliance of corporate laws is an important function of a company secretary, his role does not commence and end with mere compliance of laws.

C S under Companies Act, 1956C S under Companies Act, 1956

As per Section 2(45) of the Companies Act, 1956,

a secretary means a Company Secretary within the meaning of Section 2(1) ( c) of the Company Secretaries Act, 1980 i.e. a member of ICSI.

He must possess the prescribed qualifications and;

Shall perform the ministerial and administrative duties.

Legal Position of a C SLegal Position of a C S

Duties of a C S Duties of a C S

Ensuring good Corporate Governance Ensuring good Corporate Governance

Transfer Pricing (T.P.)Transfer Pricing (T.P.)

Expenses arising from transactions with an Associated Enterprise (AE) shall be computed having regard to arm’s length price.

TP until now was applicable to companies having cross border transactions with their AE.

Supreme court ruling in case of CIT vs. M/S Glaxo Smithkline Asia (P) Ltd. (Special Leave to Appeal (Civil) No(s).18121/2007), expanded the ambit of TP to specified domestic transactions w.e.f 01 April 2013.

Most likely transactions under the scanner of the TP Authorities would be:

Interest Free Loans to group companies;

Granting of Corporate Guarantees / Performance Guarantees by Parent Company to its subsidiaries;

Intra-group purchase / sell / service transactions;

Payment made to key personnel of the group companies;

Payment made to relatives of key personnel of the group companies.

Provided that the aggregate value of the transaction entered into by the assessee with its domestic AE exceeds Rs. 5 crore.

Transfer Pricing (T.P.)Transfer Pricing (T.P.)

Role of a C S in T.P. Role of a C S in T.P.

Company Secretary of the companies who have domestic transaction with its related parties equal to or more than Rs. 5 crore or companies whose present domestic transaction less than Rs. 5 Crore but is likely to increase beyond Rs. 5 crore in the financial year 2012-13 are advised to validate their present business model and pricing methodology from a transfer pricing perspective which will enable them to take corrective actions, if necessary.

Ensuring Compliance with Labour LawsEnsuring Compliance with Labour Laws

Ensuring Investor ProtectionEnsuring Investor Protection

The term “investors” is not limited to only shareholders but to extend to all other stakeholders who are part and parcel of the organization.

An employed Company Secretary is the bridge between all such stakeholders and the company

Role of a C S under FEMARole of a C S under FEMA

A Company Secretary is responsible for:

Advising on legal and procedural matters falling under FEMA and ensuring the timely compliances thereof.

Advising Non-Resident Indians regarding investment in India and repatriation of such investments and returns thereon.

Obtaining RBI/FIPB approvals.

Compliance under State LawsCompliance under State Laws

A company Secretary is responsible for advising on legal and procedural matters on various laws of different states on:

Pollution Control,Co-operative Societies, Public Trusts, Non Trading Corporations,Land Ceilings, Sales Tax, Revenue Laws etc.

Role of a C S in Intellectual Property Rights and WTO mattersRole of a C S in Intellectual Property Rights and WTO matters

Advising on Intellectual Property Licensing and drafting of agreement.

Advising on passing off/infringement matters.

Advising on registration of patents, trademarks and copyrights.

Advising on all matters related to Intellectual property and TRIPs of WTO.

Advising on anti-dumping matters-computation of Normal Value, Sale Price, Comparisons and Appraisals.

Personnel MattersPersonnel Matters

A Company Secretary assists the Organisation and the HR Deptt. in Manpower Planning and development, recruitment by providing specifically advising on:

fixation of terms of appointment; and

Advising on matters with respect to labour and industrial laws, maintenance of registers and records, filing of various forms and registers.

Export-Import And Forex DealingsExport-Import And Forex Dealings

Company Secretary assists the Board by:

Advising on Export-Import policy and regulations.

Export-Import documentation.

Advising on Letters of Credit, and drafting suitable conditions in L/Cs.

Advising and assisting in receipt and remittance of funds in foreign currency.

Assistance in Project PlanningAssistance in Project Planning

Apart from ensuring compliance under various laws by the Company, a Company Secretary can be of help to the Board in certain crucial areas such as project planning by helping the Board to:

Identification of Project.Selection of location for the project and advising on various incentives available.

Assistance in Project PlanningAssistance in Project Planning

Selection of land, search of titles, and getting required approvals for carrying out industrial/commercial activities on such land.

Advising on size of the project, drawing schedule of implementation and follow up from the stage of conceiving of project up to the commencement of commercial production.

Advising on expansion and modernization.

Business Responsibility ReportingBusiness Responsibility Reporting

Company Secretary, being an advisor to the Board and the custodian of the Company, is responsible for:

Compliance with various laws;Upholding Minority Rights;Ensuring well being of employees in the organisation;Ensuring integration of social and environmental issues

into core business strategy; andReporting on non financial performance of the

organisation.

New responsibilities under the Companies BillNew responsibilities under the Companies Bill

The role of Company Secretaries has also been magnified in terms of responsibilities in the Companies Bill. Every

C S has to:

Report periodically to the board the Company’s Compliance with the Act.

Report periodically to the board the Company’s Compliance with Secretarial Standards (issued by the Institute of Company Secretaries of India)

New responsibilities under the Companies BillNew responsibilities under the Companies Bill

Coordinate the performance of a Secretarial Audit. The Secretarial Audit Report has to be annexed with the director’s and auditor’s report

The Company Secretary has to sign and certify the correctness of the annual return of the Company.

Issue Of Certificates Under Various StatutesIssue Of Certificates Under Various Statutes

Compliance Certificate for companies not required to employ a whole-time secretary and having paid-up share capital of Rs. 10 lakhs or more.

Making a verified declaration of compliances for obtaining a certificate of commencement of business/commencement of other business.

Making the statutory declaration that all requirements of the Companies Act and the rules there under have been complied with in respect of registration of a company and matters precedent and incidental thereto.

Issue Of Certificates Under Various StatutesIssue Of Certificates Under Various Statutes

Certificate regarding dispatch of certificate after transfer etc. under clause 47(C) of the Listing Agreement.

Give declaration in respect of section 25 companies that the Memorandum and Articles of Association have been drawn up in conformity with the provisions of the Act and compliance of provisions with respect to registration or matters incidental thereto.

Signing of annual return of listed companies.

Due Diligence Reports for BanksDue Diligence Reports for Banks

The Reserve Bank of India has mandated all Scheduled Commercial Banks and Primary Urban Co-operative Banks to obtain] a Diligence Report from a professional (preferably a Company Secretary) on a half yearly basis regarding compliance with all statutory and contractual obligations in respect of companies availing multiple banking / consortium lending arrangements.

Practicing Company Secretaries are qualified to issue these Due Diligence Report for Banks.

CONCLUSION

It is clear from the foregoing discussion that company secretaries have come to be accepted by all as an independent and indispensable professional. The role of company secretary has not merely changed; it has transformed itself into new dimensions. The changes have terrified new challenges and tasks; that spur the professional instincts of a company secretary to identify himself with the whole of business.

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