Company Secretary in Practice, Responsibilities and Need
Learn about the roles and responsibilities of a Company Secretary in Practice and Employment under the Companies Act of 2013, and their importance in ensuring regulatory compliance and corporate governance.
Mridula Sharma10 Apr, 2024
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Company Secretary in Practice: If you're a member of the ICSI and not currently employed, you can start practising once you get a Certificate of Practice from the Institute. The Companies Act of 2013 outlines various rules for Company Secretaries working with companies or firms.
This Act emphasizes the importance of Company Secretaries by offering two options for their involvement: as an employed Company Secretary or as a practising Company Secretary. This means Company Secretaries can have different roles depending on how they're connected to the organization.Company Secretary in Employment
A company secretary in Employment means a company hires the CS under a work agreement. According to the Companies Act, 2013, specific rules apply to certain types of companies when appointing a CS. The Act identifies the CS as a Key Managerial Personnel (KMP) and other roles like CEO, Manager, MD, Whole Time Officer, and CFO. Listed companies and other public companies (with paid-up share capital over Rs.10 crore) must appoint a full-time KMP, as per Rule 8. For companies not covered under Rule 8, they must appoint a full-time KMP if their paid-up share capital exceeds Rs.5 crores.Company Secretary in Practice
Section 2(25) of the Companies Act, 2013 gives us the meaning of "company secretary in practice." It refers to a company secretary working under section 2(2) of the Company Secretaries Act, 1980. According to Section 2(2), a CS in practice is a member of the institute who operates independently, either alone or in partnership, without any formal agreement. Their role and authority surpass that of a CS in employment.Responsibilities of Company Secretary in Practice
The following are the major responsibilities of company secretary in practice:- Assisting with the creation and registration of companies, along with associated tasks.
- Acting as a representative for companies and individuals in dealings with the NCLT.
- Managing corporate restructuring and takeover procedures.
- Overseeing the rehabilitation and revival processes for struggling companies.
- Offering professional support to company liquidators.
- Conducting secretarial audits and providing certification services.
- Signing off on the annual return.
- Pre-certifying and electronically filing different e-forms as necessary.
Also Check: Role of Company Secretary in Corporate Governance
Need of Company Secretary in Practice
The importance of Company Secretaries (CS) in practical business operations has been steadily increasing, primarily due to the evolving legal landscape and the need for regulatory compliance. Two significant factors contribute to this rising demand:Annual Return Filing:
The annual return serves as a comprehensive snapshot of a company's vital information as of the end of the financial year. For non-listed companies, this document requires signatures from a CS who is an employee and a director of the company. However, if the company hasn't appointed a CS in employment, the responsibility falls on a CS in Practice to sign it. In the case of listed companies, even if the annual return is signed by a CS in employment, it necessitates certification by a CS in Practice. This condition applies specifically to listed companies meeting certain criteria: (a) Paid-up share capital exceeding Rs.10 crores (b) Turnover surpassing Rs.50 crores These regulations underscore the importance of ensuring the accuracy and legality of financial disclosures, particularly for companies with significant financial operations.Secretarial Audit Report:
Secretarial Audit represents a comprehensive review aimed at verifying compliance with various legal provisions, including those outlined in the Companies Act. According to the Companies Act, 2013, both listed companies and certain other classifications of companies are mandated to submit a Secretarial Audit Report along with the Board Report. The certification of this report is entrusted to a CS in Practice. This requirement extends to companies meeting specific criteria: (a) Paid-up share capital exceeding Rs.50 crores (b) Turnover exceeding Rs.250 crores By subjecting companies to a thorough audit process, regulatory bodies aim to uphold transparency and accountability in corporate governance, thereby safeguarding the interests of stakeholders. While both CS employed within a company and those in Practice play pivotal roles in ensuring compliance and smooth operations, it's important to acknowledge that each comes with its own set of advantages and disadvantages. This dichotomy necessitates a nuanced understanding of their respective contributions and limitations within the broader regulatory framework. Elevate your professional competency in Company Secretarial practices through PW Company Secretary courses . Enroll now to embark on a journey towards becoming a proficient Company Secretary. Initiate your career advancement today!Company Secretary in Practice FAQs
What is a Company Secretary in Employment?
A Company Secretary hired by a company under a work agreement, ensuring legal compliance within the organization.
What are the responsibilities of a Company Secretary in Practice?
Includes aiding in company registration, representing clients before NCLT, overseeing corporate restructuring, and conducting secretarial audits.
Why are CS in Practice important?
They play a crucial role in certifying annual returns and secretarial audit reports, ensuring compliance with legal provisions.
What criteria determine the need for CS certification?
Criteria include paid-up share capital and turnover thresholds, as outlined in the Companies Act.
What distinguishes CS in Employment from CS in Practice?
CS in Employment work within a company under a contract, while CS in Practice operate independently or in partnership, providing services externally.
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