The professionals who assist and direct the management team in creating long-term added value for the shareholders and society at large, as well as those who are responsible to the shareholders for the long-term performance of the companies, have received a lot of attention in the current business environment throughout India. No matter the field you are in, technology has touched everyone’s life and transformed it for greater efficiency and automation, and where Company secretary is no exception.
Self-governing professions need their members to embrace moral and legal accountability for their work as well as to advance the common good and the interests of society. The adherence to stringent standards of conduct that sustain rigorous ethical and moral convictions is one of the most important characteristics of a profession. Regulators view a Company Secretary (CS) who is bound by a strict code of conduct as a moral and reliable professional whose skill and judgment have earned a name for themselves in the business world under self-regulation.
As a result, the main objective of this essay is to show how company secretaries in India have developed professionally over time, acquiring crucial skills in corporate governance and compliance.
The metrics pertaining to government programs like “Made in India” as well as the ease of doing business in India are directly influenced by regulatory compliance. India is now placed 63rd in the World Bank’s Ease of Doing Business Index, a significant increase from a few years ago when It was frequently featured behind the Top 100 nations.
During the past three decades, the role of a CS has drastically changed in reaction to a rapidly changing industrial environment, economy, and the rise in demand for corporate governance and ethical business practices. The importance of compliance concerns is being recognized by stakeholders. Meeting stakeholders’ expectations is a professional’s top priority at all times.
The Function of CS in Indian Businesses and Their Duties at Work
A certified professional who belongs to the Institute of Company Secretaries of India (ICSI), a statutory professional organization in India that promotes, governs, and develops the field of company secretaries, is known as a company secretary. A CS professional who has a senior-level management position and sits on the board of any company is recognized as Key Managerial Person (KMP) under the regulations of the Companies Act 2013.
Professionals in corporate governance, regulations, and procedures are the obvious conscience guards for the business world since they are specialists in these areas. In these situations, they serve as the Board’s eyes and ears. They act as an essential conduit between the management of the firm, the shareholders (owners), other stakeholders, and regulatory bodies. A CS is an officer tasked with making sure that specific legal requirements are satisfied in accordance with numerous legal regulations, most notably the Companies Act of 2013, which affects enterprises. Because the CS is an “officer in default” as well, she must ensure swift adherence to the legislation just like every other board member. is on her comparable to any board member.
Another important function of a CS is to advise a company’s board of directors, both collectively and individually, on their duties, responsibilities, and powers. This is a critical function of a company secretary since she is responsible for informing Board members about their needed responsibilities and powers as outlined by corporate law, as well as supporting the Board in the conduct and affairs of the firm. CS is in charge of making sure that board processes are followed and checked on an ongoing basis.
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The Role and Duties of CS in India Are Shifting
During the past three decades, the role of a company secretary has drastically changed in reaction to a rapidly changing industrial environment, economy, and the rise in demand for corporate governance and ethical business practices. The importance of compliance concerns is being recognized by stakeholders. Meeting stakeholders’ expectations is a professional’s top priority at all times.
The role of a company secretary has evolved from being a conscience keeper to a compliance officer, governance expert, advisor, corporate growth strategist, and so on. The CS profession has now made a name for itself in the corporate world, playing a pivotal role in guiding organizations toward success and long-term growth.
In addition to overseeing legal compliance and requirements and advising the board, they have been involved in top management decision-making and the creation and execution of structures and policies for the company’s operations. Moreover, they assist and counsel the board in maintaining great corporate governance and compliance with corporate governance guidelines and best practices.
The Obligations Imposed by the Legislation
The Companies Act 2014, which went into effect on June 1, 2015, maintains the necessity for a company secretary, in contrast to UK legislation that eliminated it for private enterprises in 2006. The fact that this requirement is still in place shows how important the legislature views the company secretary’s position, and the proposals take it a step further by requiring the Board of Directors to confirm that the secretary possesses the skills and experience required to carry out her duties as secretary of the company and maintain the records mandated by the Act.
The company secretary will also be required to sign a declaration confirming the existence of the duties that she assumed upon appointment. The company secretary’s main duty is to see to it that the business complies with all applicable laws, maintains the necessary statutory registers, and submits all required paperwork to the Registrar of Companies, including annual reports, financial statements, and forms pertaining to changes in share capital, among other things.
Corporate Governance at Work
In actuality, the company secretary’s duties go considerably beyond the basic legislative requirements outlined above. Among other things, the company secretary’s duties include developing and implementing procedures to support and uphold sound corporate governance. This is acknowledged by both the FRC Guidelines on Board Effectiveness and the UK Code of Corporate Governance (which the Irish Stock Exchange has adopted through the Irish Annex). Both have endeavoured to bring companies’ attention to the efficacy of the Board and, consequently, how the company secretary may assist it. All businesses should adhere to these corporate governance rules insofar as they are regarded acceptable for the size and purpose of the company, even if this guidance is solely for listed corporations. It is best practice.
The dynamics of the boardroom are changing, and chairmen and directors are looking to corporate secretaries for help as they recognize that they need specialized knowledge and expertise in this area. There are many tasks that the company secretary may help with and bring value to, some of which have been expressly covered in the preceding advice.
Governance of Organization
It’s crucial to have sound governance procedures in place, that they’re well-documented, and that the rest of the organization is aware of them. As part of their duties, company secretaries often have a full understanding of the governance structure and are responsible for making sure that it is accurately documented, along with any supplementary rules and procedures. Making ensuring formal paperwork necessary by the UK Code of Corporate Governance is in place, such as a list of issues set aside for the Board, should be part of this process.
Supportive of the Chairperson
Via the chairman, the company secretary is tasked with advising the Board of Directors on all matters pertaining to corporate governance. On a regular basis, they should assess the Board’s and the company’s other governance mechanisms to see if they are effective for their intended purposes, and they should look into any changes or initiatives that could enhance the governance of the business. The efficiency of the Board greatly depends on the connection between the company secretary and the chairman.
Committee Developments
By aiding the Board of Directors and its committees in carrying out their responsibilities effectively, in line with their terms of reference, and in accordance with best practices, the company secretary plays a crucial part in good governance. The meeting schedule is only one aspect of support; proactive agenda management and ensuring the presentation of accurate information prior to meetings are other important components. This should enhance the Board’s ability to make wise choices and enable directors to actively engage in board discussions and debates. The company secretary should seek and oversee follow-up actions after meetings and give information on any new concerns.
Progress of Board of Directors
All directors should have access to the counsel and services of the company secretary. The company secretary should establish close working relationships with each board member, offering unbiased counsel and acting in the organization’s best interests. To encourage board growth, the company secretary should assist the chairman with all board development initiatives, such as board evaluation, induction, and training. This should involve completing an in-depth evaluation of the Board, committees, and individual directors on a yearly basis and seeing to it that the evaluations’ recommendations are implemented. The company secretary should also be in charge of creating customized induction programs for new directors as well as a training program for both the Board and the individual directors.
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Communiqué With Stakeholders
The company secretary acts as a vital link between the Board of Directors and the management since the same person is the only means of communication between them. By properly communicating with them, they may aid management in understanding the goals and objectives of the Board. The company secretary is typically the first point of contact for inquiries and plays a crucial role in dealing with external stakeholders like investors. The company secretary should collaborate closely with the chairman and the Board to maintain strong shareholder relations.
Recent economic events have raised stakeholder concerns about the company’s business practices, notably in the financial services industry. Best practices must thus always be followed, and documentation must be accessible to support this. Better standards are required in this sector, as evidenced by the Central Bank’s establishment of a set of corporate governance norms that include fitness and probity requirements for some pre-approval controlled operations or individuals who perform controlled responsibilities. “Ensuring, controlling, or monitoring compliance by a regulated financial service provider with its applicable obligations” would be one of the controlled functions.
With the implementation of these new regulations, there is increasing care in the provision of such services, which are more likely to be put at the feet of the company secretary going forward. Compliance monitoring has traditionally been outsourced in the financial services industry. It’s true that keeping the Board of Directors informed about new laws and how it impacts them is part of the corporate secretary’s duties. The role of the company secretary has evolved as a result of the increased focus on corporate governance, and the secretary is increasingly seen as the guardian of the business’s adherence to legal requirements and industry best practices.
