Definition and Appointment

A Company Secretary (CS) is a senior-level corporate professional who is an expert in company law and corporate governance. The CS acts as the conscience keeper of the company, ensuring that it operates in compliance with all applicable laws and regulations. They are the primary link between the company's Board of Directors, shareholders, regulatory authorities, and other stakeholders.

The role of a Company Secretary has evolved significantly from being a mere record-keeper to a strategic advisor to the Board on matters of corporate governance, compliance, and law.

Key Managerial Personnel (KMP)

The Companies Act, 2013, has elevated the position of a Company Secretary by including them in the definition of "Key Managerial Personnel" (KMP) under Section 2(51). This places the CS at par with other top executives like the CEO, MD, and CFO, officially recognizing their crucial role in the company's management and governance structure.

Eligibility and Qualifications

To be appointed as a Company Secretary, an individual must meet the qualifications prescribed under the Act.

As per Section 2(24) of the Companies Act, 2013, a "company secretary" or "secretary" means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980, who is appointed by a company to perform the functions of a Company Secretary.

The Company Secretaries Act, 1980, defines a Company Secretary as a person who is a member of the Institute of Company Secretaries of India (ICSI). Therefore, the essential qualification to become a CS is to pass the examinations conducted by the ICSI and become its member.

Mandatory Appointment (Section 203)

The appointment of a whole-time Company Secretary is mandatory for certain classes of companies to ensure professional handling of compliance and governance matters. Section 203 mandates the appointment of a whole-time CS for:

• Every listed company.
• Every other public company having a paid-up share capital of ten crore rupees (₹10 Crores) or more.
• Every private company which has a paid-up share capital of ten crore rupees (₹10 Crores) or more.

The appointment is made by a resolution of the Board of Directors, and the RoC must be informed by filing Form DIR-12.

Duties and Responsibilities

The duties of a Company Secretary are extensive and varied. They are broadly defined under Section 205 of the Companies Act, 2013, and the rules made thereunder. These duties can be categorized into several key areas.

1. Ensuring Compliance with Company Law and other Regulations

This is the foremost duty of a CS. They are responsible for ensuring that the company complies with the applicable provisions of:

• The Companies Act, 2013, and its rules.
• The company's Memorandum and Articles of Association.
• Other laws applicable to the company (e.g., SEBI regulations for listed companies, FEMA, labour laws, environmental laws, etc.).

They act as the company's Chief Compliance Officer, guiding the Board on all legal and procedural requirements.

2. Attending and Managing Board and General Meetings

The CS plays a pivotal role in the conduct of all company meetings.

• Convening Meetings: To issue notices for all Board, Committee, and General meetings in consultation with the Chairman.
• Preparing Agenda: To prepare the agenda for the meetings and circulate it along with the notice and any other relevant documents.
• Attending Meetings: To attend the meetings and provide necessary information and guidance to the Board on procedural and legal aspects.
• Recording Minutes: To prepare and maintain the minutes of all Board, Committee, and General meetings. The minutes are the official record of the decisions taken, and their accuracy is the responsibility of the CS.

3. Maintaining Company Records and Registers

The Company Secretary is responsible for the proper maintenance of all the statutory books and registers of the company as required under the Companies Act. This includes:

• Register of Members.
• Register of Directors and KMP and their shareholding.
• Register of Charges.
• Register of Loans, Guarantees, and Investments.
• Minutes Books of all meetings.

4. Acting as a Communication Channel

The CS serves as the principal officer through whom the company communicates with its stakeholders.

• Representing the Company: To represent the company before various regulatory authorities like the Registrar of Companies (RoC), the National Company Law Tribunal (NCLT), SEBI, and the Reserve Bank of India (RBI).
• Liaison with Stakeholders: To assist the Board in its communications with shareholders, debenture holders, depositors, and other stakeholders.

5. Advising the Board

The CS provides crucial advice to the Board of Directors on matters relating to corporate governance, business ethics, and compliance. They ensure that the directors are aware of their duties, responsibilities, and liabilities and assist them in following good corporate governance practices.

Liabilities of Company Secretary

With great responsibility comes great liability. As a Key Managerial Personnel and an "officer in default" under the Companies Act, a Company Secretary can be held personally liable for various defaults and non-compliances by the company.

Statutory Liability

The Companies Act, 2013, imposes penalties (fine and/or imprisonment) on the "officer who is in default" for a vast number of violations. The definition of an officer in default under Section 2(60) explicitly includes the Company Secretary. Some key areas of liability include:

• Incorrect Financial Statements: If the financial statements of the company are not prepared in compliance with the Act, the CS can be held liable.
• Failure to File Documents: Liability for failure to file annual returns, financial statements, and other documents with the RoC within the prescribed time.
• Defaults related to Meetings: Liability for not holding meetings as per the law, not maintaining proper minutes, or not sending out proper notices.
• Fraud (Section 447): If a Company Secretary is found to be knowingly involved in any fraudulent activity concerning the company's affairs, they can be prosecuted under Section 447, which carries severe penalties of imprisonment and fine.
• False Statements (Section 448): If a CS makes a statement in any return, report, or document which is false, knowing it to be false, they can be held liable for fraud under Section 447.

Contractual Liability

A Company Secretary is an employee of the company, and their relationship is governed by the terms of their employment contract. They can be held liable for any breach of the terms of this contract, such as a breach of confidentiality.

Liability for Negligence

As a professional, a Company Secretary is expected to perform their duties with a reasonable degree of skill and care. If they are negligent in their duties and this negligence causes a financial loss to the company, the company can sue them to recover the damages. For example, if a CS fails to file a crucial document on time, leading to a heavy penalty on the company, the CS could be held liable for that loss due to their negligence.

Definition and Appointment

In the context of the Companies Act, 2013, the term "Manager" has a very specific and technical meaning. It does not refer to any person with a managerial job title (like Sales Manager or HR Manager). Instead, it denotes a single individual who is entrusted with the overall management of the entire company, subject to the supervision and control of the Board of Directors.

The legal definition is provided under Section 2(53) of the Companies Act, 2013, which defines a 'manager' as:

"an individual who, subject to the superintendence, control and direction of the Board of Directors, has the management of the whole, or substantially the whole, of the affairs of a company, and includes a director or any other person occupying the position of a manager, by whatever name called, whether under a contract of service or not."

Key Elements of the Definition

• Must be an Individual: A firm, body corporate, or association cannot be appointed as a Manager.
• Manages the Whole or Substantially the Whole of Affairs: This is the most crucial element. The Manager is responsible for the overall, day-to-day management of the company, not just a specific department or division. Their scope of authority is comprehensive.
• Subject to Board's Control: The Manager is not the supreme authority. They must work under the supervision, control, and direction of the Board of Directors.
• By Whatever Name Called: The designation does not matter. If an individual performs the functions of a Manager as defined above, they will be considered a Manager under the Act, regardless of their official title (e.g., President, Chief Executive).

Distinction between Manager and Managing Director (MD)

While both roles involve top-level management, they are distinct under the Act. A company can appoint either a Manager or a Managing Director, but Section 196 prohibits a company from having both a Manager and an MD at the same time.

Appointment of a Manager (Section 196)

The appointment and remuneration of a Manager are governed by the same provisions that apply to a Managing Director or a Whole-Time Director under Section 196 and Schedule V of the Act.

1. The appointment must be made by a resolution of the Board of Directors.
2. The terms and conditions of the appointment and remuneration must be approved by a resolution at the next general meeting of the company.
3. The appointment is subject to the conditions specified in Schedule V of the Act, which includes criteria regarding the age of the appointee and their past conduct (e.g., they should not have been sentenced to imprisonment).
4. The tenure of appointment cannot exceed five years at a time. However, they are eligible for re-appointment.

Powers and Duties

The powers and duties of a Manager stem from their position as the head of the company's day-to-day management and their status as a Key Managerial Personnel.

Powers of a Manager

The primary power of a Manager is to manage the "whole, or substantially the whole, of the affairs of the company". The specific powers are usually detailed in their contract of service and the resolutions passed by the Board. These generally include:

• Implementing the policies and strategies formulated by the Board of Directors.
• Overseeing and coordinating the functions of all departments of the company.
• Appointing, supervising, and managing the employees and officers of the company.
• Entering into contracts and agreements on behalf of the company in its ordinary course of business.
• Managing the company's finances, operations, and resources on a daily basis.
• Representing the company in dealings with customers, suppliers, government authorities, and other third parties.

All these powers must be exercised subject to the overall control and direction of the Board.

Duties of a Manager

As a key executive in a position of trust, a Manager has several duties:

• Fiduciary Duties: A Manager has a fiduciary duty to act in good faith and in the best interests of the company. They must avoid any conflict of interest and cannot make any secret profits from their position.
• Duty of Care and Skill: They must perform their managerial functions with reasonable care, skill, and diligence, as would be expected from a person in their position.
• Statutory Duties: As a KMP and an "officer" of the company, a Manager is responsible for ensuring compliance with various provisions of the Companies Act and other applicable laws.
• Duty to Report to the Board: A Manager has a duty to keep the Board of Directors fully informed about the company's affairs and to seek their guidance and approval on major decisions.

Liabilities of Manager

The significant powers vested in a Manager are accompanied by corresponding liabilities. As a Key Managerial Personnel and an "officer who is in default" under Section 2(60), a Manager can be held personally liable for defaults and wrongdoings.

Civil Liability

• Breach of Fiduciary Duty: If a Manager's breach of duty (e.g., through negligence or by making a secret profit) causes a financial loss to the company, they can be sued by the company to make good that loss.
• Breach of Contract: A Manager can be held liable for any breach of the terms of their employment contract with the company.
• Liability for Misfeasance: During winding up, a Manager can be held personally liable to compensate the company for any loss caused by their misfeasance or breach of trust.

Criminal Liability

A Manager is exposed to the same criminal liabilities as directors and other KMPs for various offences under the Companies Act, 2013. Key instances include:

• Fraud (Section 447): If a Manager is found guilty of any act of fraud in relation to the company's affairs, they can face severe punishment, including imprisonment for up to ten years and a heavy fine.
• False Statements (Section 448): If a Manager knowingly makes a false statement in any statutory document or report, they can be prosecuted for fraud under Section 447.
• Other Statutory Defaults: A Manager, as an "officer in default", can be held liable for a wide range of non-compliances, such as failure to file annual returns, defaults in payment of dividends, or non-compliance with rules regarding company accounts. The penalties for these defaults can include both fines and imprisonment.

The legal framework ensures that the individual entrusted with the management of the entire company is held to the highest standards of accountability.