In today’s business environment in India, there is an adding emphasis on adherence to norms of good corporate governance, leading to jacked attention on the professionals who support and guide the management team. These professionals play a critical role in generating long-term added value for shareholders and society while being responsible to shareholders for the company’s long-term performance, also regulatory compliance has a direct impact on the ease of doing business in India, as well as parameters relating to government initiatives such as “Make in India.”

According to the World Bank’s Ease of Doing Business Index, India has made significant advancement and is now ranked 63rd, a major improvement from its former years. In this context, Company Secretaries (CS) have emerged as highly valued professionals who are members of the Institute of Company Secretaries of India (ICSI), a statutory professional body in India with the objective of promoting, regulating, and developing the profession of company secretaries in India.

CS professionals are honored as Key Managerial Personnel (KMP) under the provisions of the Companies Act, 2013, occupying a senior-level position in management and serving as an integral part of the board of any company. They are subject to a strong code of conduct and are viewed by regulators as ethical and trustworthy professionals, whose professional judgment and competence have made a significant impact in the corporate sector, operating in a self-regulated environment.

Over the last three decades, the function of a CS has evolved in response to a rapidly changing economy, industrial environment, and the growing demand for corporate governance and ethical business practices. As stakeholders become more aware of compliance issues, professionals in this field have a primary responsibility to meet their expectations at all times.

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The Company Secretary (CS) is tasked with the critical responsibility of ensuring that the company adheres to all relevant statutory and regulatory requirements, and is responsible for implementing decisions made by the board of directors. The CS must ensure that the company complies with numerous laws, statutes, and regulations that are applicable to it. In India, a Company Secretary must be a member of the Institute of Company Secretaries of India to be eligible for appointment as a Company Secretary for any company.

Benefits of a Company Secretary

In today’s business environment, adherence to statutory and regulatory compliance is of utmost importance. Failure to comply with the required standards may result in the imposition of fines and prosecution of the company’s directors. A Company Secretary plays a vital role in ensuring compliance matters are handled effectively. The benefits of a Company Secretary are as follows:

• Maintaining accurate and up-to-date company records
• Sending reminders for account-related deadlines
• Filing returns with the appropriate regulatory body
• Updating information such as changes in directors
• Providing valuable business advice
• Ensuring corporate governance and statutory compliance are met.

 

The Underlying Roles And Duties Of The Company Secretary

The role of company secretaries in India has evolved significantly beyond traditional notions, with modern company secretaries serving as vital components in business machinery. In addition to corporate governance and compliance, today’s company secretaries serve as advisors on a range of important matters, including law, mergers and acquisitions, restructuring, and new business setups.

The emphasis on adherence to norms of good corporate governance in today’s Indian business environment has led to increased focus on professionals who support and guide management teams in generating long-term added value for shareholders and society at large. Members of self-governing professions are expected to accept legal and ethical responsibility for their work and prioritize the interests of the public and society. Strict adherence to codes of conduct is essential for preserving rigorous ethical and moral obligations in a self-regulated regime.

As a result, Company Secretaries (CS) subjected to a strict code of conduct are recognized by regulators as ethical and trustworthy professionals whose professional judgment and competence have made a significant impact in the corporate sector. The widening roles and responsibilities of CSs include:

• Advising on foreign collaborations/setting up of joint ventures/subsidiaries in India or abroad

• Carrying out plan for consolidation and diversification of the business

• Planning strategies for amalgamation/merger, acquisition, takeover, reorganization, restructuring and winding up of companies

• Advising the management on post-merger, acquisitions or restructuring strategies

• Advising on legal and procedural matters under the Companies Act and FEMA

• To act as Arbitrator and Conciliator and advising on the same

• Appearing as authorized representative of the Company before the NCLT/NCLAT, Central Government, Regional Director and Registrar of Companies

• To act as Secretarial Auditor, advisor or consultant

• Advising on matters related to Intellectual Property

Corporate Governance

The modern business environment in India demands strict adherence to norms of good corporate governance, and the role of company secretaries has become increasingly important in ensuring that companies comply with legal and regulatory requirements. Today, a company secretary is much more than just a compliance officer; they serve as advisors to the management team on a range of issues that are critical to the success of the business.

In addition to their traditional responsibilities of ensuring compliance with statutory and regulatory requirements, company secretaries now play a key role in advising management on legal matters, mergers and acquisitions, restructuring, and new business setups. With the increasing complexity of the business environment, CSs are expected to provide business advisories to the management team to help them make informed decisions that are in the best of the company and its shareholders.

Good corporate governance is essential for the long-term success of any company, and the role of the company secretary in ensuring compliance with legal and regulatory requirements is critical. In today’s business environment, companies are expected to operate with transparency, accountability, and integrity, and the CS plays a key role in ensuring that the company operates in compliance with these principles.

One of the key conjecture of members of self-governing professions is that they accept legal and ethical responsibility for their work and hold the interest of the public and society as highest. CSs are subject to strict codes of conduct and are recognized by regulators as ethical and trustworthy professionals whose professional judgment and competence have made a significant impact in the corporate sector.

The widening roles and responsibilities of CSs include proper maintenance of all company records, issuing reminders regarding the company’s accounts, filing returns with the registry of jurisdiction, updating any changes such as director change, and taking care of all corporate governance and statutory compliances. Additionally, CSs are expected to provide business advisories and help the management team navigate complex legal and regulatory environments.

In conclusion, the role of company secretaries in India has evolved significantly beyond traditional notions, and they are now recognized as vital components of business machinery. The CS plays a critical role in ensuring that companies comply with legal and regulatory requirements, and they also serve as advisors to the management team on a range of issues critical to the success of the business. With the increasing complexity of the business environment, the role of the CS has become even more critical in ensuring that companies operate with transparency, accountability, and integrity.

Statutory Responsibilities

The role of company secretaries in India has become increasingly crucial in the modern business environment due to the demand for strict adherence to norms of good corporate governance. Company secretaries are now recognized as advisors to the management team on a range of critical issues beyond just compliance with legal and regulatory requirements.

In addition to their traditional responsibilities, company secretaries are expected to advise management on legal matters, mergers and acquisitions, restructuring, and new business setups. They provide business advisories to help the management team make informed decisions that are in the best interests of the company and its stakeholders.

The importance of good corporate governance cannot be overstated, and the role of the company secretary in ensuring compliance with legal and regulatory requirements is vital. In today’s business environment, companies are expected to operate with transparency, accountability, and integrity, and the CS plays a key role in ensuring that the company operates in compliance with these principles.

Members of self-governing professions are expected to accept legal and ethical responsibility for their work and prioritize the interests of the public and society. CSs are held to strict codes of conduct and are recognized by regulators as ethical and trustworthy professionals whose professional judgment and competence have made a significant impact in the corporate sector.

The widening roles and responsibilities of CSs include proper maintenance of all company records, issuing reminders regarding the company’s accounts, filing returns with the registry of jurisdiction, updating any changes such as director change, and taking care of all corporate governance and statutory compliances. CSs are expected to provide business advisories and help the management team navigate complex legal and regulatory environments.

 

Regulatory Compliance in India –

Compliance with regulations and laws is a critical aspect of doing business in India. The Ease of Doing Business Index of the World Bank ranks India at the 63rd position, a significant improvement from the past, but compliance burden in India continues to remain high. With over 993 acts in India, including an average of 2,500 amendments per year, and 600 updates related to taxation and finance, regulatory compliances pose a significant challenge for businesses.

An enterprise in India has to adhere to 25,537 central compliances, which increases to 69,233 if it operates across all states. In comparison, a Chinese enterprise spends 138 hours paying taxes, while a business in Singapore, the best-performing country, spends only 49 hours. Moreover, any default in regulatory compliance may lead to stringent actions, including the levy of penalty and prosecution.

These compliance challenges pose a significant barrier to doing business in India, despite being the second-largest consumer market globally. To encourage authenticity in the day-to-day operations of the company, the government needs to introduce new compliances that streamline regulatory compliance instead of making it a tedious and costly affair.

Company secretaries in India play a vital role in ensuring compliance with regulations and laws. They are expected to provide guidance and advice to organizations on regulatory compliance matters. Company secretaries must ensure that companies adhere to regulations and laws and are answerable to the following basic questions:

1. What are the applicable laws and regulations for the company’s operations?

2. What compliances are required for the company under applicable laws and regulations?

3. What is the timeline for compliance with these laws and regulations?

4. What are the consequences of non-compliance, and how can they be avoided?

5. What is to be done?

6. Who is to execute it?

7. How it is to be done?

8. When is it to be done?

9. In which cases, approval or permission is required from statutory authorities?

10. Who all are to be intimated post the transaction including regulatory authorities, etc.?

It is not possible to carry out any business transaction in India without answering all these questions. Therefore, as a professional, a CS has a core competence in compliance and corporate governance.

In the context of conducting business transactions in India, it is imperative to address the fundamental questions of regulatory compliance. As such, the role of a Company Secretary (CS) is critical in ensuring compliance and promoting corporate governance. CS professionals possess specialized expertise in navigating the intricacies of various statutes, rules, regulations, bylaws, and guidelines. Therefore, when executing their duties, CSs must exercise diligence and care to avoid legal implications while adhering to professional standards, duties, and the trust bestowed upon them by management and shareholders.

As the roles and responsibilities of Company Secretaries continue to expand, so does their accountability. Given their understanding of the complexities of the law, the management and shareholders of a company must depend on CS professionals for compliance-related matters. This reliance ensures that any potential breach of compliance is avoided, which, in turn, contributes to the sound conduct of the company’s affairs. 

Conclusion

In recent years, the role of the Company Secretary in India has evolved and expanded, with increased responsibilities and accountability in the area of compliance and corporate governance. With the complexity of laws and regulations in India, it is imperative for businesses to have a skilled and competent Company Secretary to ensure compliance with various statutes, rules, regulations, bylaws, and guidelines.

The Company Secretary plays a crucial role in ensuring sound conduct of affairs of the company, by ensuring that the company adheres to the professional standards, professional duties, and trust lie on them by the management and the shareholders. With the increasing responsibility in role of a Company Secretary in India, their responsibility has also increased. They must act with care and diligence while performing their duties, not only to avoid any legal implications but also to ensure effective governance practices within the organization.

In addition to their role in compliance, the Company Secretary has become a key advisor to the board and senior management, providing guidance on governance practices and their impact on stakeholders. As such, the chairman of the board and Board committees look to the Company Secretary to advise them on matters of compliance and effective governance practices at board level.

 

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