Company Secretary Study Notes — Class 12 Commerce

Company Secretary - study notes

28.01 Meaning and definition

A company is an artificial person with no mind or body of its own; it needs people to run it.
The word secretary comes from the Latin 'Secretarius', meaning secret. The secretary handles confidential matters and the day-to-day business of the company.
Section 2(24), Companies Act, 2013: a company secretary is any individual possessing the prescribed qualifications, appointed to perform the duties of a secretary under the Act and other ministerial or administrative duties.
Oxford Dictionary: a person employed to conduct correspondence for an individual or company and to do filing, documentation and administrative work.
Only an individual can be a secretary; a firm, society or association cannot.

28.02 Qualifications

Since the 1994 amendment of the Companies Act, only a person with prescribed qualifications can be appointed secretary. Section 2(45) says the qualifications are prescribed by the Central Government.
Paid-up capital 5 crore or more: member of the Institute of Company Secretaries of India; a member of the Institute of Chartered Secretaries of London is also eligible.
Other companies: one or more of: a law degree; membership of ICAI; membership of the Institute of Cost and Works Accountants of India; a post-graduate degree or diploma in Management or Commerce; a diploma in Company Law from an Indian Law Institute.
Other qualifications: knowledge of company law, mercantile law, economic laws, accounting, labour law and office administration.

28.03 Appointment

Every listed company, and every other company with paid-up capital of 5 crore or more, must have a full-time secretary.
By promoters: the first secretary, appointed before incorporation and named in the Articles of Association.
By the first board of directors: at the first board meeting, continuing the existing secretary or appointing a new one.

28.04 Functions

Statutory functions (Companies Act, 2013): sign documents needing authentication; maintain share registers and registers of directors and contracts; notify increase of share capital; deliver share certificates within 2 months; sign and send the annual return; make the declaration for the certificate of commencement of business; send notice of general meetings; keep statutory books; prepare minutes of every general and board meeting within 30 days; file resolutions with the Registrar; help prepare the statement of affairs in a winding up.

Act	Secretary's duty
Income-tax Act	Deduct tax at source, deposit it, file returns, issue TDS certificates
Indian Stamp Act	Proper stamps on letters of allotment and share certificates
Sales-tax Act	Timely returns and payment of tax
Other Acts	Factories Act, Payment of Wages Act, Industrial Disputes Act and other labour laws

Non-statutory functions:

Towards directors: works under the board's control, advises it, arranges board meetings, issues notice and agenda, records attendance and minutes, and implements the board's decisions.
Towards shareholders: acts as a link between the board and shareholders; issues allotment letters, call letters, letters of regret, share certificates and share warrants; answers complaints.
Towards office and staff: supervises, controls and co-ordinates all clerical work in the office.

28.05 Rights and powers

Supervision and control of office activities; signing authority; exercising powers given by the board; issuing testimonials to employees.
Claiming salary and damages for wrongful dismissal after reasonable notice.
Preferential creditor: can claim legal dues on a preferential basis in winding up.
Right to attend meetings of shareholders and the board.

28.06 Removal

Under the law of master and servant the board can remove the secretary at any time, with or without reason. Usual grounds: expiry of term, proper notice under the agreement, secret profit, misconduct, moral turpitude, negligence, disobedience or incompetence, and permanent mental and physical disability.

28.07-28.08 Company meetings

Meeting	Key points
Statutory meeting	First general meeting of a public company; within 6 months, not earlier than 1 month, from commencement of business; held once in a lifetime; not needed for a private company or a public company without share capital
Annual general meeting	First AGM within 18 months of registration; then every year; gap not more than 15 months; business hours, not a public holiday, at or near the registered office
Extra-ordinary general meeting	Any general meeting other than statutory and annual; held between two AGMs for urgent business
Board meeting	First within 30 days of incorporation
Committee meeting	Audit committee for listed companies and public companies with 10 crore paid-up capital; meets at least four times a year
Class meeting	Of a particular class of shareholders or debenture holders
Creditors' meeting	Strictly not a company meeting; held to reach a compromise with creditors

28.09 Resolutions

A motion put to vote and passed with the required quorum becomes a resolution.
Ordinary: simple majority. Examples: alter share capital, redeem debentures, declare dividends, approve annual accounts, appoint directors.
Special: not less than 75 percent; votes for at least three times votes against. Examples: shift registered office to another state, change objects or name, alter Articles, reduce capital, commence a new business.
Requiring special notice: notice at least 14 days before the meeting. Examples: appoint an auditor other than the retiring one, remove a director before his term ends, appoint a director in his place.

28.10 Voting

Section 47 of the Companies Act, 2013 governs members' voting rights.
Open procedure: voice voting (unscientific, unfit for complex issues) and show of hands.
Secret procedure: ballot (serially numbered papers, counted with tellers) and postal ballot (for members scattered all over the country).
Quorum: the requisite number of persons present at a meeting.
Proxy: a shareholder's representative at a meeting; need not be a member; form to reach the office 48 hours before the meeting.

Company Secretary - Study Notes