ICSI want MCA to authorise company secretaries to give compliance certificate to small companies. SEBI also want company secretaries to provide advice for other official operations. Companies Act 2013 is for all the companies operating in India. Small companies fail to appoint professionals. The compliance certificate is a doorway to the auditors and investigators. The compliance certificate promotes small companies to large companies. The compliance certificate also brings the owners of the small companies into the legal mechanism of India. The proposal of the ICSI institute is waiting for the acceptance of the regulatory bodies. The proposal serves as a benchmark for legal approach and ease of doing business. The MCA notification dated 15 September 2022 changed the threshold for small companies. The Companies Act, section 2(85) consists of the details of the revision of the threshold. The absence of this certificate from the company secretary results in the risk of non-governance concerns. The role and responsibilities of a company secretary are changing. Regulatory bodies like SEBI and MCA expect more services from a company secretary. A blog is here to reveal the additional responsibilities of a company secretary. The demand and responsibilities increase the value of a company secretary.
Details of the certificate:
ICSI advices MCA to introduce a compliance certificate signed by the company secretaries. The certificate is to monitor small companies with a capital of four crores or turnover of 40 crores. The findings say that large-size multinational corporations form small companies to understand the business climate. In such a scenario, certifying the operations of small company’s benefits society. The letter from ICSI states that the officers in small companies get a penalty for non-compliance. The laws in India work to strengthen the corporate world and global market. ICSI insists that small companies with no full-time working company secretary should submit form no. MGT to the registrar. The institute insists that small companies file the form within thirty days of the annual general meeting. According to section 134, a copy of the certificate should be in the board meeting. The certificate represents the figures and operations of the financial year. The details of the certificate are listed below:
- Pass the journal entries and maintain registers and records according to the prescribed time.
- Check the operations of forms and returns submission to the registrar of companies, central government, regional director, the tribunal and the court within the prescribed time.
- Check the minute book and register with signatures. The company should conduct meetings, call the board of directors, and convene information, with notices, and such records should be filed in the minute’s book.
- The details of loans and advances are as per section 85 of the act.
- The company secretary should collect the details of arrangements and contracts with related parties according to section 188 of the act.
- The details of share issue, allotment, transfer, redemption of debentures or preference shares, reduction of share capital, alteration in the share capital, share conversion, and issue of security certificates and securities are essential parts of corporate management. A company secretary should check the above details and provide the compliance certificate to the small companies.
- A company secretary should check the details of rights shares, dividends, and bonus shares.
- The company should provide the details of the dividend, declaration of dividend, transfer of unpaid dividend, and other amounts to the investor as per the investor education and protection fund under section 125 of the act.
- The company must submit an audited financial statement with a signature as per section 134 of the act. The director’s report is essential according to the section (5), (4) and (3).
- The information regarding causal vacancies, appointment, retirement, re-appointment, constitution and remuneration payment are the mandatory information maintained by the company.
- Section 139 of the act talks about the job vacancy details for auditor positions. The appointment and re-appointment of the auditor is valid data to understand the company’s legal operations.
- The provisions ask for the approvals of the tribunal, central government, regional director, court, registrar, and authorities. The details of such approval are an important legal document.
- The company administration should provide the details of repayment, acceptance and renewal of the deposits.
- The management should maintain the details of borrowings from public financial institutions, directors, members, banks, and others. The details of charges and modification of charges are inspected.
- The loans and investments given to corporations or persons are mentioned in section 186 of the act.
- The memorandum or association and articles of association are inspected.
SEBI want company secretaries:
SEBI’s regulations like SEBI depositories and participants, disclosure requirements, and listing obligations require audit reports and certificates from professionals. Company secretaries understand the complexity of the guidelines from SEBI. ICSI mentioned recently that company secretaries in practice should check the regulations and circulars from SEBI. A company secretary should maintain important details. The service of company secretaries protects the interest of the investors. The key points of the ICSI advisory are as follows:
- The company secretaries in practice should maintain a checklist for regulatory compliance.
- The company secretaries doing practice should take ownership of the inspection and report non-compliance to the regulatory bodies. The notices from MCA, SEBI, stock exchanges, RBI and other regulatory bodies result in a penalty to the company if not followed.
- Company secretaries are in the place of implementing a culture of compliance and governance. The company secretaries reflect the standards and reviews associated with the governance.
The changing role of company secretaries:
Company secretaries fulfil the expectations of the investors and stakeholders. Company secretaries are not just legal officers, they are governance experts, advisors, consultants, compliance officers and corporate strategists. Company secretaries provide the external environment and competitive edge to the board members. The external environment and compliances make the company a more objective and strategic performer. Company secretaries are accountable and responsible for the legal side of the company. Small and big companies grow with the service of the company secretaries. The business climate and investor’s views are the elements that drive the companies.
The SEBI and MCA appoint professionals and manage the dynamic business climate. Auditors provide insight into the financial matters. Company secretaries are more inclined towards the legal, social and objective side of the management. The professional contributes to the internal and external growth of the company.