MACS MALAYSIAN COMPANY SECRETARIES CONFERENCE 2016
   
 
Plenary 1 : The Companies Bill 2015 & Interest Scheme Bill 2015 >>
Plenary 2 : The Role of the Company Secretary as the Chief Governance Officer – The India Experience >>
Labuan IBFC – The Solution for Growing Asian Businesses in the Changing Global Tax Landscape >>
Plenary 3 : Updates from Bursa Malaysia – Amendments to the Listing Requirements Relating to Disclosure, Corporate Governance and Other Consequential Changes >>
View Conference Video >>
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Plenary 2 : The Role of the Company Secretary as the Chief Governance Officer – The India Experience
  (Questions & Answers)
   
 
1.
Q :
You elaborate the role of company secretary as a Governance Officer in India?
A :
The Companies Act, 2013 has considerably enhanced the role and responsibilities of company secretaries as a key managerial person in a company, responsible to ensure the effective and efficient administration of the company and certifying the company’s compliance with the provisions of the Act. The legal provisions are testimonies that company secretary are essential for ensuring better efficiency and governance.
   
1) Statutory responsibilities:
   
 
If one were to examine the role and duties of the company secretary as currently outlined in legislation it would appear to be quite restrictive and mainly administrative in nature. Principally, the company secretary ensures the company has complied with company law, maintains certain statutory registers and makes the necessary filings with the Registrar of Companies such as annual returns, financial statements and certain forms with respect to changes to share capital etc.
 
 
For the first time in Indian legislation, the duties of the company secretary have been specified. Section 205 of the Companies Act, 2013 provides that the Company Secretary shall discharge following functions and duties:
 
 
To report to the Board about the compliance with the provisions of this Act. The rules made thereunder and other laws applicable to company.
 
To ensure that the company complies with the applicable secretarial standards.
 
To provide to the directors of the company collectively or individually such guidance as they require in discharging their duties, responsibilities and powers.
 
To facilitate the convening of meetings and attend Board, committee and general meetings and maintain the minutes of these meetings.
 
To obtain approvals from the Board, general meeting, the Government and such other authorities as required under the provisions of the Act.
 
To represent before various regulators and other authorities under the Act in connection with discharge of various duties under the Act.
    To assist the Board in the conduct of the affairs of the company.
   
To assist and advise the Board in ensuring good corporate governance and in complying with the corporate governance requirements and best practices.
 
Such other duties as may be assigned by the Board from time to time.
     
   
2) Secretarial Audit
   
 
Section 204 of the Companies Act, 2013 provides that every listed company and every public company with a paid-up share capital of Rs. 50 Crore or more or every public company with a turnover of Rs. 250 Crore or more shall provide a Secretarial Audit report completed by the company secretaries in practice.
 
 
The company secretaries have been empowered as secretarial auditor to require from the officers of the company such information and explanation as he may consider necessary for the performance of his duties as auditor. It is the duty of the Company Secretary to check compliances made by the Company under Corporate Law & other laws, rules, regulations, procedures etc. He is required to monitor compliance with the requirements of stated laws and processes and place his report. It is to ensure that the regulators, stakeholders and management that company has disciplined approach to evaluate and improve effectiveness of risk management, control, and governance processes.
     
     
   
3) Compliance with Secretarial Standards:
   
 
For the first time under section 118(10) of the Companies Act 2013, all companies have been mandated to observe secretarial standards with respect to general and Board meetings and under section 205, the duty to ensure that the company complies with the applicable Secretarial Standards has been casted upon Company Secretaries. The objective behind the formulation of secretarial standards is to integrate, harmonize and standardization of diverse secretarial practices. Secretarial Standards have been introduced to facilitate adoption of standard yardstick for meetings of the Board of Directors and the committees of the Board and this will help in compliance management of the provisions of the Companies Act, 2013 and also ensure good corporate governance systems in the Indian corporate sector. Thus, the company secretary has been provided an important role to ensure that the interests of stakeholders are protected.
     
     
   
4) Other Obligations of Compliance officer
   
 
Regulation (6)(1) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 provides that A listed entity shall appoint a qualified Company secretary as the compliance officer. Compliance officer of the listed entity shall be responsible for-
 
 
a)
ensuring conformity with the regulatory provisions applicable to the listed entity in letter and spirit.
 
b)
co-ordination with and reporting to the Board, recognised stock exchange(s) and depositories with respect to compliance with rules, regulations and other directives of these authorities in manner as specified from time to time.
 
c)
ensuring that the correct procedures have been followed that would result in the correctness, authenticity and comprehensiveness of the information, statements and reports filed by the listed entity under these regulations.
 
d)
monitoring email address of grievance redressal division as designated by the listed entity for the purpose of registering complaints by investors:
     
     
2.
Q :
Please can you share with us on the shareholder activism in India.
 
A :
The Companies Act, 2013, focuses on governance and a board structure that fosters good behaviour. There have been two key changes in the Companies Act that have resulted in increased awareness and participation by investors.

The first critical change relates to norms pertaining to related party transactions (RPTs). The Act requires obtaining approval by majority of minority shareholders for related party transactions.

Further the Act has made e-voting mandatory, the real implication of which is in the manner in which the votes are counted. E-voting counts one vote per share held, which dramatically changes the counting from the show-of- hands method (- of counting one vote per hand, prevalent till then). Now each vote counts.

With the introduction of this provision, it is now possible for retail shareholders to vote easily and conveniently through the click of a mouse. No longer do shareholders have to undergo the tedious process of filing and sending postal ballots or of attending meetings in remote towns or cities.

Small shareholders are empowered to nominate a director on the boards of a certain class of companies helps bolster open, transparent and democratic conduct of business. Section 245 of the Act introduces the class action for protection of interest of shareholders.

Indian equity shareholders are increasing their proactive engagement with companies. A new class of investors are vocalizing their opinions and casting their vote, rather than exiting their shareholding at the first whiff of a disagreement with management decisions. A slew of recent instances – United Spirits (where related party resolutions were defeated), Siemens (where shareholders forced the parent to step-up payment for the acquisition), Crompton Greaves (where the deal structure was changed), PTL Enterprises (shareholders got the court to intervene), Tata Motors (shareholders first voted down salary increase, before approving it the second time around), Maruti (over 20 months of negotiations with shareholders, before the company obtained shareholder approval), and many more, discussed in this report, signal this change.

     
3.
Q :
In India is there a threshold for a company must have a company secretary. If so how governance is managed in those companies without company secretaries
A :
The new Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, provides that every listed company and every other public company having paid up share capital of Rs. 10 Crores or more has to compulsorily appoint the whole time Key Managerial Personnel to ensure good corporate governance and regulation. The company shall have the following whole-time Key Managerial Personnel (KMP):
     
   
Managing Director, or Chief Executive Officer or manager and in their absence, a whole-time director.
   
Company Secretary and
   
Chief Financial Officer.
   


Further, as per Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a company other than a company which is required to appoint a whole time key managerial personnel as discussed above and which is having paid up share capital of Rs. 5 Crores or more shall have a whole time Company Secretary.

Section 204 of the Companies Act, 2013 provides that every listed company and every public company with a paid-up share capital of Rs. 50 Crore or more or every public company with a turnover of Rs. 250 Crore or more shall provide a Secretarial Audit report done by the company secretaries in practice.

The company secretaries have been empowered as secretarial auditor to require from the officers of the company such information and explanation as he may consider necessary for the performance of his duties as auditor. It is the duty of the Company Secretary to check compliances made by the Company under Corporate Law & other laws, rules, regulations, procedures etc. he is required to monitor compliance with the requirements of stated laws and processes and place his report. It is to ensure that the regulators, stakeholders and management that company has disciplined approach to evaluate and improve effectiveness of risk management, control, and governance processes.

     
4.
Q :
In India is there a threshold for a company required to have a company secretary. If so how governance is managed in those companies without company secretaries.
 
A :
Please refer the reply of previous question.
     
5.
Q :
Earlier, MACS & ICSI signed an MOU. Could u enlighten us on what we as MACS members can expect.
A :
MACS and ICSI is in process to sign MOU. After signing of MOU members of both Institutes will get reciprocal membership.
     
6.
Q :
May we know what is the estimated secretarial fee per annum or incorporation fee for a normal private limited entity in India?
A :
There are no minimum fees prescribed for conducting Secretarial Audit by Company Secretary in practice. However, it would be in the fitness of things that 9 Company Secretary in practice takes proper call about fees considering the nature & size of the company, type of company and the efforts required to be put in while carrying out Secretarial Audit. It is expected that member should maintain high standard and quality in audit process.
     
 
 
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