The Company Secretaries Act, 1980 is a legislation that governs the profession of Company Secretaries in India. It is a landmark legislation that has helped elevate the status of Company Secretaries in the country. It is an act of the Indian Parliament that seeks to regulate the profession of company secretaries. The act accommodates the foundation of the Institute of Company Secretaries of India (ICSI) as a legal body liable for managing and advancing the calling. The primary objective of the act is to ensure that company secretaries maintain a high standard of professional conduct and excellence in their work.
The act sets out the qualifications required to become a member of ICSI, which includes passing specified examinations and undergoing a prescribed period of practical training. It also outlines the roles and responsibilities of company secretaries, which include advising companies on corporate governance and compliance with various laws and regulations.
The act empowers ICSI to regulate the profession of company secretaries by setting standards of professional conduct, monitoring compliance, and taking disciplinary action against members who breach these standards. The act also provides for the establishment of a disciplinary committee that is vested with the power to hear and decide on complaints against members who violate the code of conduct.
The Company Secretaries Act, 1980 is an essential piece of regulation that looks to direct and advance the calling of organisation secretaries in India. It lays out the ICSI as a legal body liable for managing the calling and sets out the obligations and obligations of organisation secretaries.
Evolution and Provisions of the Company Secretaries Act
The Company Secretaries Act, 1980 has its roots in the Companies Act, 1956, which recognized the role of company secretaries as Key Managerial Personnel in companies. In 1977, the Ministry of Law and Justice constituted a committee to review the role and functions of company secretaries in India, which led to the drafting of the Company Secretaries Bill. The bill was introduced in Parliament in 1979 and passed into law in 1980 as the Company Secretaries Act, 1980.
The act defines a company secretary as a person who is a member of the ICSI and provides for the establishment of the institute as a statutory body. It sets out the eligibility criteria for becoming a company secretary, the duties, and responsibilities of company secretaries in companies and private firms, and the disciplinary mechanisms for regulating their conduct.
The act prescribes that every company with a paid-up share capital of at least Rs. 50 lakhs must appoint a whole-time company secretary. It likewise requires recorded companies to delegate a certified company secretary as the Consistence Official to guarantee consistence with different lawful and administrative prerequisites. The act mandates that every company secretary must maintain a register of members, a record of proceedings of meetings and resolutions, and other registers and records as required by law.
The act also lays down the disciplinary mechanism for regulating the conduct of company secretaries and imposes penalties for misconduct. The act provides for a Disciplinary Committee to inquire into complaints against company secretaries and impose penalties such as reprimand, fine, suspension, or removal from membership.
Objectives of the Act
The objective of the Company Secretaries Act, 1980 is to regulate and develop the profession of company secretaries in India. It aims to ensure that only qualified and competent professionals are allowed to act as company secretaries and that they adhere to high standards of professional ethics and conduct. It also lays down rules and regulations for the functioning of the ICSI and governs the conduct and discipline of its members. The goal of the Act is to promote good corporate governance and transparency in the workings of companies. The primary objectives of the Company Secretaries Act are to:
- Regulate the profession of Company Secretaries in India and ensure that only qualified individuals are allowed to practice as Company Secretaries.
- Establish a professional regulatory body for Company Secretaries, known as the Institute of Company Secretaries of India (ICSI).
- Provide for the education and training of Company Secretaries in India.
- Promote high standards of professionalism and ethical conduct among Company Secretaries.
Key Provisions of the Act
The Company Secretaries Act contains several key provisions, some of which are highlighted below:
1. Qualifications:
The Act lays down the qualifications required to become a Company Secretary, including passing the Foundation, Executive, and Professional exams conducted by the ICSI.
2. Role of ICSI:
The Act establishes the ICSI as the regulatory body for Company Secretaries in India. The ICSI is responsible for conducting the exams, granting membership to qualified individuals, and regulating the profession.
3. Continuing Professional Development:
The Act requires Company Secretaries to undertake continuing professional development activities to keep their knowledge and skills up to date.
4. Code of Conduct:
The Act also establishes a code of conduct that Company Secretaries must follow, which covers areas such as professional ethics, confidentiality, and conflict of interest.
Impact of the Company Secretaries Act on Corporate Governance
The Company Secretaries Act, 1980 has played a crucial role in promoting good corporate governance practices in India by setting out the responsibilities and duties of company secretaries and establishing the ICSI as the professional body for regulating and promoting the profession.
The act has helped to enhance the level of professionalism in the role of company secretaries and strengthen the compliance culture in companies. The act has also contributed to improving transparency, accountability, and ethical behaviour in companies by setting out clear standards and procedures for carrying out various functions.
The Company Secretaries Act has had a significant impact on the profession of Company Secretaries in India. Some of the key benefits of the Act are:
1. Standardisation:
The Act has helped standardise the qualifications and requirements for becoming a Company Secretary in India, thereby ensuring that only qualified individuals are allowed to practise as Company Secretaries.
2. Professionalism:
The Act has helped promote a culture of professionalism and ethical conduct among Company Secretaries in India, which has helped raise the status of the profession.
3. Regulatory Body:
The establishment of the ICSI as the regulatory body for Company Secretaries has helped ensure that the profession is regulated in a consistent and effective manner.
Challenges and the Way Forward
Regardless of the viability of the Company Secretaries Act, 1980 in advancing great corporate administration rehearses in India, it faces a few difficulties. Some of these challenges include a lack of awareness among companies about the importance of appointing a qualified company secretary, the need for greater regulation of multi-disciplinary firms, and the need to strengthen the disciplinary mechanism for regulating conduct.
One way of addressing these challenges is to strengthen the legal framework by amending the act to require companies to appoint more than one company secretary and provide for greater regulation of multi-disciplinary firms. The act could also be amended to enhance the disciplinary mechanism to ensure that complaints against company secretaries are dealt with in a time-bound and transparent manner. Some challenges of the company secretaries act,1980 are:
1. Lack of Awareness:
One of the major challenges faced by the Company Secretaries Act, 1980 is the lack of awareness among the general public regarding the role and responsibilities of a Company Secretary. Many people are unaware of the importance of the role played by a Company Secretary in ensuring the efficient functioning of a company.
2. Lack of Qualified Professionals:
Another significant challenge faced by the Act is the shortage of qualified Company Secretaries in the country. This often results in companies appointing unqualified and inexperienced professionals to the position, leading to several operational issues.
3. Increasing Competition:
With the rapid growth of the corporate sector, there has been an increase in the competition among Company Secretaries. This has placed significant pressure on the profession, leading to a decrease in job opportunities and remuneration levels.
4. Changing Legal and Regulatory Framework:
The legal and regulatory framework governing the corporate sector is constantly evolving. This requires Company Secretaries to stay updated with the latest legal developments, which can be challenging.
5. Lack of Clarity:
The Company Secretaries Act, 1980 is often criticised for its lack of clarity and specificity in certain areas. This can lead to confusion among professionals and the general public regarding the roles and responsibilities of Company Secretaries.
6. Lack of Autonomy:
The Company Secretaries Act, 1980 does not provide sufficient autonomy to Company Secretaries in terms of decision-making. This often leads to a limited role for Company Secretaries in the overall management and functioning of companies.
7. Inadequate Compensation:
Many Company Secretaries in the country are not adequately compensated for their services, particularly those working in smaller companies. This can lead to a lack of motivation and job dissatisfaction.
Conclusion
The Company Secretaries Act, 1980 is a landmark legislation that has helped regulate the profession of Company Secretaries in India. It has standardized the qualifications and requirements for becoming a Company Secretary, promoted professionalism and ethical conduct, and established an effective regulatory body in the form of the ICSI. These factors have helped elevate the status of Company Secretaries in India and ensure that the profession is practiced in a responsible and competent manner.
