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Richa Mishra

New Delhi , Nov. 28

THE Institute of Company Secretaries of India (ICSI) has urged the Department of Company Affairs (DCA) to reconsider its recent amendments that exclude companies located in smaller places from the services of a qualified company secretary (CS) altogether.

In effect, this meant that such companies would neither be required to appoint a qualified CS nor obtain a compliance certificate from a practising company secretary.

The institute has termed this amendment a "reversal of the process of corporate governance reforms".

This amendment, according to professionals, is contrary to recent developments in the global regulatory measures. "The recent developments and consequent regulator measures are ample testimony to movements towards the need for stringent compliances to restore public confidence in the business organisation. The concept of good corporate governance does not distinguish between a company operating from a small or big town," they argued.

As per the amendment, a company whose registered and corporate office and works are situated in towns with a population of less than a lakh and having a paid-up share capital of Rs 2 crore or more but less than Rs 5 crore, may appoint any individual who possesses any one or more of the qualifications specified in the Rules as its whole-time secretary.

In fact, this amendment provides the companies having their works at prescribed smaller towns a freedom not to appoint a qualified company secretary just by shifting their registered office and corporate office to such towns, the professionals said. "A situation may also occur when companies having their works registered office and corporate office in such towns and which have already appointed a qualified CS will remove them and appoint those who are not qualified CS. Even the terms corporate office and works used in these amendments have not been defined, thereby giving unscrupulous companies leeway to circumvent the provision," experts said.

Brushing aside the arguments that there is a lesser number of company secretaries available, the professionals said, "There is a wrong impression that the sufficient number of CS are not available and that they are unwilling to take up employment in smaller towns. The truth is that there are a number of CS looking for employment. Besides, the institute, with its four regional councils and 64 chapters and satellite chapters, provides assistance to companies in appointing CS through its placement services."

It is pertinent to point out that the Companies (Appointment & Qualification of Secretary) Rules, 1988, were primarily formulated based on the Rules of 1975. The qualifications provided in the Rules were included since at that time sufficient number of CS was not available. Today the situation is different, the industry insiders stated, adding that "there are not only sufficient number of qualified CS, but the strength of intermediate passed students available for the jobs is also growing very fast. Hence, it would be appropriate if deletion of other prescribed qualifications for appointment of CS is done."

Further, the ceiling for compulsory appointment of CS was recently enhanced from Rs 50 lakh to Rs 2 crore. It is, therefore, not in the interest of the profession of CS to provide further relaxation in this regard, they stated.

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