Financial Daily from THE HINDU group of publications
Tuesday, Jan 20, 2004
Regulatory Bodies & Rulings
`Amend norms on enlisting company secretary services'
New Delhi , Jan. 19
THE Institute of Company Secretaries of India (ICSI) has once again urged the Department of Company Affairs (DCA) to review its recent amendment that excludes companies located in smaller places from availing themselves of the services of a qualified company secretary.
Stating that the amendment was not in the interest of the profession, Mr Pavan Kumar Vijay, the outgoing President of ICSI, said, "the amendment will work as a setback to the profession."
He pointed out that the profession was brought up and nurtured by the Government itself to professionalise the area of corporate management.
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 other person as its company secretary from among those specified in the Rules.
"If the withdrawal of the amendments is not possible, the department should consider deleting the other prescribed qualifications for appointment of company secretary," Mr Vijay said.
Currently, the qualifications prescribed under the Companies (Appointment and Qualification of Secretary) Rules, allow professionals individuals, such as lawyers and chartered accountants and non-professionals also to be appointed as a company secretary.
"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 company secretaries was not available. Today the situation is different," Mr Vijay told Business Line.
There are not only sufficient number of qualified candidates, but also the strength of intermediate passed students available for the job is growing fast.
Hence, it would be appropriate if deletion of other prescribed qualifications for appointment of CS were done, he pointed out.
Arguing further, he said, "Neither the Government nor anyone else has any data on how many companies would fit into this category. Therefore, in such a situation the Government needs to view the entire issue positively."
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.
Fearing that 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 company secretary will remove them and appoint those who are not qualified company secretary, they said that it would lead to emergence of fly-by-night companies.
When contacted official sources said, "There is a merit in their (the CSs') argument. The Government may consider amending the qualifications."
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