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{Section 205 of the Companies Act 2013}


In the modern corporate sector, the position of Company Secretary has gained critical importance. The significance has however evolved over a considerable period.

Even earlier, the courts had held to the effect that a modern secretary is not a mere clerk but an officer with executive duties and responsibilities [Ref: Panaroma Development {Guildford} v. Fidelis Furnishing fabrics { 1971} 3 WLR 440]. The emphasis was though on ministerial or administrative duties of the secretary.

As per the erstwhile Companies Act 1956, certain companies were obliged to have whole time secretary. It had laid down prescribed qualifications for an individual to be eligible for appointment. The individual would also be an officer in default. The Institute of Company Secretaries of India, constituted under an Act of Parliament, administers the profession.

The Companies Act 2013 {new Companies Act} has, in recent times, rightfully further strengthened the profession. It has also placed on the individual, onerous statutory duties & responsibilities. 

The company secretary is the key managerial personnel and officer in default in terms of sections 2 {51} and 2{60} of the new Companies Act.  His appointment as an officer {section 2[59]} who is whole time is mandatory for certain class of companies and has to be done by passing a resolution of the Board of Directors of the company in terms of section on 203 of the Act. 

Thus following companies need to appoint whole time company secretary:-          

{1} Every listed  company.

{2} Every other public company having a paid up capital of Rs  10 crores or more.

{3} A company not covered above which has a paid up share capital of Rs 05 cores or more.  


The duties of company secretary were not elaborately laid down in the erstwhile Companies Act 1956; it just provided that the individual has to perform duties which may be performed by a secretary under that Act and any other ministerial or administrative duties.  However, keeping in view the criticality of the position and increasing role in corporate compliance and governance, the new Companies Act has laid down the function in some detail for the first time in terms of section 205 herein.    


The sub-section {1} gives an inclusive definition about the functions of a company secretary as follows:-

A. To report to the Board about compliance with the provisions of the new Act, the rules made there under and other laws applicable to the company.

This seems to indicate that the duty of the company secretary is limited to only reporting to the Board about compliance of the new Companies Act and various other laws. Interestingly it does not stipulate clearly that the onus of compliance is on company secretary.  

In contrast, it may be interpreted here that the section requires that company secretary should ensure compliance with these laws and then report to the Board. The inclusive nature of this provision may support this interpretation.

However, a clarification should come from the Government.   

B. To ensure that the company complies with the applicable secretarial standards,

Here there is clarity on the duties of the company secretary. The individual has to make certain that Secretarial Standards which are applicable to the company are complied.

The explanation given herein defines the expression “secretarial standards” to mean secretarial standards:-

a. Issued by the Institute of Company Secretaries of India {ICSI} constituted  under section 3 of the Company Secretaries Act, 1980, and

b. Approved by the Central Government.

To discharge such other duties as may be prescribed by the Central Government.

Compliance of Secretarial Standards

Section 118 {10} of the new Companies Act provides as follows:-

“(10) Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980, and approved as such by the Central Government.”

ICSI has recently issued { Secretarial Standards} SS-1 regarding  Meeting of the Board of Directors and SS-2 in respect of General Meetings which have since been made applicable w.e.f. 1st July 2015.

Duties prescribed by the Central Government.

The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been prescribed by the Central Government effective from 1st April 2014 reading as follows:-

“10. Duties of Company Secretary

The duties of Company Secretary: shall also discharge, the following duties, namely:-

(1) to provide to the directors of the company, collectively and individually, such guidance as they may require, with regard to their duties, responsibilities and powers;

(2) to facilitate the convening of meetings and attend Board, committee and general meetings and maintain the minutes of these meetings;

(3) to obtain approvals from the Board, general meeting, the government and such other authorities as required under the provisions of the Act;

(4) to represent before various regulators, and other authorities under the Act in connection with discharge of various duties under the Act;

(5) to assist the Board in the conduct of the affairs of the company;

(6) to assist and advise the Board in ensuring good corporate governance and in complying with the corporate governance requirements and best practices; and

(7) to discharge such other duties as have been specified under the Act or rules; and

(8) such other duties as may be assigned by the Board from time to time.”

From the above it becomes clear that many of the duties have already existed in the usual domain of functioning of company secretary since decades. Though good corporate governance is an area of later development in the corporate world and the need for its compliance is of more recent origin. The new Companies Act as well as Clause 49 of the listing agreement {applicable to companies whose securities are listed on stock exchanges} have elaborate provisions in this regard which company secretaries should ensure to follow as statutory compliance or as guidance as relevant.     


The last sub section {2} essentially provides that the provisions of section 204 {relating to secretarial audit for bigger companies} and section 205 {relating to functions of company secretary} of the new Companies Act shall not affect the duties and functions of:-

  • Board of Directors of the company,
  • Chairperson,
  • Managing director, or
  • Whole-time director

under the new Act  or any other the law for the time being in force.

Thus, it emerges that in spite of carrying out Secretarial Audit of a company by a company secretary in practice as per section 204, the company secretary carrying out his statutory functions as provided in this section, the onerous statutory duties and functions of the Board, Chairperson, MD or WTD are not affected, have to be complied and cannot be avoided by them.     


It is a very laudable step to specifically provide and elaborate the functions of a company secretary in the new Companies Act 2013 which also clears ambiguity or non-uniformity which may have existed earlier. This will ensure better compliance of laws and good corporate governance in companies. However, some clarity from the Government would be welcome.  



Published by

Amitav Ganguly
(Company Secretary Professional)
Category Corporate Law   Report

2 Likes   42 Shares   13356 Views



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