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Name Lending: An Invitation To A Walking Disaster

Kartik Aggarwal 
on 26 June 2018


When our country is advocating for setting up a mechanism for corporate governance at world platform, our own professionals are piercing the mission of ICSI "To develop high calibre professionals facilitating good Corporate Governance" by adopting the policy of name lending to comply with the letters in law and not with the spirit behind it.

In this article, we will try to understand the practice of name lending and its impact on the prestige of corporate governance.

The Central Government under section 203 of Companies Act 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 necessitated the appointment of company secretaries in specified companies to discharge central responsibilities of compliance of law  develop transparency among the stakeholders but instead it acted pension for the professionals for just being member of ICSI. 

The unfortunate series of events where the cycle begins with a CS and ends with acceptance of CS with the following consequences:

1. Low pay package for CS freshers as the company tries to avoid hiring of a KMP instead they aim to comply with the law on paper.

2. Develops narrow vision among the industrialist and businessmen 

3. Compliance of Law of law in not true spirit.

4. Damages the bridge between Government and the Company.

5. Narrows the role of watchdogs and Regulators.

6. Restricts the true image of a Company.

7. Enhances corruption in the Corporate World.

The ICSI election is approaching at the end of this year and the contesting candidates have already started making tall claims to counter such unethical practice for more than 2 decades but unanimously failed to act on it.

A Warning to a disaster may be understood by an old times proverb "You have to heal the wound before it ignores the medicine"

The only way out is to such wound is to play a vigilant role and shall forward a written complaint when observed such activity to the Council Member's of ICSI and to the Ministry of Corporate Affairs.

We Further hope the learned Council of ICSI sets up Task Force Committee to make necessary penal provisions for such kind of activities done with the active participation of Ministry Of External Affairs.

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