CAclubindia in a one-to-one candid discussion with CS R. Sridharan, the President of ICSI.
Our first question is - They say that with great powers come great responsibility. In the wake of that, we have a Section called 205, which also defines the functions of the CS in the new Act. What are your views on that?
Welcome Sir, its a pleasure to have you here.
The entire Key Managerial Personnel shouldnâ€™t just be read with section 205 but the appointment of a Company Secretary as a KMP should be read with the Section 205 because a CS in addition to playing the role as a KMP also has the responsibilities to the functions. Probably, I can say that it is the first time that Co. Act, 2013 defines the functions of the CS. The appointment of a CS is made mandatory under Section 203 which is not only made mandatory for appointment but also for defining the functions. That means the regulator is looking at the CS as a person who can ensure that the Governance which has been set out in the Co. Act, 2013, if the Govt. feels that CS is the only person who can probably play a positive role to ensure that the governance is complied by the Companies where he is associated as a CS in employment. So, the functions not only talks about the advising the board, it also talks about corporate governance so in order to ensure that the Governance is complied by the Board of Directors, CS is the person who can ensure all the 9 functions and right now 9 functions have been specified but it doesnâ€™t end with that, it will also go beyond that. The Board on its own can also fix further functions. So, a CS is not only for reporting the board but is also answerable to the stakeholders who are associated with the company. A stakeholder includes, creditors, shareholders, it includes the employees and the regulators. So, everywhere he is answerable. So, I can say that the CS is not only the Key Managerial Personnel but is also a compliance officer as far as listed companies are concerned.
The vision of ICSI lies upon Ethics & Governance. You belong to a school of academia where integrity, trust & honesty were the top-notch criteria. How do you think the upcoming professionals and the students would be able to carry it forward?
Good question relating to the Ethics & Governance. Now, look at the mantra for the last probably, 12 years now, from the year 2000 onwards. The various committees constituted in going into the details about the corporate governance which has to be followed by the listed companies. Probably, in the year 2009, the Ministry of Corporate of Affairs came out with the decision that other companies should also follow the corporate governance; those companies are which are not listed with the Stocks Exchange. So, as far as the students and the members are concerned , where I am not only looking at the students but also at the members , Ethics, Corporate & Governance, the three words have to be looked into independently by us. Ethics, Corporate and Governance all are independent and cannot be discussed together because unless you have ethics, governance will not come. Probably about last 3000 years back what was Ethics in Mahabharata period; what is Ethics today is different. So, what was treated as Ethics that time, those things now are not called as Ethics. So, it is the Ethics and Governance and using these we want to create awareness amongst the students for them . For this we have introduced one subject in the course named as Ethics and Governance. These things are inbuilt and these should come from within the professionals, from within the corporate and those who are managing the business; so whatever the letter, whatever the law, whatever the regulation that comes; I donâ€™t want that those regulations which are going to be made mandatory should be kept as just tickboxes. Tickbox is one way â€“which means just complied, but in reality ethics and governance should come within the industrialists, within the promoters, they should ensure that ethics and governance are followed in letter and spirit.
In the last couple of years, ICSI has gone through a complete overhaul, you have gone on the technical mode, this time even the examination forms have been made in an online mode. Our question is: with regards to the students who are aspiring to become professionals one day, what are the steps which we have taken with regards to e-learning? The Institute of Company Secretaries of India has recently introduced Open Book Examination in elective subjects. How do you think this approach will help in the assessment of the abilities of a student?
As a professional, at student level, the Institute has introduced one of the subjects named Ethics & Governance to ensure that students should read the ethics and governance at professional level itself so that when they become members of the institute, they will keep it in mind. We also regularly educate them to understand and follow the ethics & governance. We have also introduced Post Membership Qualifications on Corporate Governance, for the students who will become the members; they can also subsequently pursue the course on Corporate Governance. The members who want to get specialized in this course can pursue that. Itâ€™s an optional course; itâ€™s not mandatory. We are trying to introduce some more papers also along with it.
Under the final level, we have introduced 5 electives: Banking and Insurance, Intellectual Property Rights, Capital & Commodity Markets, International Business. So, all the 5 subjects which are now presently made available to the final level students, we are trying to take it to the PMQs, for the members who couldnâ€™t get the opportunity while doing their course as a student, so they can get themselves specialized and they can get into those areas. Now, the opportunity is plenty for them. So, now governance and the ethics, the students and members of the ICSI should regularly follow. We have the standard regulations and we have disciplinary mechanism to regulate the members. From the studentâ€™s point of view; I donâ€™t think we have anything other than teaching them at their studentâ€™s level itself how they should behave because all of them are going to be leaders. Leader by means of being a CS, leader by setting up their own practice so every member is a leader and every member is entrepreneur. So, Ethics & Governance should be followed from the studentâ€™s level. Though we are trying our level best to incorporate it into our curriculum but it is upto the students and members who take it up and enable themselves to follow the ethics and Code of Conduct because they should know that there is ensured monitoring in their performance, they are subjected to disciplinary mechanism incase, they do anything wrong.
Related to students, all our 3 institute courses are distance education so the students who are registered for this course have to study sitting at their home .However, in our institute we have 4 regional offices, one Centre for Excellence at CCGRT and also have 69 chapters across the country. So, all these 69 chapters are conducting coaching classes for the students who have registered themselves as the students for the Oral Coaching Classes, so in one way we are bringing the best faculties , best minds in one place and organizing the coaching classes. There are private classes also taking place because using the knowledge, anybody can teach subject for the professional development but as far as the institute is concerned, we have around 4,50,000 students registered as on-date in all the 3 levels so in order to give them a capacity building and also to give them a comfort level to face the examinations, all the chapters in the Regional offices are organizing oral coaching classes through which they try and understand the subject so that they will not have any fear to face the examination. Now, look at the examination system in our institute â€“ there are 3 levels of examination- Foundation, - Executive and - Professional. In this at foundation level, we have now made mandatory for entire foundation examination on computer basis w.e.f from June 2014 related to OMR for foundations, now it on computer-based examination. All the centres which presently conduct examination, same centres will be used for conducting the computer examination. The Institute will hire the computers. The students will have to sit before the system and complete the process. Once they click the answer, it will directly go into the back office. With reference to the Executive level, there are 7 papers â€“ 2groups; 1 group of 4 papers and the other of 3 papers. Out of 7 papers, there are 3 papers which the Council has decided to go for the OMR based examination. What we believe, there are certain papers, the students should have only for working knowledge. There are certain papers where students would have expert knowledge so expert knowledge & working knowledge should go together although there are lots of difference. Wherever the working knowledge is there, so the Institute has decided to go for the OMR based system for the Executive level. In the final level, as you rightly said, we are going for open book examination(OBE). We are not going for all the papers â€“ Professional level is expert level. In all the papers, expert knowledge is required. Out of the electives which now the students are going to choose out of 5 papers which the Institute has introduced, the students can choose one. So, for those papers, students will have to write the open book examination. Basically, now we need to look for his intellectual, his capacity and how he is taking the task into his hands rather than just memorizing and reproducing it. We are looking at it differently because CS has to now play the role as a CS from day one he joins the office because there is no probation period for him. There is no question of even the time for him to learn and do that because whatever he has learnt during the course, he has to put it into use immediately after he becomes the member of the institute, So, these sort of examination systems will help him to understand the subjects in detail, so he can put it into use effectively when he becomes a member of the institute. So, all the final papers( Professional Level) make use of the practical implementation. Theoretical aspect is covered up all in the executive level and so after he accomplishes all the training and before he becomes the member, one more training has to be undergone, after that, he will definitely have absolute strength to face as a CS wherever he goes. So, it is very important because whatever the student studies, we cannot say that he will just throw it. But, ofcourse, all our professionals are out-dated as the New Laws Come in and so we need to unlearn and relearn everyday on a regular basis, itâ€™s applicable to all of us. All of us today are still students, ofcourse we are members but it doesnâ€™t mean that we will sit relax & enjoy. But we need to continuously upgrade ourselves; that is what is applicable to members and students which would help them to grow consistently and reach the top. So, every student and a member should set a goal for themselves. Without setting a goal, you cannot reach. Every student and member should have a dream that I want to become the best CS, so in order to achieve the best you need to excel in your performance. You need to create a better platform in the beginning stage itself; if you want to make the dream come true, then you would have to set a goal and work towards that. For that, a very apt word that is to be used is hardwork. So, hardwork and perseverance are very important; and both should go together for the students pursuing this course from the studentâ€™s level. Same hardwork should be continued after student becomes the member, for them to be on top always.
Continuing with the studentâ€™s question, you have around 4,50,000 students who have registered for CS course; majority of them are women so I think CS institute is taking the cause of women empowerment in a very good manner. At the same time you also offer a lot of exemptions to many other professional institute, academy or curriculum when there are students who are appearing for the exams in CS. But, We havenâ€™t found such exemptions for CA or CA students. Can you please throw some light on that?
Those days have gone when in 1970â€™s, students who passed SLLC were forced to go for employment at that point of time. Later on in the 80â€™s the students felt that SLLC was not sufficient â€“ the schooling level, so necessarily letâ€™s go for the higher studies. The Universities picked up during that period only and various courses like B.Com, BBA, BSc and various other courses came up. So, after 10 years down the line when everywhere the economy was growing, students were feeling that as the cost of living was growing up so higher education definitely would help them to grow up and perform better in their life. So, like that, the professional courses started and later on off late, the students were feeling that dual qualification is essential; the students were feeling that BL and CS, Cost Accounting and the CS were a good combination and so they were looking for such Courses to take up ,so that they can play multiple roles in an organization when they go for employment. Even when they take up the practice; the Accounting knowledge definitely will help them up to understand the subject in detail so that they can perform better. So, on account of that we were earlier giving exemption to MBAs, M.Com pass students However , later on we thought that MBA is not common across the country in the subjects so we thought that it cannot gel with our subject if we provide the exemptions to MBAs. So, the Council decided last year to do away with all the exemptions retaining only 2 categories. The students who passed BL or LLB; they were given one paper exemption on Law i.e. Labour Laws & Economic Laws.
CS R. Sridharan
President, ICSI 2014-15
Students who passed the final examination of the Costing Institute, we were giving about 6 paper exemptions out of 16 papers to write i.e. 9 + 7 = 16 papers because the subjects were more or less the same. But, similar exemptions we are not in a position to give to the students who passed CA because there is no such agreement / arrangement with the CA Institute. If the CA Institute comes forward, the CS Institute will arrange for the agreement which we have with the Costing Institute, then definitely we can take it forward and take it to the Council for approval and we can consider for the proposition. As such, there now no such agreement with the CA institute is there that is why the CA Institute member wants to write exams of the CS course also, they will have to write all the papers because there is no such arrangement with the CA Institute as on date. But, we are ready to consider the proposal if it comes from the CA Institute so that we can definitely look into it and give the consideration, subject to our Council approval, probably we can think of giving the exemption for certain papers as we are giving exemptions for the Costing Students who have passed the final examination.
How do you think the other professionals like CA / CMA / CWA can come along together in tandem and then work. So, I would just want your views on both of them?
All the three instituteâ€™s existence is not only for making the students becoming members but also continuously we have to ensure that capacity building is created for all members as well as the students. Particularly now, you have asked the question about the members of the CS, the Co. Act, 2013 has come into force much after the Co. Act, 1956.
Our last question to you is - CAclubindia (CCI) has always been there in the last decade or so, it has become synonymous with the profession whether itâ€™s CS, CA or CWA. What message do you have for the viewers of CCI, for the members and students of your institute?
Our instituteâ€™s course if we just put all together, focuses on Company Law, so we always believe that Company Law is our core subject- our core area to perform as a Company Secretary, so what we have decided this year is since Companies Act 2013 is a core subject for us so we as a Council and the other committees decided to create a capacity building, organizing various workshops, seminars on Companies Act 2013; So it is very important for the members to understand what we were earlier and what we are going to be tomorrow is totally different. So, yesterdayâ€™s gone and tomorrow what we are going to be like, has to be decided today. So, necessarily we need to create capacity building. The Institute is going to organize across the country around 300 to 400 seminars this year, especially on our core subject â€“ Co. Act, 2013 and also the rules.
We are also going to conduct workshops exclusively for our practicing CS whose capacity building is being created because we as CS believe that the Co. Act is our core subject.I have not told you that, Under Companies Act 2013, Secretarial Audit has been introduced similar to Financial Audit for registered Companies and such other companies as may be prescribed, we are waiting for the notification to be issued for the rules, Rules talks about the certain categories of companies also included in addition to the listed companies for Secretarial Audit. The Secretarial Audit now not only focus on Companies Act , it also talks about the rules applicable to the Companies Act, it also covers the Secretarial Standard. I think I am proud to say that we are the first Institute to come out with Secretarial Standards on Non Financial aspects, probably in the world. The two secretarial standards out of ten issued by the Institute has been made mandatory under the Companies Act 2013. So the Compalince of Secretarial Standards, Compliance of Companies Act, 2013, the rules made thereunder, in addition to that, the secretarial audit report focus on other acts also, other laws applicable to industry like SEBI listed comapnies, SEBI related rules& the Labour Laws, Economic Laws, even the financial laws also, we are covering to some extent. So the Students and members should have a comprehensive knowledge on indusrty to which he is going to associate as a Company Secretary in practice. On account of that the Council decided to carry out Workshops on Secretarial Audit excusively , because this is a new area opened to the Company Secretary in Practice.
We are all aware of the statutory audit by the statutory auditors, similarly now the secretarial audit has been introduced, in which the Company Secretary in practice will look into the nonfinancial aspects, compliances of the law, even the noncomplinace of the laws leads to the financial impact, so the objective of the Government is to ensure through the Secretarial audit report if the deficiencies are to come out early, so that the corrective measures can be taken through the mechanism by the regulators.
Probably the practising Company Secretary now, on account of Secretarial Audit will now play a very supportive roles to the regulators with reference to compliances of Companies Act tools and also other laws, because Secretarial Audit Report focus on entire thing. We are planning to organise variuos workshops, seminars, with small numbers and bigger numbers to create awareness of the Companies Act. This is the task of the year with Institute not only for students We are also planning to revamp the entire syllabus in tune with the Companies Act 2013, we are waiting for the entire sections to be notified, once it is notied there are 7 to 8 subjects will undergo a change in line with The Companies Act, 2013. So the Institute for this year is a very challenging year, for us, as the council has to work round the clock. Every Officer sitting at Headquarters has to work round the clock to ensure that capacity building is created, because we as a Company Secretary believe that Companies Act is a Core Subject.
You have also asked question related to how all the 3 institutes can be related together as a team. The Chartered Accountants are looking into the financial aspects that doesnâ€™t mean that they are not aware of the other laws and their curriculum is also designed in a way that they know other laws. But, a CS is specialistin the laws. All the subjects, included in the curriculum, we are will have to get ourselves specialized in ,not only in Company law, but also other laws because in our curriculum, all the subjects arefocussed on laws. The CA Institute curriculum is focussed more on financial aspects on Auditing Standards, Income Taxand so is for Costing Institute on Costing Aspects. But, all the 3 institutes, members, their role in the corporate growth and also serving the society as a regulators point of view are inevitable. So, it is not the question of only CA alone doing it.All the 3 institutes are on common platform now. I always believe that we have no question of bifurcation among the 3 institutes. All the 3 institutes are being treated at par. All the 3 professionalsâ€™ role is important for the growth of the corporate. So, our role is also equally important. All the 3 Professionals are equal as far as service into the corporate sector is concerned. All the three professionalâ€™s role for the growth is very important. I think we believe that as a President of the institute, there is absolutely no issue in that, all the 3 institutes are working together as a team and I believe that this relationship will continue.
Before I answer the question, I would like to make a small submission to you; since you cater to the students of all the 3 instituteâ€™s â€“ CA, CS & CMA, why donâ€™t you change your name to CA/CS/CMA Clubindia so that I think that it would be the way probably to create the bonding with the 3 institutes than me telling that we are together; we are working for the common cause it gives a wrong message that CAclubindia means only CA students, so since you are catering to all the students across the country for all the three Instituteâ€™s students. We have 4,50,000 students â€“ I think majority of the students would be registered with you. Every student says that sir I have downloaded this from the CAclubindia and I am also proud to say that I am also a member of CAclubindia, and I also registered online. Whenever, I require any information like the checklist, any letterâ€™s changes, I always go to your site and I can proudly say that I have downloaded the information freely. Many articles which I downloaded from your site, I have saved it in my system. Whenever, I need some information, I go through it; definitely it gives an immense service for the students and the members. They should try to make use of this opportunity available to them like how CAclubindia is serving to the students and the members; providing various information instantly. Even though it is available in many sites but you are bringing entire thing in one platform so thatâ€™s a good initiative. I think, I really compliment your efforts and you should do continuously for this. So, you donâ€™t differentiate all the 3 level students. You treat all the 3 level students equally in one platform â€“ do a service in total so that all the 3 level students of the respective institutes, their role to the corporate is very-very important. I think the CS students should take this course very seriously and try to make use of the services provided by the CAclub and still I appeal that CAclubindia should change the name to CS/CA/CMA Clubindia so that in that way you are telling to the public that you are one site catering to all Three professionals . So, therefore you shouldnâ€™t claim yourselves that you are exclusively for the CA students. All the 3 professionals are equally important for the growth; similarly members also. I think the capacity building is just not created by attending the workshop, but it can also be created by reading books, understanding the articles, various checklists which have been made available to the various sites like CAclubindia. It will help them to understand better to perform their role as a CS practice in their employment. I wish that you continue to do services to the students and the members and I wish that CAclubindia should grow better and better in the months and years to come!!
Sir, last but not the least, a small mantra of success?
I can talk of many success stories, what Napoleon said â€“ Nothing is impossible in life. So, the students and members should always believe that if you want to achieve your goal and success, success is not a free lunch; if you want to taste success the two things which you should keep in mind is hard work and perseverance. Hard work and Perseverance, if you keep these two words together always with you, I think success will automatically come to you. That is what I am just trying to say that we need to have and main important thing which students & members should keep in mind is the attitude. So, attitude plays a very important role. If you donâ€™t change your attitude according to a situation, you cannot grow. If you feel that I will not change my style and the clients should come to me, that shouldnâ€™t be the attitude. So, you need to change your attitude according to a situation. If you change your attitude, then I am confident that whether he/she is a CS/CA/CMA student, definitely they would perform well and reach the height whatever they have dreamt in their mind, will definitely come true. So, success mantra is that they should have hard work and perseverance to do well â€“ this is the thought which I can share through CAclubindia. Thank you very much for being with us!!
Thank you, Sir!!
Interview hosted by:
CA Anjani Kumar Sharma, CCI Evangelist
Note : This interview was taken on 26th March 2014
Comments on this Interview
[Scorecard : 20 ]
06 June 2014
" My Question is about the Inclusion of Company Secretaries in the Direct Tax Code. I would like to ask CS R. Sridharan, that the President of ICAI CA Raghu Says that "A Company Secretary is in no case eligible
to conduct a financial audit or
issue certificates based on
accounts of a company or any
other assessee" and only a Chartered Accountant has the expertise to do Tax Audit. CA Raghu also says that "“Company Secretaries” who do not
have expertise to do Tax Audit and if they do Tax Audit it will be as good as fake audits."
These statements are quoted by Institute of Chartered Accountants of India in their "Pre-Budget Memorandam-2014 on Direct Taxes"
I would like to ask both the President of ICSI & ICMAI that these kinds of unprofessional statements shall be condemned and should be taken to higher authorities like MCA & Ministry of Finace. How the CA institute can raise question mark on the professional expertise of the other two professional institutes.
I am expecting rebut from ICSI & ICMAI on this. "