Good morning and a very warm welcome to all the viewers of CAclubindia. Today, we have a very special guest with us- CS Atul Hasmukhrai Mehta, the President of ICSI, India.Sir, it’s a matter of huge honour and pride for us to have you here on CAclubindia with us!!
It’s my privilege to be a part of this interview program and I understand that CAclubindia has more than 1 million viewers- students and professionals both. So, again it’s my privilege.First of all congratulations that you have been elected as the President of ICSI!
Of course, in ICSI we already have a vision plan for a 20-20 and if you talk about the immediate plan, I think all of us we know that we have this Companies Act, 2013 which got passed in 1st April, 2014 so now it is almost 1 year which we have completed since this Companies Act got passed. Of course, there are more than 50 circular notifications issued by the Ministry of Corporate Affairs and if you talk about the ICSI, this Companies Act, 2013 has given a different role to Company Secretary either in practice or in employment to a different level so it has taken a CS profession to a different level. There are a lot of areas for a practicing CS for practice and also for a CS for an employment. If you talk about the employment side, now there is a provision for Key Managerial Personnel. All our members who are qualified company secretaries are eligible for becoming a KMP , as for a company having more than 10 crore paid up capital for a public limited company and those listed company, they need to have KMPs and CS is one of it and if you talk about the practicing side also, there is a lot of scope for the practicing side also; if you talk about the secretarial audit; if you talk about the CS certification experts – the company secretaries are also an expert in valuation, so there is a lot of scope for the CS both from the employment side and from the practicing side.ICSI is the pioneer and the only institution in the world so far to have issued secretarial standards under section 118(10) of the Companies Act, 2013. How do you see it will benefit the industry and the regulators?
See, there is a specific provision in the Companies Act, Sec-118, sub-section (10) which says that all the companies have to follow this secretarial standard except the OPC company. Now what does it mean- it means that more than 8 lakhs companies will have to follow this provision which is there in the Companies Act. Now, this provision says that all the company except those OPC company will have to follow the SS-1 & SS-2.
Now, SS-1 talks about the Board meetings standards and the SS-2 talks about the Shareholders meetings standards. So far all the companies have different practices. Some companies give a 3 days notice, some 5 days notice and some companies give a one week or 15 days notice. Now, you know there is a different style of preparing agendas also and giving the agendas to the board. Now, we have a standard, which talks about the board meetings and also we have the second standard which talks about the shareholders meetings. Now, this will definitely take corporate governance to a next level and at the same time this will be benefiting the board of directors, secondly it will reduce the litigations, thirdly, of course, it will improve the board process because you know when you say that the directors should get the notice; should also receive the agenda; also what should be the way of recording; so everything has been covered in this standard. And at the same time, there will be one more advantage that is the investors, particularly, those FIIs will be more benefited because you know now that they know that there are some standards i.e secretarial standards which has been introduced. So, as I said, standards will take corporate governance to a next level.
The secretarial audit is like a non-financial audit. Now, in India, we have accounting and tax audit. But, now, first time in India and probably in the world we have a non-financial audit. Now, what is this secretarial audit. Secretarial Audit is something where – it is basically an audit which is a non-financial audit where certain categories of company, they need to do this audit. Now, which are those companies. These are the companies which are the public listed companies , all public limited company with more than 50 crores paid up capital and all public company having more than 250 crores turn over. Now, all three categories of company - they need to do their secretarial audit from practicing company secretaries. Now, the secretarial audit talks about whether the company has complied all the provisions of the law – there are some file laws which has been mentioned in the MR 3. Now MR 3 is a form under which CS has to report or rather it is a format for the secretarial audit. So, there are 5 laws which is given in the MR 3 and the 6th point says “.................specifically applicable to company.” And, for the other law, it says the systems are in place so basically a secretarial audit; as I said, it is a non-financial audit and where the practicing company secretary is to certify that the company has complied all the laws which is applicable to company. Now, this is something which is happening for the first time and as I said this will also increase the corporate governance. It will take corporate governance to the next level. Of course, you know, there is an agency called OECD. Now, OECD is an agency where we have more than some 30 European countries member. They are the agency who lay down the corporate governance principle. Now, again, they are still talking about the appointment of woman directors and all. Now, in India, we have already this provision in place where for all the listed companies, you should have a woman director in place. Anyways, what I am trying to convey is that - the secretarial audit will be benefiting to the stakeholder. For e.g:-we have shareholders, the owner directors also and the independent directors also because all those are directors of a big company. Sometimes, they don’t know whether the company has the HODs or have followed all the laws applicable to this company. Now, we have a third person who will be doing the audit and this report will go to the board of directors whether the company has complied all the laws. Now, basically a secretarial audit is like a health check up where you go to the doctor once in a year and you do your blood test, BP tests and all those health check-ups. So, it is something like a kind of health check-up where the company secretary is going to certify whether the company has complied all the laws of the land. Now, this is something which is very interesting. This is going to benefit to those independent directors. Now-a-days, to become independent directors in any company is a big challenge. Now, this non-financial audit report will definitely give some kind of a support to the independent directors. So, as I said this is the first time which is happening in the world - a non financial audit and the whole world is looking into these provisions. ICSI, has also recommended those standards to international body of the Chartered Institute of Company Secretaries. So, as I said that the whole world is looking into India as a lot of things are happening for the first time - the secretarial audit and the secretarial standards.
This amendment bill has changed or rather proposed to change many things. For e.g : you should not have any minimum paid up capital. Now, this is a very welcome stage and this is in line with the ease of doing business in India. So, there are so many other provisions also – for e.g: like Common Seal which is not required like earlier– it was made mandatory. Now, there were some provisions about the deposit which was left out in the previous act. So, now they are also added and writing up of the past laws which was not included in the previous act. Now, that also has been added.
Now, at the same time a very important change has been made , that earlier most of the board meetings – the resolutions, the companies were supposed to file with the ROC and it was open for the public. Now, of course, what it says you will have to file with the Registrar of companies. But, now, it is not available for the public. Now, this of course, because you know a lot of company has stakeholder who has given a representation and now it got changed. So, this amendment has focussed more on “ease of doing business in India”. I am sure once it gets implemented; it will be a benefit to the entire corporate world.
For NCLT, we were waiting for a very long time. Now, the Madras High Court has removed that obstacle and even half of the Companies Act has still not been introduced but once we have this NCLT in place, definitely the whole balance act will be enforced when it will be implemented.
Yes, if you talk about the CS profession, NCLT definitely will give a boost to our profession because many of our members who are in practice; they will get into this area of practice. Even many of the employee company secretaries who are working for the company and who have the ability to represent before the various semi/quasi judicial authorities, they will also get benefitted. They also will plan to get into this practice. So, if you ask me, others will also help the corporate world for a speedy disposal of the case. So, it is a very welcoming stage. Rather it should have been introduced from day 1 but anyways, it has its own problem. But now, yes, we have this NCALT which is in place, so definitely, it is good for our CS profession and many of the litigation work will also flow to the practicing company secretary.
Company secretary Course , one can join after 12th standard and there is also provision for joining after the graduation. There is no entry barrier. You can join having any percentage. So, there is no minimum percentage which we ask for, at the time of registration . If you ask me about CS course – we have Foundation , Executive and Professional level , Now, 90% of our syllabus is more of corporate laws and 10% of the laws are focussed on Corporate Accounts, Costing and Financial Management. Now, if you leave these 3 subjects, the other subjects are all laws. So, basically what are those laws. These laws are corporate laws. So, if you ask me, a CS is basically a corporate lawyer. He is an in-house lawyer, he is the person who understands all the laws of the land which is required for the functioning of the company and he is the one who is the guide to the board of directors. Now, once we have the whole Companies Act in place, I am very sure there is going to be a demand for the employee company secretary from the corporate world. And at the same time, you will find many of the members will get into practice, so lot of scope for the company secretaries in future and if you see our articleship also, unlike Chartered Accountancy, where there is a 3 years rigorous articleship. In our case, we have 3 stages training structure – 1 year , 2 year & 3 year. So, somebody joining after the graduation- he can get into 3 years module, then somebody who is doing the training after the Executive Level, one will have to undergo two years of training. And, if student has passed professional level , he will have to undergo 1 year. And, of course we are very liberal for giving an exemption also. So, if some senior person joins this course and he clears at a later stage, we give them almost all kind of exemption from the training unlike Chartered Accountant where somebody has to go through rigorous 3 years of articleship which is not there in case of a CS. So, CS Course is very easy and if somebody is good in theory, I am sure he/she can pass this CS course very easily.Recently ICSI have joined hands in many partnerships & tieup's, like, with International Accounting Bodies. Can you throw some light in that area as how these partnerships will help the profession as a whole?
See, if you ask me, currently we have a tie-up with the chartered secretaries of UK where any member of our institute has to appear for some 2 to 3 papers of Chartered Secretaries UK and he gets a qualification of Chartered Secretaries UK. So, once he does this, probably there is a lot of scope- he can practice or he can get into a job in any of those UK countries. So, this qualification has been recognized. One more thing as an ICSI, we are also in the process of opening a chapter outside India. So, we are in the process of opening a branch in Dubai. So, those initial paper work has been done now. Very soon, may be another 2 to 3 months, we would be launching our chapter in Dubai. We have around 100 members in Dubai and I was told that there are more than 300 students there and also we have our examination centre in Dubai. Now, this will definitely give a boost to our CS profession and those who are working in Dubai and also those who are planning to re-settle in Dubai. So, it is a good opportunity. And of course, internationally also we have a couple of more tie-ups. Now, we are also in the process of , rather we have a talk with the Malaysian Institute of Company Secretaries. Of course, the talks are in a very early stage. Let’s see how it moves on. But yes, our vision is to become a global leader in corporate governance so definitely we will be going outside our country and we will propagate corporate governance across world.Would you like to give few tips to the ICSI students who are appearing for the examination?
My advice to the students who are appearing for the June exam 2015 to focus on your study and believe yourself and as I said passing CS is not that difficult; if you are focussed and if you give a proper answer, then definitely you will get through in the exams. Consistent reading is needed and students should keep track of what is happening around him. So, once you are dedicatedly making the efforts, nobody can stop you to pass this exam.So, now finally what would be your message to our CAclubindia members and the members of the institute?
CAclubindia is doing a good job. I have seen the ICAI President Mr. Fadnis’s interview and they are doing a good job and we as ICSI are also very happy to be associated with CAclubindia.We thank you Sir, for giving us your precious time. It was an enlightening and insightful conversation with you.
Thank you very much!!