Key managerial personnel

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 September 2013 Whether CFO with ICSI membership be appointed as Company Secretary.

Under the new companies bill since both CFO and Company Secretary is KMP, whether the same can be done?

Ajay Mishra

Ajay Mishra (Expert)
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02 September 2013 Hi

You are talking about under CA, 1956 or under new CA, 2013.

Querist : Anonymous

Querist : Anonymous (Querist)

02 September 2013 Hi

Can you please reply taking into consideration both CA 1956 and CA 2013

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2024 Under the Companies Act, 2013, in India, the roles of Key Managerial Personnel (KMP) are defined with specific responsibilities and qualifications. Here’s how the appointment of a CFO as a Company Secretary (CS) fits within the regulatory framework:

### **Roles and Definitions**

1. **Key Managerial Personnel (KMP)**:
- **Company Secretary (CS)**: Under Section 2(51) of the Companies Act, 2013, a Company Secretary is one of the KMPs. The Company Secretary is responsible for ensuring compliance with corporate laws and managing company secretarial functions.
- **Chief Financial Officer (CFO)**: The CFO is also considered a KMP under Section 2(51). The CFO manages the financial aspects of the company, including financial planning, risk management, and reporting.

2. **Qualifications**:
- **Company Secretary**: To be appointed as a Company Secretary, an individual must be a member of the Institute of Company Secretaries of India (ICSI). This is a regulatory requirement to ensure that the person has the appropriate qualifications and experience.
- **CFO**: There is no specific requirement for the CFO to be a member of ICSI; instead, they should have qualifications and experience related to financial management.

### **Appointment of CFO as Company Secretary**

1. **Regulatory Requirement**:
- **Dual Role**: The Companies Act, 2013 does not explicitly prohibit an individual from holding multiple KMP positions. Therefore, technically, a CFO with ICSI membership can be appointed as a Company Secretary as well, provided they meet the qualification requirements for the CS role.

2. **Compliance**:
- **Qualification**: The individual must be a qualified member of ICSI to serve as a Company Secretary. If the CFO is also a member of ICSI, they can legally take on the role of Company Secretary.
- **Disclosure**: The appointment should be properly documented in the company’s records and disclosed in the Board’s resolutions and annual filings.

3. **Practical Considerations**:
- **Conflict of Interest**: Consider whether having the same person serve as both CFO and Company Secretary could lead to conflicts of interest or overburdening. Each role has distinct responsibilities, and it’s essential to ensure that both roles are effectively managed.
- **Regulatory Compliance**: Ensure that the appointment complies with all relevant provisions of the Companies Act, 2013, and any other applicable regulations.

### **Action Steps**

1. **Verify Qualifications**: Confirm that the CFO is a member of ICSI if you intend for them to serve as the Company Secretary.
2. **Board Resolution**: Pass a board resolution to appoint the individual as both CFO and Company Secretary.
3. **Update Records**: Update the company’s records and filings to reflect the dual role of the individual.
4. **Consult Legal Advisors**: For complex situations or to ensure compliance with all legal requirements, consult with a corporate legal advisor or company secretary who can provide expert guidance.

In summary, a CFO who is a member of ICSI can be appointed as the Company Secretary, provided all regulatory and qualification requirements are met. Ensure that the roles are effectively managed and compliant with the Companies Act, 2013.

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