The Hindu Business Line : `Self-regulation is a dominant theme of the new company law'

It is necessary that the appointment and removal of company secretary get the deserved importance under the law. MS PREETI MALHOTRA, PRESIDENT, ICSI.

MS PREETI MALHOTRA, President, ICSI.

Company law reforms may get a push during the second half of the Budget Session, when the Companies Bill and the Competition Bill are expected to be introduced in Parliament. A few weeks ago, while inaugurating the National Seminar on `Limited Liability Partnership' organised by the Institute of Company Secretaries of India (ICSI) in Delhi, the Minister of Company Affairs, Mr Prem Chand Gupta, spoke about the law-in-the-works. Taking it forward, Business Line interacted with Ms Preeti Malhotra, the recently-elected president of the Institute, to know what changes the ICSI is looking for in the new company law on the anvil. Excerpts from the interview:

On the role played by the Institute.

The ICSI was actively involved in the making of the Dr J. J. Irani Committee Report. The new company law is based on the Irani Committee recommendations.

An important recommendation is the identification of the company secretary as a key managerial personnel along with the CEO (chief executive officer) and the CFO (chief financial officer).

This is in the interest of the development of the corporate sector in the context of globalisation of the Indian economy. Further, in our view, the new company law should find variety as well as strength in the role that company secretaries could play in the corporate sector. It is laudable that the Ministry of Company Affairs is endeavouring to put in place a globally compatible and business-friendly company law.

On the most important expectations from the new law.

Self-regulation is a dominant theme of the new company law. This will call for extra care in ensuring proper governance in companies. To further strengthen and expand the existing compliance management system, in the new company law, we would like a structure to be in place using the services of company secretaries both in practice and in employment to ensure that the requirements of the Companies Act are complied with by all companies.

Further, as in the present Companies Act, even in the new law, every company having such paid-up capital as may be prescribed should need to appoint a whole-time company secretary.

Also, it is necessary that the appointment and removal of company secretary get the deserved importance In the new company law, as recommended by the Irani Committee, the appointment and removal of company secretary should require a resolution of the board of directors passed at a meeting of the board.

On further capacity building.

We are strengthening the necessary skills of company secretaries to act as specialist insolvency practitioners.

When the new company law rationalises and simplifies procedures for capital reduction and restructuring, there will be further enhancement in the scope company secretaries' practice. Similarly, recognition to contractual mergers would expand the work profile of company secretaries.

On possible new professional opportunities.

The new law may provide that private professionals, including company secretaries, are appointed as inspectors for inspection and investigation, operating either individually or in teams. Company secretaries can render speedy and high quality services in various areas of liquidation of companies; it is necessary to professionalise the work of insolvency and liquidation of companies. We need a regime where the Tribunal may appoint interim, company administrator/liquidator from a panel of professionals including company secretaries.

We expect the new law to provide that a company administrator/liquidator may engage the services of professionals, including company secretaries, to assist in discharge of his duties and functions. The proposed in-house procedure empowering the Registrar of Companies to impose penalty in the form of fine, and provision for appeal to NCLT (National Company Law Tribunal) will provide further opportunities of practice. We anticipate that stringent penalties proposed in the new company law would make it imperative for companies to utilise services of company secretaries.

D. Murali

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