Company secretaries seem to be facing regulatory heat as the rules notified under the new company law could put thousands of such professionals out of work.
The new rules mandate the appointment of a company secretary only for listed companies and every other public company with a paid-up capital of ₹10 crore or more.
With no such specific requirement for private companies under the new legal framework, there is now a possibility of all company secretaries employed with private companies losing their “bread and butter”.
Private companies constitute 93 per cent of total active companies (about nine lakh) in India. The number of private companies will increase further as the definition of private company has been modified to include firms having up to 200 shareholders.
Also, the current liberal dispensation would encourage conversion of public companies into private ones, say corporate observers. One may, in the coming days, see a situation where most new companies would be private ones.
All eyes on pilot Following a strong protest by aggrieved company secretaries before the Shastri Bhawan (which houses the Corporate Affairs Ministry) and the ICSI headquarters in the Capital on Friday, the institute’s brass have rushed to the Corporate Affairs Minister Sachin Pilot, who is campaigning in Rajasthan (Ajmer). “Our request to the Minister will be to ensure that private companies also be required to have a company secretary (key managerial person),” R Sridharan, President, Institute of Company Secretaries of India (ICSI) told Business Line on Friday, before leaving for Rajasthan.
Draft rules The professional world has completely changed for company secretaries in a few months between the release of draft rules (in second half of 2013) and the final rules (in end March this year).
The draft rule proposed that every listed company and “every other company” having a paid-up share capital of Rs 5 crore or more should have whole-time key managerial personnel (KMP).
But the final rules modified the coverage to every listed company and “every other public company” having a paid-up share capital of ₹ 10 crore or more. Some aggrieved company secretaries also raised the principle of natural justice to point out that the draft rules and the final rule could not be altogether different.
The institute also wants the KMP trigger to be lowered to ₹ 5 crore, against ₹ 10 crore specified in the final rule.