Are you a Company Secretary (CS)? Can we hire you ? It’s urgent. That was a frantic call to Santhanam, a CS, from a small city-based shipping company as demand for full-time CS spiked after the Ministry of Corporate Affairs strengthened the governance structure by introducing Form INC-22A (ACTIVE) in February.

Under the new rule, if a company with ₹5-crore paid-up capital and above does not intimate the particulars specified in the e-Form INC-22A (ACTIVE), including the details of CS by June 15, the company will be marked as ‘ACTIVE-non-compliant’. This means, companies cannot file with the Registrar forms seeking changes in authorised capital; paid-up capital; directors except cessation; registered office and amalgamation and de-merger.

After June 15, the company can appoint a CS and file “e-Form ACTIVE”, on paying ₹10,000 as fine and thereafter, the company shall be marked as “ACTIVE Compliant”.

The demand for whole-time CS spiked a week before the deadline with smaller companies struggling to find suitable CS, and if found, the salary sought was too high to afford. “We tried to hire a CS but the salary demanded was three to four times the market price,” said an official of a Custom House Agent. “We are yet to find one. We are unable to upload Form 22A without a whole time CS,” he added.

Short of qualified CS

Media reports say that there are around 58,000 qualified CS as against requirement of 89,623 companies. Of them nearly 40 per cent are employed, leaving with around 20,000 available to comply with the new law.

B Desikan, an advocate and a faculty at the city-based Bharadwaj Institute, which trains CS aspirants, said many companies are calling him seeking CS. “So far, CS have been paid less but thanks to the new law, they are being recognised and paid well according to their competency,” he said.

There are many CS who just lend their name as whole-time CS of the company without actually being engaged as the Secretarial duties. Such a practice complies with the law in mere letter rather than spirit, he said.

Sampath K Rajagopalan, Partner, Entity Compliance and Governance, EY India, said companies who have not appointed CS are unable to make the Form 22A filing. This also affects other important filings. With such companies now rushing to appoint CS, there seems like a sudden demand for them.

There is a visible shift in the regulator’s approach towards making companies adhere to corporate governance norms, a role that CS are supposed to assume. Therefore, companies (meeting the capital threshold) should view this as an important cost. CS of various experience levels are available and companies should look to recruit individuals with skills and experience commensurate with the size and complexities of their business, he said.

Reacting to the sudden demand for CS and higher pay package sought by CS, Ranjeet Pandey, President, The Institute of Company Secretaries of India, said, “We don’t see any immediate surge in pay packages after the requirement of INC-22A (ACTIVE). The pay packages in any profession are market driven. The institute’s placement cell is dedicatedly working towards supporting the corporates and members to match the demand and supply of CS in terms of numbers, packages.”

Appointment of CS was to enhance the governance structure, advise board and provide comfort to regulator and stakeholders. Form INC-22A (ACTIVE) was brought out to ensure the existence of important aspects in any company, he added.

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