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There are, no doubt, 9 lakhs companies registered under Companies Act 1956 but NOT " ACTIVE COMPANIES." IT IS ESTIMATED THAT "ACTIVE COMPANIES WILL NOT BE MORE THAN 5 LAKHS " i.e MORE THAN 4 LAKHS COMPANIES ARE DORMANT COMPANIES THAT IS TO SAY THE COMPANIES HAVE NOT FILED REGULAR RETURNS UNDER SECTION 161 AND 220 COMPANIES ACT 1956 (ANNUAL RETURN AND BALANCE SHEET )
MEMBERS SHOULD PONDER ON THE ABOVE
VIEWS ARE SOLICITED
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Barely days after the new company law regime has come into effect on April 1, there has been large scale protests by company secretaries ( CS) outside Shastri Bhavan ( that houses the Ministry of Corporate Affairs) and the Institute of Company Secretaries of India ( ICSI), the statutory body for training and certifying company secretaries. Subsequently, over the last 10 days senior officials from ICSI and the MCA have been huddled in meetings to sort out the misgivings. The Companies Act, 2013, limits the role of company secretaries ( CS) to 7,000- odd companies, putting at threat the livelihood of thousands of CS professionals in the country. The new rules mandate the appointment of a company secretary only for listed companies and public companies with a paid- up capital of ₹ 10 crore or more. There is no specific requirement for a private company under the new legal framework to appoint a company secretary. According to ICSI estimates, of the nine lakh- odd active companies in India, around 93 per cent are private. According to R Sridharan, president, ICSI, the thrust of the new company law regime is on corporate governance and compliance. " Leaving out a vast majority of private companies from the ambit of secretarial audit goes against the spirit of the Act," says Sridharan. Moreover, company secretaries should be seen as an extended arm of the regulator, he adds. There are around four lakh registered company secretaries in the country and around 2,000 fresh professionals get registered every year. What has taken the CS community by surprise is the divergence in the draft Act – issued towards the end of 2013- and the final notified rules that came out last week of March 2014. The draft rule had proposed that every listed company and " every other company" having a paid- up share capital of ₹ 5 crore or more should have whole- time key managerial personnel (KMP). Company secretaries are part of KMP, along with managing director or CEO, a whole- time director and the chief financial officer. The MCA has raised concerns over overlap in the scopes of secretarial audit and financial audit to limit the role of company secretaries. However ICSI's stand has been that secretarial audit relates to audit of compliances of applicable laws, while any financial audit would involve audit of financial transactions. Typically, financial audits fall under the ambit of chartered accountants. The new law has done away with the need for pre- certification of some e- forms by a practicing professional. The ICSI's contention has been that pre- certification would help improve compliance and governance. Corporate lawyers note that the Ministry would have to amend the rules if they were to make it mandatory on certain class of private companies to have company secretaries. The law ministry would have to take a call on any such amendment in the rules, a Ministry official said. RULES OF CONTENTION KEYMANAGERIAL PERSONNEL KMPs need to be appointed in every listed company and every public company having paid up share capital of ₹ 10 cr or more SECRETARIAL AUDIT Besides listed companies, the rules prescribe such audit for (a) public company having a paid- up share capital of ₹ 50 cr or more; or (b) having a turnover of ₹ 250 cr or more ANNUAL RETURN Annual return of companies with paid- up share capital of ₹ 10 cr or more or turnover of ₹ 50 cr or more to be certified by company secretary Extracts of annual return to be attached with the board report need not be certified by a company secretary PRE- CERTIFICATION OF E- FORMS Certain forms which required precertification according to Companies Act, 1956, do not require pre- certification by a practising professional; Pre- certification required only in respect of 14 forms COMPANIES ACT, 2013 |
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