When Does A Company Require A Whole Time Company Secretary?

Company Secretary is an important member of corporate management and acts as an advisor to the management of a company on legal and business matters. Company Secretary is an indispensable professional in the efficient management of an organization, whose affairs are conducted by board of directors or a council or any other corporate structure.

Only those persons who are Company Secretaries within the meaning of Section 2(1)(c) of the Companies Secretaries Act 1980, and individuals possessing the prescribed qualifications can be appointed as Secretary of a Company.

1. Appointment of Whole Time Company Secretary is mandatory in the following cases –

• Companies having Share Capital in between 2 Crores and 5 Crores and not having the Compliance Certificate from Company Secretary in whole time practice.
• Companies having Share Capital of not less than 5 Crores

Note: If your Company fails to comply with the above requirement, the company and every officer of the Company who is in default will be punishable with fine upto Rs. 500 for everyday during which the default continues.

Provided that in any proceedings against a person in respect of an offence, it shall be a defense to prove that all reasonable efforts to comply with the provisions were taken or that the financial position of the company was such that it was beyond its capacity to engage a whole-time secretary.

2. Compliance Certificate is Mandatory in the following cases –

• Companies having Share Capital in between 10 Lakhs and 2 Crores
• Companies having Share Capital in between 2 Crores and 5 Crores and had not been appointed as a whole time company secretary

Qualification of Company Secretary

No individual shall be appointed as Company secretary unless he possesses any one or more of the following qualifications, namely:-

• Membership of the Institute of Company Secretaries of India constituted under the Company Secretaries Act, 1980 (56 of 1980);
• Pass in the Intermediate examination conducted either by the Institute of Company Secretaries of India constituted under the Company Secretaries Act, 1980 (No. 56 of 1980), or by the earlier Institute of Company Secretaries of India incorporated on 4th October, 1968, under the
• Companies Act, 1956 (1 of 1956), and licensed under section 25 of that Act;
• Post-graduate degree in commerce or corporate secretaryship granted by any university in India;
• degree in law granted by any university;
• Membership of the Institute of Chartered Accountants of India constituted under the Chartered Accountants Act, 1949 (38 of 1949);
• Membership of the Institute of Cost and Works Accountants of India constituted under the Cost and Works Accountants Act, 1959 (23 of 1959);
• Post-graduate degree or diploma in management sciences, granted by any university, or the Institutes of Management, Ahmedabad, Calcutta, Bangalore or Lucknow;
• Post-graduate diploma in company secretaryship granted by the Institute of Commercial Practice under the Delhi Administration or Diploma in Corporate Laws and Management granted by the Indian Law Institute, New Delhi;
• Post-graduate diploma in company law and secretarial practice granted by the University of Udaipur; or
• Membership of the Association of Secretaries and Managers, Calcutta, registered under the West Bengal Registration of Societies Act, 1961 (XXVI of 1961):

However, when there are more than two directors on the Board, then one of them if otherwise qualified within the meaning of Companies Rules, 1988 may act as secretary not otherwise.

One can go through the following Amendment for their understanding.

COMPANIES (APPOINTMENT AND QUALIFICATIONS OF SECRETARY) AMENDMENT RULES, 2009-AMENDMENT IN RULE 3

NOTIFICATION NO. G.S.R. 11 (E), DATED 5-1-2009

In exercise of the powers conferred by clauses (a) and (b) of sub-section (1) of section 642 read with clause (45) of section 2 and section 383A of the Companies Act, 1956 (1 of 1956), the Central Government hereby makes the following rules further to amend the Companies (Appointment and Qualifications of Secretary) Rules, 1988, namely :—

1. (1) These rules may be called the Companies (Appointment and Qualifications of Secretary) Amendment Rules, 2009.

(2) They shall come into force from the 15th day of March, 2009.

2. In the Companies (Appointment and Qualifications of Secretary) Rules, 1988, in rule 2,

(i) In sub-rule (1) and in the proviso to sub-rule (4), for the words “rupees two crores” the following words shall be substituted, namely: — “five crore rupees”;

(ii) In sub-rule (3), the second and third proviso shall be omitted;

(iii) After sub-rule (3), the following sub-rule shall be inserted, namely:—

“(3A) A company having a paid up share capital of two crore rupees or more but less than five crore rupees may appoint any individual who possesses the qualification of membership of the Institute of Company Secretaries of India constituted under the Company Secretaries Act, 1980 (56 of 1980), as a whole-time secretary to perform the duties of a secretary under the Companies Act, 1956: Provided that where a company has appointed under sub-rule (3) or this sub-rule, a whole-time company secretary, possessing the qualification of membership of the Institute of Company Secretaries of India, such a company is not required to obtain a certificate from a secretary in whole-time practice under rule 3 of the Companies (Compliance Certificate) Rules, 2001.”