Responsibility of a Company Secretary

1. Responsibility of a Company Secretary Prof. Suman K Mukerjee Principal and Dean BharatiyaVidyaBhavanInstt. of Management Science

2. Administrative Responsibilities “What you see depends on where you sit” • The Modern Society is a society of Different Organisations. • There is need for comprehensive freedom in order to function properly • Use freedom in the right way. • Ensuring Company Law and Articles of Association. • Personal liability – Default - knowing or deliberate

3. “Keep thy shop and shop will keep thee”- George Chapman • Corporations are not only business enterprises, they shape values of our society • Understand clearly the rights, roles, responsibilities and accountability . • Optimise business performance • Ensure continuous disclosure of material information – financial & non-financial

4. Management implies joy for living - take work as joy • Good CG will improve market capitalisation of Indian companies, thereby reducing cost of capital • Large number of retail investors with limited knowledge requiring stringent investor protection. • Public holdings are widely dispersed so that shareholders have little power on their own.

5. From functional to cross sectional to holistic • Holistic GDP = Economic GDP + Social GDP(HDI) + Psycho spiritual GDP ; • The need is scale neutral MSMEs to large enterprises • Information asymmetry - between institutional and retail investors • Regulatory regime still evolving on insider trading, market manipulations, relevant disclosures etc. • Foreign Portfolio Investors will demand more transparency and greater disclosure from Indian Companies

6. CEO – Creative, Enlightment & Organic • New Clause 49 has been incorporated in the listing agreement that deals with - Board of Directors - Audit Committees - Remuneration Committee of the Board - Board Procedures - Management - Shareholders - Report on Corporate Governance - Compliance

7. Duty & Description • Compliance with internal regulations & Ligislation • Checking the company complies with : • Memorandum & Articles of Association and that these are up to date • The Companies Act 1985 • Companies and other legislation

8. Duty & Description Maintenance of records Keeping the company’s statutory books and records, including registers of • Mortgages and charges • Directors and secretary • Director’s interests • Members • Debenture holders

9. Duty & Description • Administration of board and general meetings Procedural compliance and administration in : • Preparing and sending out notices • Taking minutes of meetings and keeping the minute books

10. Duty & Description • Filling forms etc. at companies House • This must be done in the time limits given. Particular importance is attached to filling company accounts and returns, together with notices of changes to registers, especially charges.

11. Duty & Description Collation of accounts and compliance with legislation Shareholder communications Ensuring that the company’s accounting records are : • Maintained in accordance with company legislation • Prepared in time • In the form required by company law ad accounting standards • Copies of the accounts are distributed to the appropriate persons within the correct time constraints. • Not applicable to a charitable company limited by guarantee.

12. Duty & Description : Access to records Ensuring that eligible persons can review company records and that the company is compliant with the Data Protection Act

13. Duty & Description Legal Advice Share administration Advising directors on their legal responsibilities and updating them on developments in the law concerning the running of companies Not applicable to a charitable company limited by guarantee

14. Duty & Description • Information Link Maintaining communication links between • Directors and non-executive directors • Shareholders and the board • Employees and the board • Media / press and the company

15. Duty & Description Running the registered office Administering the registered office • Dealing with correspondence • Receipt and care of official documents • Making documents required by law available for inspection by third parties

16. Duty & Description Security of documentation Managing the security of • Company seal • Certificate of incorporation • Certificate(s) on change of name • Memorandum and Articles of Association • Directors’ service contracts • Share certificates and stock transfer forms • Other documents of title.

17. Value Addition through • Stability and growth • Builds confidence • Reduces perceivded risks, consequenty reducing cost of capital • Leverage a competitive advantage in the final market • Long terms sustenance of stakeholders relationship • A good corporate citizen becomes an icon and enjoys a position of pride • Stakeholders aspire to enter into relationships with enterprises whose governance credentials are exemplary.

18. A self regulatory mechanisms • Basic regulations and best practices will be effective when tailored to the individuals enterprise with reference to the stage of development, specific needs and the legal, economic, social and cultural environment it operates in. • If the trumpet gives an uncertain sound, who will prepare for the battle?

19. Management SAW= Science (practical), Action, Wisdom (tacit/explicit) • Integrity of the management • Ability of the board • Adequacy of the process • Commitment level of individual broad members • Quality of corporate reporting • Participation of stakeholders in the management How is knowledge created ? Looking around

20. Performance evaluation 3H= Head + Heart + Hand • Normative Responsibility of Corporations • Socio-Economic Development

21. Three Forms of Corporate Responsibility • Economic Responsibilities of Corporations • “Acting” in accord with the logic of competitive marketing and respecting the principle of shareholder democracy • Political responsibilities of Corporations abiding by legitimate law, respect for the system of rights and principle of constitutional state. • Social responsibilities of Corporations understands itself or promotes itself either as a community with shared values or as a part of larger community.

22. Factors in Promoting Corporate Responsibilities to Socio-economic Development Objective Factors • Technical knowledge • Managerial skills • Knowledge of locals community needs • Knowledge of development planning Subjective Factors • Pragmatic motivations – ST (cost) - Name recognition - Goodwill - Marketing opportunities - Increased company morale • Ethical motivations - LT (they are and want to be ) - sense of individual identity - sense of common identity

23. Custodian of good of Good Governance • Good governance is not merely a protective edge. It is a cutting edge. • It is not recommended because it is good for the shareholders and other state holders. It is essential because it is good for the company itself in the present competitive environment. • Corporate performance in a competitive environment requires dynamism and positive activism. The boar should remain unified and decisive. • Minority shareholders have a right to hones and fair dealings. They should be adequately protected from mismanagement, oppression and misrepresentation. • Good corporate governance is therefore not about avoiding risks, it is about managing them effectively.

24. Some Reflections • Corporate governance is necessary even essential for the company’s own benefit nor merely for the benefit of the shareholders and the stakeholders. • The purpose of business is not safety and security it is adventure with reasonable security. • Subject of the risk management is critical to good governance in a competitive environment. • Doctrinaire fallacy i) Firstly : Protection of minority shareholders. This is important but it is not a function of good governance. It is a matter of separate protection by the Companies Act against protection of minority shareholders. It is also necessary to protect the majority shareholders against the unjust and unfair expectations of the minority.

25. Some Reflections (Contd..) • Doctrinaire fallacy ii) Secondly : The shareholders should be given some part in management of the company. This is also quite illogical since the shareholders have themselves assigned the right of management to the directors. iii)Thirdly : Board should not become a debating society rather than an instrument of effective and decisive action. iv) Fourthly : Should be transparency. CG is about preserving a reasonable fair balance between transparency on the one hand and the need for the secrecy on the other.

26. Some Reflections (Contd..) • About ethics We need “Ethics for success”. There is no ethics in failure even if failure is achieved honestly and transparently. Let us not excuse failure almost as a manifestation of ethical behaviour. • The medium and small sectors also need good corporate governance even more than the large sector . • Good corporate governance is need not only by profit making enterprises but in the social and non-profit sectors – like schools, colleges, universities , hospitals and municipalities need good corporate governance perhaps even to a greater extent.

27. Some Reflections (Contd..) • Corporate governance ownership from management and control. Banks and financial institutions to ask for promoter’s personal guarantee. Personal risk exposure can not be reconciled with personal exclusion from management. If you insist on personal guarantee you must expect and accept personal involvement. • If shareholders are to distance themselves from management, this must also be true in the case of the public sector i.e. MPs must not exercise management rights from the back seat on the basis that they are representing the real owner.

28. Rules, Evolve and Revolve • Rotation can be a positive force (swastik ) High self esteem or a negative force ( inveretedswastik) Low self esteem • Freedom from stress ; (1) renunciation / restraint (2) accommodation ( Kshanti) (3) Equanmity (samadittavam) (4) Contentment (santosh) • We have witnessed three revolutions - (1) industrial revolution (2) service revolution (3) knowledge revolution • From efficiency to effectiveness to excellence • Individual to enterprise to culture

29. “Self reverence, self knowledge, self control – these three alone lead life to sovereign power”- Alfred Tennyson • Revolutionise– two meanings (a) Fundamental Change (b) Completed Rotation • Revolutionise Your Business • Revolutionise Your Culture • Revolutionise How Innovative Creates Prosperity • Revolutionise The Society In Which You Operate

30. “Boldness in business is the first , second and third thing” – Thomas Fuller • Build company profits on responsible action and skill • Create business models based on sharing and caring • Identify role models who combine thought work and deed. • Develop young talent driven by human values and bring them to business • The brain is not a sex organ therefore, there can be no gender bias or glass ceilings.

31. “Business underlies everything in our national life including spiritual life witness the fact in the Lord’s prayer. The first petition is for our daily bread. No one can worship God or love his neighbour on an empty stomach” – Woodraw Wilson 1912 THANK YOU Email : sumankmukerjee@gmail.com