Is the Role of the Company Secretary in a Roller Coaster now ?

Article published in the Souvenir of 5th SIRC Tamilnadu State Conference held on August 8 - 10, 2024.

When I first took the position of a Company Secretary, I was proudly telling everyone that I became the Company Secretary and was also briefly in a cloud nine moment, till one of my relatives asked me to whom I was a Secretary.? I had to put a lot of efforts to explain the role of the Company Secretary in a Company and his responsibilities as a Compliance Officer of various statutory regulations. Leave alone the person who was not connected with the industry, like my relative - ?even within the industry and among other professionals, the role of the Company Secretaries were undermined with preparing some Resolutions, Minutes and filing a few Annual Returns with the Registrar of Companies / MCA.

Not the case anymore. The role of the Company Secretary is very well recognised now. Of course, like every other profession, the value of the CS Professional also depends on the individual calibre and traits.

Also, the Company Secretary’s role has become very dynamic now.? With the ever-changing laws and regulations, with the imposition of penalty / fine on a daily basis for the delayed filing, with RoC Adjudication Orders being issued on the non-compliance of each and every provision – whether the Company Secretary is employed in a private company or a listed or unlisted public company, one needs to be very well equipped and updated with laws and its compliances on a regular basis.

With the mounting legal compliances day after day, unless the Company Secretary is proactively managing things, he (as per The General Clauses Act, 1897, words importing the masculine gender shall be taken to include females - so he includes she) will not be able to decide on how to move forward and will be just stranded in the middle of the traffic of compliances.

For instance, if the Company receives Foreign Direct Investment, whether the Company is a Private Company or a Public – listed or unlisted one, we are supposed to be more familiar with the Foreign Exchange Management Act, 1999 with its Rules and Regulations.

And if the Company is a listed one, it is not just the compliance of Companies Act.? There are whole lot of compliances under the SEBI Regulations.

As the theme of this this 5th SIRC Tamil Nadu State Conference of Company Secretaries is “Creating a measurable ESG Ecosystem and Overcoming Compliance Challenges”, let me dwell something on this line.

As many of you are well aware that as per Regulation 34 (2) (f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, for the top one thousand listed entities based on market capitalization, the annual report shall contain a Business Responsibility and Sustainability Report (BRSR) on the Environmental, Social and Governance (ESG) disclosures, in the format as may be specified by the Board from time to time.

The said regulation also provides that for other listed entities and other entities which have listed their specified securities on the SME Exchange may voluntarily disclose the BRSR.? This indicates that other listed entities may follow suit of the top 1000 listed entities for mandatory disclosure.

If one goes through the details required in the Business Responsibility and Sustainability Report, the Company Secretary is not only required to understand the various laws and regulations, but also need to understand the entire gamut of the business as well.?

For example, the Business Responsibility and Sustainability Report (BRSR), inter alia, requires the following disclosures / details:

?? The entity to indicate material responsible business conduct and sustainability issues pertaining to environmental and social matters that present a risk or an opportunity to the business and the approach to adapt or mitigate the risk along with its financial implications;

?? A Statement by the director responsible for the business responsibility report, highlighting ESG related challenges, targets and achievements, Capital Expenditure (CAPEX) investments in specific technologies to improve the environmental and social impacts;

?? Details of disclosures regarding water required for the industry, details of greenhouse gas emissions, details of waste management by the entity;

?? Whether the entity or its operations are located in and around ecologically sensitive areas and whether any environmental approvals / clearances required;

?? Whether the entity is in compliance with the environmental laws / regulations / guidelines in India like Water (Prevention and Control of Pollution) Act, Air (Prevention and Control of Pollution) Act, Environment Protection Act and Rules thereunder;

?? Details of Social Impact Assessments (SIA) of projects undertaken by the entity based on applicable laws, the mechanisms to receive and redress grievances of the community.

This is just the tip of the iceberg.? There are so many disclosures and compliances like the above the Company Secretary is required to collect, collate and file with the relevant authorities within the due dates.? The Company Secretary cannot be complacent.? Any wrong information or delayed filing will cost him and the Company heavily.

As the importance of effective corporate governance is a critical fragment of today’s business environment and as the dynamics of the board room is changing, the need for well-equipped professionals with technical knowledge is the need of the hour. Further, as depicted herein, the regulatory landscape has become more complex and demanding, leaving the Company Secretaries to navigate a labyrinth of regulations and compliance requirements. Digital transformation within the companies also demands that a CS should be capable of managing and implementing digital governance practices as well. Therefore, adaptability, continuous learning and the proactive engagement of Company Secretaries are crucial for a Company Secretary to thrive.

Also, one cannot simply say that I am not in the listed company and I am only taking care of the private company or the unlisted public company.? One needs to have passport readily available if a chance to go abroad sneaks through him. After getting the chance to go abroad, he cannot apply for a passport.? So, the prudent CS is required to be conversant with all the laws whether it is required for now or later.

Whether the Company Secretary will be in the roller coaster or moving up in the corporate ladder (and to even become the corporate leader), depends on how well he adapts himself to the present day requirements with the continuous learning in all the facets of the business and its compliances.

The role of a Company Secretary, characterized by rapid changes, increasing complexities and expanding responsibilities certainly present challenges and nothing short of this is expected in the impending. However, this also provides a wide array of opportunities paving the way for the participation of Company Secretaries in previously unexpected areas like strategic decision making, risk management, corporate governance and more and as the role continues to evolve, Company Secretaries are placed in the heart of the corporate realm.

We have to decide for ourselves, whether we are a meticulous CS or mediocre CS, to put ourselves in the Roller Coaster or not.

Also, it is high time that the nomenclature of the Company Secretary is changed to Corporate Secretary as the horizons of laws to be complied by the Company Secretary go beyond the Companies Act.

CS N.A. Srinivasan, M.Com., B.L., FCS

Advocate & Resolution Professional

Genicon Legal LLP

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