Chapter 24: Company Secretaryship

Introduction

The expanding role of Company Secretaries in the corporate sector has led to the growth of Corporate Secretaryship as a separate discipline. The professional education for Company Secretaryship is offered by a small number of universities and the Institute of Company Secretaries of India (ICSI). (ICSI House, 22 Institutional Area, Lodi Road, New Delhi 110003). Only recently, courses in Corporate Secretaryship have been introduced at graduate and post graduate levels in a small number of universities. As has already been mentioned in Chapter 5, the programme offered by ICSI has statutory implication.

This is because the position of Company Secretaryship has been made statutory by the Company (Amendment Act) of 1975. The section 383A prescribes that every company with a paid-up capital of Rs.50 lakh and above must have a whole time company secretary who is a member of the ICSI. The Institute itself has statutory status as it was constituted under the Company Secretaries Act, 1980 to develop and regulate the profession of company secretaryship.

The Courses

A person desiring to enter the profession is required to pass three successive examinations, viz. Foundation, Intermediate, and Final, conducted by the Institute. This has to be followed by acquiring experience by undergoing a specified period of practical training to become the Associate Member of the Institute(ACS), the official stamp of the profession.

The first step, for taking up the course, is the registration as students of the Institute which is open throughout the year. Studentship is open to candidates who are not less than 17 years of age and have either passed the Foundation Course examination or are eligible for exemption from it. The following categories of candidates exempted from the Foundation Course: (1) a Bachelor or Master’s Degree holder in Corporate Secretaryship or Commerce; or (2) a candidate who has passed the final examination of the Institute of Costs and Works Accountants of India (ICWAI) or the Institute of Chartered Accountants of India (ICAI); or a Degree or a Master’s Degree holder in any discipline other than Fine Arts.

However, the study of commerce as a subject is an essential requirement for exemption. The candidates in the third category are, therefore, required to undergo satisfactorily a course of postal or oral tuition in those subjects in the Foundation examination which they had not studied at the graduate or postgraduate level. According to a recent decision, only those candidates scoring less than 55% would have to pass as entrance test for admission into the Intermediate course.

All registered students are required to undergo a compulsory postal tuition provided by the headquarters of the Institute at New Delhi. Under the tuition scheme, students are provided with a set of five test papers for each subject - three compulsory and two optional. They are required to submit to the Institute response sheets in respect of the compulsory test papers. Response sheets are to be written under examination conditions after going through study material and recommended books. The response sheets are returned to the students after they are evaluated by the Institute’s examiners along with comments, if any.

The qualifying marks for each response sheet are 40%. Only on successful completion of the postal tuitions, students are allowed to appear in the Intermediate or Final Examination, as the case may be. The Regional Councils located in New Delhi, Calcutta, Chennai, and Mumbai and Chapters (and also satellite Chapters) of the Institute are authorised to provide oral tuition. However, oral tuition is optional and not a substitute for the compulsory postal tuition.

As regards the Foundation Course, it is open to candidates who have passed the 10+ 2 examination. It has been now decided that Foundation Course would be restricted to candidates who have secured 60% or more marks in the aggregate at the 10+2stage. There are four papers: (1) Business Communication; (2) Business Law and Management; (3) Principles of Accountancy; and (4) Economics and Statistics. After passing the Foundation course examination, the candidates are eligible for registration as students for pursuing further studies for the Intermediate and Final examinations.

There is a system of exemption from appearing in certain papers both for the Intermediate and Final examinations, if the candidates possess some special qualifications. For the Intermediate level, the qualifications are Master of Corporate Secretaryship, MCom, and MBA for getting exemptions in four papers. In accordance with a reciprocal agreement between the ICSI and ICWAI, candidates who have passed the final examination of the ICWA are exempted from three papers. There are two groups for both the Intermediate and the Final Examinations. Each group consists of four papers (See the Annexure). Topics covered by the syllabus include various acts and laws applicable for the operation of companies, financial management, management control, cost and management accounting.

Examination are held at 50 centres including one in Dubai twice a year, in the months of June and December. Results are usually declared on 25^th August of the same year and 25^th of February of the next year, respectively.

New Syllabus

A new syllabus would be introduced in September 2000. This was necessitated by the advancement in information technologies and new developments in the economic environment both at the national and international levels. The new syllabus would, therefore, include information technologies applicable to business and industries, economic liberalisation, globalisation, new insurance policy, intellectual property rights, and the World Trade Organisation, and the like. Further, all the students would have to undergo a Training Orientation Programme before commencing the training.

Under the new syllabus, students would be allowed to appear for the final examination only after they have completed at least twelve months of training. The Institute had also decided to change the pattern of examination papers which would test the comprehensive understanding of the students and help in the “development of analytical, legal and business mind capable of taking an integrated view” of the profession. Online testing through computer-based examination to measure the competence of students in certain areas would also be introduced. The first examination under the changed norms and syllabus is likely to be held in December 2001.

Admission to Membership

Candidates who have passed the Final Examination and have completed practical training are entitled to get themselves enrolled as Associate Members. On admission to the Associateship, they are entitled to use the descriptive letters “ACS” after their names, denoting that they are Associate Members of the Institute. They can also use the designation” Company Secretary” after their name. Associate Members become eligible to get themselves enrolled as a Fellow after five years, provided he fulfils other conditions stipulated in the Institute’s regulations. When admitted to the Fellowship, he is entitled to use the descriptive letters FCS after his name. So far, the ACS qualification has been recognized by 24 Universities, for admission to the PhD course. As stated earlier, a person who has passed the Final examination of the Institute and wishes to pursue the Cost Accountancy Course of the ICWAI is entitled to exemptions in some papers of the ICWAI examinations.

University Courses

As the number of students desiring to take up the company Secretaryship started growing, several universities in the South are now offering Corporate Secretaryship at the undergraduate level leading to the award of Bachelor of Corporate Secretaryship (BCS) or BA (Corporate Secretaryship). At present, the courses are available in several colleges affiliated to the University of Madras, Madurai Kamraj University (Tiruchirapalli). The Alagappa University, Bharatidasan University, Mother Teresa Women’s University, and Pondicherry University also offer BCS course through distance learning mode.

The subject is also available as one of the combinations at the undergraduate level. The Alagappa University (Karaikudi 630003) introduced the first ever postgraduate degree course leading to the award of Master of Corporate Secretaryship (MCS). This course is also available in the University through distance learning mode. As stated earlier, the MCS degree holders are entitled to exemptions to several papers in the Intermediate Examination of the ICSI. MCS students are required to undergo practical training in companies. The University has also introduced an M Phil course, besides a PhD programme in Corporate Secretaryship, both on full time and part-time basis.

The MCS degree has been recognized by the Department of Company Affairs for appointment of Company Secretary in small companies having paid-up capital of less than Rs.50 lakh. The University Grants Commission and the Tamil Nadu State Government had included the subject in the National Eligibility Test (NET) and State Level Eligibility Test (SLET), respectively for recruitment of lectures. Other university courses are: (i) University of Madras (Chennai 600005) MA (Corporate Secretaryship), (ii) Osmania University (Hyderabad 500007)- PG Diploma, (iii) HN Bahuguna Garhwal University (Srinagar Garhwal 246174) – PG Diploma in Company Secretaryship, and Annamalai University (Annamalainagar 608002)- PG Diploma.

Career Opportunities

Regarded as the conscience keeper of a company and a custodian of the interests of the share-holders, Company Secretaries occupy centre stage in the affairs of the company. Their job is an interesting blend of financial, legal, and advisory services. Today, the Company Secretaries are corporate legal officers who are well versed in company law as well as the numerous legislations affecting companies and the share-holders. They have to ensure that the company is complying with these legislations. As such, the profession offers excellent employment opportunities with attractive pay packets even for a new entrant.

The employment potential of company secretaries has gone up not only in private and public sector companies but also in commercial banks and financial institutions. The Indian Bank Association has recommended that banks consider appointment of Company Secretaries as specialists in the fields of finance accounts, law and merchant banking. Apart from the regulatory provision for appointing Company Secretaries in companies with paid-up capital of Rs.50 lakh and above, companies seeking listing on stock exchanges are also required to have whole time qualified Company Secretaries. Even candidates who have passed the Intermediate Examination can get a job in companies whose paid-up capital is less than Rs.50lakh.

The ACS qualification is now recognized by the Government of India for appointment to superior posts under the Central Government. It is one of the essential qualifications for recruitment to Grades I to IV in the Accounts Branch of the Central Company Law Service of the Department of Company Secretaries. A member of the Institute may also practice independently as a professional after obtaining a certificate of practice from the Institute as provided in Company Secretaries Act, 1980.

The scope of work of Company Secretary in practice has been greatly enhanced by the Companies (Amendment) Act, 1988. Under Section 161, the annual return of a listed company is compulsorily required to be signed by the whole time practicing Company Secretary. A Company Secretary in practice who is engaged in the formation of the company can now sign a declaration under section 33(2) that all the requirements of the companies act and the rules made there under have been complied with in respect of registration of the company. A practicing Company Secretary is also authorised to give a verified declaration under section 149.

Again under the guidelines laid down in Schedule XIII for appointment of managerial personnel and payment of managerial remuneration, a Company Secretary, in whole time practice can also certify that the requirements of this schedule have been complied with. A practicing Company Secretary may be called upon to arrange for promotion, formation and incorporation of a new company and also to deal with reorganisation, merger or winding up of companies. The 1988 amendment of the Companies Act requires annual returns of all the listed companies to be signed by a Company Secretary, in addition to the authorised officials of the Company.

The Institute had signed Memorandum of Understanding with the Institute of Chartered Secretaries (ICSA), London and agreed to explore areas of close cooperation for mutual benefits. According to this, the candidates after completing company secretary course from India will have to appear for the three papers of the UK Institute. Successful candidates will be awarded certificates which would make them eligible to take up jobs or practice independently in Commonwealth countries. ICSI has also been trying to set up an association called the South Asian Association of Company Secretaries.

Students aspiring to enter the profession should obtain a copy of the publication, Career in Company Secretaryship – A Handbook which contains detailed information about the course.