New Delhi: Considering the shortage of company secretaries, the government is planning to relax rules for corporates on employing a full time company secretary but their apex body ICSI is opposing the move.
At present, companies with a paid-up capital of Rs2-crore are required to hire a full time company secretary. The government is planning to amend the Companies Act and raise the threshold limit on equity capital from Rs2-crore to Rs5-crore for employing a full time secretary.
Once the proposal is approved, companies with less than Rs5-crore paid-up capital need not employ a full time company secretary and instead they can hire one on temporary basis, an official in the know of the matter said.
The proposal is aimed at addressing the problem of shortage of company secretary in the country.
There are 31,705 companies with a paid-up capital of Rs2-crore plus, whereas there are only around 15,000 qualified company secretary, making it difficult for many companies to appoint a whole-time company secretary, the official said.
The government is planning to amend the Companies Act, 1956, which lays down the criterion for employing a whole-time company secretary, in this regard.
According to Section 383 (A) of the Companies Act, 1956, “every company having paid up capital of Rs2-crore shall have whole-time secretaries and where the Board of directors of any such company comprises only two directors, either of them shall be the secretary of the company”.
However, there is a huge gap between the availability of company secretary and their demand by companies. As per the officials, there are 19,582 qualified members of the Institute of Company Secretaries of India (ICSI), of which not even 50% are in employment.
The official said, “The companies above Rs5-crore threshold are only 15,000 so it would be prudent to fill the demand-supply mismatch like this.”
The move is going to benefit around 16,000 companies, as they are not required to employ a whole-time company secretary, which would save cost for them.
However, ICSI President opines differently. “We don’t want the limit to be enhanced right now. Large companies are properly governed, it is the small and medium size companies which need good governance,” ICSI President Keyoor Bakshi said.
“We will write to the government requesting them not to raise the limit right now. With the economic slowdown, it may not be a right time for such a decision,” Bakshi said.
He said as far as the shortage of company secretaries is concerned, the institute has seen an increase in the number of applications this year, with enrolment increasing by 50% this year. Over a period of two years, the gap will be filled, Bakshi said.
This year, 35,000 students enrolled for the course of company secretaries as a result of various awareness campaign organised by the institute. Also, the ICSI is planning to increase its office count from 70 to around 150, which will promote the course, Bakshi said.