The Committee on Corporate Governance has recommended that the term ‘senior management’ shall specifically include ‘company secretary’.
The report of the Committee on Corporate Governance recently submitted to Sebi had certain recommendations specifically pertaining to the profession of company secretaries. Once incorporated, it will not only boost the profession, but enhance its significance as well. In a country like India, which is emerging as a strong propelling force on the global map, reshaping the role of company secretaries is of paramount importance. Here, public and private enterprises play a major role in driving success and paving ground-breaking paths towards the betterment of the nation. The government and regulators are the drivers towards bringing transparency in business dealings, accountability and good governance. Going forward, far more emphasis will paid be on corporate India and Indian markets.
Corporate India plays a key role in nation building, and corporate governance is an integral part of the broader governance of the country. Corporate governance practices, in today’s era, play a major role in recognising leading corporates as promising entrepreneurs, emerging SMEs and the broader community at large. However, further probing showcases ongoing impediments that are hindering growth. No doubt, most leading corporates adhere to rules and regulations, but they will likely stand scrutiny when their governance practices are examined. Delving deeper will show that while the letter of the law may have been followed, the spirit of regulations turns out to be biased. This is where the contention between letter and spirit steps in.
Secretarial audit has been the core area for company secretaries. The Committee, recognising that secretarial functions are critical to efficient board functioning, recommended that not only should secretarial audit be made compulsory for all listed entities—so as to bring at par the provisions of the SEBI (LODR) Regulations, 2015, with those of Companies Act, 2013—but the same may be extended to all material unlisted Indian subsidiaries. This is in line with the theme of strengthening group oversight and improving compliance at a group level.
The Committee, during the course of its discussions and deliberations, felt that investors are often unaware as to whether or not the directors of a company have been debarred from acting as directors? Taking note of this issue, the Committee recommended that, in the annual report, a certificate from a company secretary in practice be included, providing that none of the directors on the board have been debarred or disqualified from being appointed or continuing as directors by Sebi, MCA or any such statutory authority.
The same shall be a welcome step in strengthening the corporate governance framework in the economy and more so bears significance particularly in the context of some of the recent ongoing industry issues. The existing definition of ‘senior management’ means and includes officers or personnel of the listed entity who are members of its core management team, excluding board of directors, and normally this comprises of all the members of the management one level below the executive directors, including all functional heads. The Committee, while redefining senior management, recommended that the term ‘senior management’ shall specifically include ‘company secretary’.
During the recent golden jubilee year celebrations of ICSI, Prime Minister Narendra Modi applauded the fact that the advice given by a company secretary is key towards impacting the corporate governance scenario. Continuing this spirit, the Sebi recommendations pertaining to the members of ICSI have given impetus and pace to the significance of the activities undertaken by ICSI in general and the members in particular.
President, Institute of Company Secretaries of India (ICSI). Views are personal