Panel Member Threatens To Submit Dissent Note
K R Chandratre, a member of the seven-member expert group on the Companies Bill which submitted a unanimous report last month, has threatened to submit a dissent note on a provision in the bill which dilutes the role of company secretaries.
The expert committee on income-tax reforms, which was constituted along with this group, is already a house divided with a member submitting his note of dissent.
Chandratre is a former president of the Institute of Company Secretaries of India (ICSI) and was appointed to the committee when he was holding this office.
Also Read
Significantly, Chandratre's letter to the finance minister written on May 2 has now been released through the ICSI clearly indicating that the former ICSI president is under immense pressure to lobby for the continuation of the existing powers of the company secretaries.
It is also evident from the copy of his letter attached by the ICSI to its media release that the former ICSI president's objection is limited to the provisions relating to the role of the company secretaries, though the public debate on the draft companies bill has thrown up several significant points of criticism.
In his letter, Chandratre has reminded the finance minister that he had expressed his disagreement and concern on the group's recommendation regarding the monetary limit on companies for the appointment of company secretary under Section 383A of the Companies Act, 1956.
The letter reminds that the group's recommendation that the current limit of Rs 50 lakh be raised to Rs 2 crore and made applicable only to listed companies is in my submission a retrograde step and contrary to the concept of professionalisation of corporate management, good corporate governance and investor protection.
The letter adds, I still disagree though as a matter of propriety and in accordance with the understanding that the report should be unanimous, I did not give a note of dissent.
The letter further demands that the present status should be maintained concerning the provisions making it mandatory for all companies (listed and unlisted) with a paid up share capital of Rs 50 lakh or more to appoint a whole-time company secretary and to obtain secretarial compliance certificate (certificate issued by any practising company secretary that the company has followed the provisions of Company Law) by all companies having a paid up capital of Rs 10 lakh or more but less than Rs 50 lakh.
The draft bill has raised the mandatory threshold for hiring a full-time company secretary by companies to a paid up equity of Rs 2 crore and above.
This means that it is sufficient if smaller companies below this threshold obtain a certificate of secretarial compliance. This would result in cost saving for a small company since a full-time company secretary need not be hired.
Significantly, the covering note to this letter issued by ICSI states that the minister has promised to look into the matter.
However, when the same question was raised at the seminar on the draft bill organised by CII early last week, the minister had been categorical that it was not the government's job to keep professionals suitably employed.
Mandatory provisions in law requiring companies to hire full-time company secretaries would have this effect.