We have just started our business!
There is no operation in our company right now!
We don’t want to add any extra cost as we have just started our business!
The paid-up capital of our company is not yet INR 10 Crores, why do we need a company secretary at this stage?
Etc. and etc.
I hear the above lines a lot these days.
Let me quote a line here for those who think compliance is expensive- “The cost of non-compliance is great. If you think that compliance is expensive, try non- compliance.”
This article is not related to insights on Companies Act, 2013 (Act) or FEMA but on how important it is to have a Company Secretary (CS) in your organisation since its incorporation. It is not necessary to always have a Company Secretary in-house unless an entity meets the threshold limit to have one (though advised to), but it can always opt for retainership services from Practicing Company Secretaries. Though, the Act has laid down the roles, duties and responsibilities of a CS, there are other important points to be considered.
A company is incorporated under the provisions of the Act and rules thereof and hence it is required to comply with post incorporation compliances, annual compliances and event based compliances (if any) and various other acts. In short, these regulatory compliances are like spokes in the wheel without which a company cannot think of functioning smoothly and a CS makes your life easier when it comes to complying with such regulatory requirements. For Example: If you want to hold board meetings/ general meetings or if there are any regulatory requirements, you would need a CS, or if you want to raise funds for your company, you would need a CS, etc.
Let me take you through the benefits of having a CS in your company-
Functions of Company Secretary as laid down under the Act:
A Company Secretary-
1. reports to the Board about compliance requirements as per the provisions of the Act, its rules and any other acts that may be applicable to the company and ensures that the company complies with the secretarial standards at all times.
2. provides to the Director a guidance as required under the Act with regard to their duties, responsibilities and powers.
3. facilitates convening of board meetings, committee and general meetings and maintain all the necessary records thereafter.
4. represents the company before various regulators, and other authorities under the Act.
5. obtains approvals from the board, shareholders, the government and such other authorities as required under the provisions of the Act.
6. assists and advices the company in ensuring a good corporate governance and best practices.
7. discharges all other duties as required under the Act and assigned by the company from time to time.
Benefits of having a CS in your company:
1. You can focus on your business- Setting up a business itself requires a lot of time and effort. Burdening yourself with the compliances will lead to diverse attention. Moreover, you may not be aware of the compliances that are required to be carried out after incorporation. You can focus more on your business when you know there is someone who is taking care of the regulatory part.
2. Compliances within Due Dates- Since, a CS is well versed with the compliance requirements along with their due dates, they would be able to complete the requirements within timelines and in an efficient manner. Non- filing within due dates will attract late fines and penalties. The delay in filing beyond a certain point of time would attract condonation of delay and compounding of offences. The penalties for such defaults are usually very high.
3. You can take an informed decision- You may know your business well, but a CS knows the regulatory requirements attached to it. If you have a CS for your organisation, you can take an informed decision on the complications involved. A CS ensures that you are meeting your business requirements and at the same time the regulatory ones.
4. Saves time- When you are associated with a CS, you will be saved from hunting one at the eleventh hour. It would help you save a lot of time. Also, since you would already have an experience with the professional, trusting him/her with work will be much easier.
5. Funding becomes easy- All companies require funds to run their business. Some use their own funds and the rest looks out for funding from investors. These investors before funding scrutinise every aspects of the company, starting from potentiality of the company to the corporate governance it undertakes. They do that by way of carrying out a due diligence on the company. If you have a CS for your company dealing with due diligence is much easier than the companies who do not have one.
Hope this article gives a fair idea on why it’s important to have a CS for your organisation. A CS is the face of the company when it comes to liasioning with the external bodies and ensures smooth functioning of your company.
Disclaimer: This article is written with the sole purpose to let the new entrepreneurs know on how having a Company Secretary can help them. It is not intended for any advertising purpose in any manner whatsoever.