External Role as Co-ordinator

External Role as Co-ordinator
(a) Relating to the Shareholders. For maintaining cordial relations with the shareholders, the company secretary has to maintain proper link or liaison between the Board and the shareholders. Under the Companies Act, shareholders have the right to receive share certificates, notices of meetings, dividend warrants, etc. in time, to inspect books and registers of the company and have extracts of registers on payment of prescribed fees. The secretary must ensure that these rights of shareholders are honoured in time and the extracts of registers demanded by shareholders are supplied to him within the statutory periods.
The secretary should ensure that all letters and complaints from shareholders are
promptly dealt with and their queries are answered without violating the statutory
provisions. He should be polite and courteous while dealing with shareholders.
(b) Relating to the Government. The company secretary has a very important role vis-a-vis the Government. The secretary has to ensure that the provisions of the Companies Act and other laws of the country are complied with strictly. He must see to it that the company is implementing the policies of the Government in their true spirit. He should advise the Board about the changing policies of the Government. While sending information and reports to the Government, the secretary should make
sure that they are factually correct and are in accordance with the law.
(c) Relating to the Society. It has been well recognised that a company has some responsibility towards the society .We find that leading companies are making important contribution in providing more employment opportunities, imparting technical education, establishing schools, colleges and hospitals. The secretary should advise the Board regarding the areas where the company can make useful contribution.
Companies supplying goods and services should be more careful in discharging their
social responsibility by supplying goods and services at reasonable rates.
PRACTICAL PROBLEMS
1. The Board of Directors of Mis ABC Motors Ltd. made the following appointments
at its meeting held on 1st January, 1994:
(i) Mr.X, a Director of its subsidiary company, namely, Mis ABCForgings Ltd., was appointed as Purchase Manager on a consolidated salary of Rs. 11,000
per month witheffect from 1st January, 1994.
(ii) Mr. Ywas appointedas theSalesManageronaconsolidatedsalaryofRs. 11,000 per monthwitheffectfrom1st January, 1994.Answerthe followingexplainingthe
relevant provisions of the Companies Act: .
Pouny Ltd. is a public company which was being mismanaged due to which rtain parties applied to the CLBfor relief.The Central Government, pursuant to a recommendation by the CLB,by its order under Section 408, appointed Mr.Pureesh (an lAS, Officer)as a director of the company for a period of four years. The said Mr. Pureesh is a member of a joint Hindufamilyis which Mr.Paresh who is a director of the company is also a member.
Mr.Ramesh another directoron the Company’s Boardchallenges the action ofthe
Central Government on the ground that the consent of the company by a special
resolution was not obtained before appointing Mr.Pureesh (as he is a relative of Mr.
Paresh) and, therefore, the government nominee should forthwithvacate his officeand
refund the remuneration received tilldate. Examinethe provisions of law applicable to
the facts of the case, and give a well-deliberatedanswer.
this case, the appointment of Pureesh was made by the Central Government,
purse recommendation of the CLB, under Section 408 of the Act; more so,
because he was a Government servant, an IAS officer, not because of his relationship
with any other director on the Board of the company.
Section 314, deals with appointment of a person who is a relative of certain persons
(such as directors of a company) to an office or place of profit in the company. There
is no doubt that Paresh and Pureesh are relatives under section 6 of the Act. But, ‘office
or place of profit’, in relation to a director, means that he is appointed to an office or
place whictl entitles hj!!1J:a..hi!!! as a dus, holding oroffice oTaGirector in itself cannot be said to
constitutean ‘office or place of profit’. Moreover, Section 314(4) enacts that “nothing
contained in this section shall apply to a person, who being the holder of any office of
profit in the company is appointed by the Central Government, under Section 408, as
a director ofthe company”.
Therefore, Ramesh’s challenge of the appointment of Pureesh, would fail.
There is thus no question of Pureesh vacating his office and/or refunding his
remuneration, given the above legal position. The action of the Central Govern-
.. ment is valid, and the challenge of Ramesh is not maintainable in law. However,
the appointment under Section 408 can be made for not more than thg: years at one time. Thus, th apointment of Mr. Pureesh shall be valid for tree years
and not for four years.