Section 383-A (1) of the Companies Act, 1956 provides that every company having such paid-up capital as may be prescribed (presently, Rs. 50
lakhs) shall have a whole-time secretary, and where the Board of Directors of any such company comprises only two directors, neither of them shall be
the secretary of the company. Thus, for smaller companies having paid-up share capital of less than Rs. 50 lakhs, the appointment of a whole-time
secretary is not compulsory.
It is also necessary that the person to be appointed as a whole-time secretary must possess the qualifications laid down in the Companies (Appointment
and Qualifications of Secretary) Rules, 1988. It should also be noted that an individual can hold the office of a whole-time secretary only in one company.
The Companies Amendment Act, 1988 incorporated a new sub-section (I-A) in Section 383-A which provides that if a company fails to appoint a
whole-time secretary, the company and every officer of the company, who is in default, shall be punishable with fine which may extend to Rs. 50 for every
day during which the default continues.
It is further provided that in any proceedings against a person in respect of an offence under this sub-section, it shall be a defence to prove that all
reasonable efforts to comply with the provisions of the Act were taken or that the financial position of the company was such that it was beyond its
capacity to engage a whole-time secretary.
Discuss the legal position of company secretary and state his main functions.
Legal Position of Company Secretary
The Companies Act has not defined the exact legal position of a company secretary; therefore, we have to depend on the observations made by judges in
different cases. In 1887 in Barnett Hoares & Co. vs. The South London Tramways Co. Ltd., Lord Esher stated that “a secretary is a mere servant; his
position is that he is to do what he is told, and
no person can assume that he has any authority to represent anything li all; nor can
anyone assume that statements made by him are necessarily to be accepted as
trustworthy without further inquiry.”
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