Procedure for Removal of a Company Secretary under the Companies Act, 2013 in India
Removal of a Company Secretary Under the Companies Act, 2013
Table of Contents
The Companies Act of 2013 serves as the foundation for corporate legislation in India, establishing crucial guidelines that govern the functioning and management of companies. Among the key positions within a company is that of the company secretary, whose role is paramount for ensuring compliance and promoting effective corporate governance. However, there are circumstances where a company secretary may need to be removed from their role. This guide will provide an in-depth exploration of the procedures and grounds for this removal as stipulated by the Companies Act 2013.
Who is a Company Secretary?
A company secretary plays a vital role in ensuring that the organization adheres to regulatory mandates and maintains transparency in its operations. This role involves not only compliance with legal requirements but also facilitating clear communication among the company’s stakeholders. Nevertheless, certain situations may necessitate the removal of the company secretary from their position for various reasons.
Grounds for Removal of a Company Secretary
According to Section 203 of the Companies Act 2013, a company secretary can be removed by either the board of directors or the shareholders of the company under specific conditions. The grounds for removal can include:
1. Resignation
A company secretary may choose to resign voluntarily by submitting a resignation letter to the board of directors. This resignation must be acknowledged and documented in the meeting minutes. Upon resignation, the company must appoint a new secretary within six months.
2. Removal by the Board of Directors
The board can decide to remove the company secretary based on valid reasons, which might include:
- Incompetence or Negligence: If the company secretary fails to fulfill their duties effectively or engages in negligent behavior that detrimentally affects the company.
- Breach of Confidentiality: Any unauthorized disclosure of sensitive company information can cause serious issues, leading to potential dismissal.
- Non-Compliance: A consistent failure to meet legal and regulatory obligations can motivate the board to remove the secretary.
- Misrepresentation or Fraud: Any dishonest actions taken by the company secretary provide grounds for removal.
- Conflict of Interest: If the secretary’s personal interests impede their ability to act in the company’s best interests, removal may be considered.
Shareholders can also initiate the removal of a company secretary by passing a special resolution during a general meeting. This resolution requires the approval of at least 75% of the shareholders present and voting.
Procedural Requirements for Removal of a Company Secretary
Regardless of whether the removal is initiated by the board or shareholders, certain procedural requirements must be met under the Companies Act 2013:
1. Notice
A notice should be issued to the company secretary, providing them the opportunity to present their case before the board or shareholders.
2. Board or General Meeting
A meeting must be called to discuss the removal of the company secretary, and the decision should be documented in the meeting minutes.
3. Intimation to Registrar of Companies
Following the removal decision, the company must inform the Registrar of Companies (RoC) within 30 days, submitting the necessary documentation.
Step-by-Step Guide for the Removal of a Company Secretary in India
Here is a detailed step-by-step process for removing a company secretary as per the Companies Act 2013:
Step 1: Board Meeting and Passing of a Special Resolution
The process begins by convening a board meeting to deliberate on the removal of the company secretary. The board must pass a special resolution for this removal, as defined in Section 203 of the Companies Act 2013. The resolution must clearly state the reasons for removal and receive majority approval from the directors present.
Step 2: Filing of Form DIR-12
Once the special resolution is passed, the company is required to file Form DIR-12 with the RoC within 30 days. This form is essential for reporting the cessation of the company secretary’s role. Vital documents to attach include:
- A certified copy of the board resolution for the removal.
- Notice of the board meeting where the resolution was passed.
- Resignation letter from the company secretary, if applicable.
- Any additional documentation required by the RoC.
Step 3: Intimation to the Company Secretary
The company must communicate the decision of removal to the company secretary through a formal letter or notice. This notice should include the effective date of removal and inform the secretary about their right to be heard at a general meeting. Transparency and respect for natural justice principles are crucial in this step.
Step 4: Filing of Form MGT-14
After the company secretary’s removal, Form MGT-14 must be filed with the RoC within 30 days to notify them of the passed resolution. Relevant documents must accompany this form, including:
- A certified copy of the special resolution for the removal.
- Notice of the general meeting where the resolution was passed.
Step 5: Updating Statutory Registers
The statutory registers must be updated to reflect the change in the company secretary’s status. This includes the Register of Directors & Key Managerial Personnel (KMP) and any other relevant registers.
Step 6: Compliance with Additional Requirements
Companies should also ensure adherence to any additional requirements specified in the articles of association or employment agreements with the company secretary, such as notice periods or specific termination protocols.
Conclusion
In conclusion, the Companies Act 2013 provides a structured approach to the removal of a company secretary, whether this decision arises from the board of directors or the shareholders. It is crucial that all procedural requirements are followed meticulously to facilitate a legally compliant removal process. Consulting with legal professionals or experienced company secretaries can aid in fulfilling all obligations and minimizing any legal risks associated with the removal. The position of a company secretary is essential for maintaining compliance and promoting effective governance, but in certain circumstances, their removal may be necessary for the betterment of the organization.
