Tuesday, July 15, 2008

Companies Act

Can a company secretary appointed under section 383A(1) be appointed as the manager under section 269?

Companies Act_Practical Problems_18

Mr. A, a member of ICSI is employed in XYZ Limited as Asst. Manager – Secretarial. He has been informed by XYZ Limited that he shall act as the Company Secretary of PQR Limited which is a subsidiary/ group company of XYZ Limited. Mr. A has filed Form 32 with the ROC and has signed the annual accounts in the capacity of Company Secretary of PQR Limited.

PQR Limited requires appointment of a Company Secretary pursuant to section 383A of the Companies Act. No formal letter of deputation etc. has been issued to Mr. A by XYZ Limited. Mr. A is also attending to the duties at XYZ Limited and salary, PF, TDS etc. is paid by XYZ Limited.

Question is:

a) Since Mr. A is an employee of XYZ Limited as per records, whether PQR Limited is said to have complied with the provisions of Section 383A w.r.t. appointment of a Secretary on whole-time basis ?

b) Whether Mr. A invites any penalties or violations by being employed in one company and signing annual accounts of second company in the capacity of a Company Secretary?

c) Any other consequence?

Companies Act_Practical Problems_17

Mr. A is a qualified company secretary. He is an employee of X Ltd a public company having paid-up share capital of Rs. 8 crores. Can Mr. A function as a company secretary of a subsidiary of X Ltd, while remaining on the rolls of X Ltd or should Mr. A be in the employment of the subsidiary in order to ensure compliance with section 383A of the Companies Act 1956?