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Firms with equity up to Rs 20 million need not hire company secy

Sidhartha

Corporates which have a paid-up capital less than Rs 20 million (Rs 2 crore) have been exempted by the government from having to hire company secretaries. Earlier, the limit was Rs 5 million (Rs 50 lakh).

However, the exempted companies will be required to submit a compliance report from a company secretary.

The department of company affairs is in the process of issuing a notification under Section 383A of the Companies Act.

Also, the government is likely to do away with the mandatory appointment of company secretaries by corporates and shift to a regime of secretarial audit over a period. However, the shift will entail an amendment to the Companies Act.

Officials said that the notification would specify that the government would review the equity level for hiring company secretaries after two years.

Sources said it was at the behest of the Institute of Company Secretaries of India that the government decided to raise the level to just Rs 20 million. The earlier proposal was to raise it to Rs 30 million or Rs 50 million.

The government's contention was that the amendments were necessary because of a shortage of company secretaries, who numbered around 16,000. The Institute of Company Secretaries of India disagreed.

"The idea is to gradually remove the stipulation and make it mandatory for all companies to undertake a secretarial audit," an official of the department of company affairs said.

According to the secretarial audit scheme, devised in consultation with the Institute of Company Secretaries of India, large companies will be brought under the net, to be followed by smaller ones.

The government is also contemplating amending the Company Secretaries Act, 1980, to impose more stiff punitive measures and increase the role of the disciplinary committee. Changes in the fee structure of company secretaries are also being planned.

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