Compliance Management, Audit and Due Diligence · Legal Framework Governing Company Secretaries

Professional Misconduct and Disciplinary Mechanism of Company Secretaries

Updated 11 October 2026 · Fact-checked

Professional or other misconduct means any act or omission listed in the Schedules of the Company Secretaries Act, 1980, plus other conduct the Director (Discipline) may inquire into. First Schedule cases go to the Board of Discipline; Second Schedule cases, or both, go to the Disciplinary Committee, which can impose heavier penalties.

Understand Professional Misconduct and Disciplinary Mechanism

The Company Secretaries Act, 1980 gives the Institute power to discipline its members. Section 22 says "professional or other misconduct" includes any act or omission provided in any Schedule. The word "includes" matters. The Director (Discipline) can still inquire into a member's conduct in other circumstances under section 21(1).

The process starts with the Disciplinary Directorate, set up by the Council and headed by the Director (Discipline). On receiving information or a complaint with the prescribed fee, the Director forms a prima facie opinion on whether the alleged misconduct occurred.

Where to send the matter depends on the Schedule. If the Director thinks the member is guilty of misconduct in the First Schedule, he places the matter before the Board of Discipline. If the misconduct is in the Second Schedule, or in both Schedules, it goes to the Disciplinary Committee. So the First Schedule leads to lighter penalties and a summary procedure. The Second Schedule leads to heavier ones.

If the Director finds no prima facie case, he must still submit the matter to the Board of Discipline. The Board may close it if it agrees. If it disagrees, it can advise further investigation. A complainant may withdraw, but only the Board or Committee can permit the withdrawal, and only if circumstances warrant.

Both bodies must give the member an opportunity of being heard before any order. Both, along with the Director (Discipline) and the Appellate Authority, have civil court powers for an inquiry: summoning and examining on oath, discovery and production of documents, and receiving evidence on affidavit.

Key rules to remember

Meaning of misconduct (Section 22): Professional or other misconduct includes any act or omission in any Schedule; The list is not exhaustive. Section 21(1) lets the Director (Discipline) inquire into other conduct.
Routing of cases (Section 21(3)): First Schedule → Board of Discipline; Second Schedule or both Schedules → Disciplinary Committee; The Director (Discipline) decides the routing after forming a prima facie opinion.
Board of Discipline penalties (Section 21A(3)): Reprimand; removal from Register up to 3 months; fine up to ₹1,00,000; Any one or more. The member must be heard first. The Board follows summary disposal procedure.
Disciplinary Committee penalties (Section 21B(3)): Reprimand; removal from Register permanently or for such period as it thinks fit; fine up to ₹5,00,000; Any one or more. The member must be heard first.
Board of Discipline composition (Section 21A(1)): Presiding officer with law experience + 2 members + Director (Discipline) as Secretary; One member is a Council member elected by the Council. The other is the person designated under section 16(1)(c).
Disciplinary Committee composition (Section 21B(1)): President or Vice-President as Presiding Officer + 2 elected Council members + 2 Central Government nominees; Nominees are persons of eminence in law, economics, business, finance or accountancy. The Council may constitute more Committees.
Civil court powers (Section 21C): Summoning and examining on oath; discovery and production of documents; evidence on affidavit; Held by the Authority, Disciplinary Committee, Board of Discipline and Director (Discipline).

How to solve Professional Misconduct and Disciplinary Mechanism questions

Use this order for any case-based question on misconduct. It follows the provision, analysis, conclusion pattern.

1Identify the forum or person: the Director (Discipline), Board of Discipline or Disciplinary Committee.
2State the rule: section 22 defines misconduct by reference to the Schedules, and section 21 sets the procedure.
3Find the act or omission in the facts. Decide whether it falls in the First Schedule, Second Schedule or both. If the Schedule is not given, say so and reason from the nature of the act.
4Apply routing under section 21(3): First Schedule to the Board, Second Schedule or both to the Committee.
5Check the process: prima facie opinion, hearing before any order, and the right to be heard.
6Name the penalties available to that body with their limits.
7Conclude clearly with the forum, the possible action and the member's remedy.

Quickest way: Forum-first shortcut

When to use it: Use when a question asks who will hear a case or what penalty is possible.

Decide the Schedule: First means Board, Second or both means Committee.
Recall the cap: Board gives 3 months removal and ₹1,00,000; Committee gives permanent removal and ₹5,00,000.
Add one line on the hearing requirement and the prima facie step.
Write the conclusion in one sentence.

Common mistakes in Professional Misconduct and Disciplinary Mechanism

Treating the Schedules as the only source of misconduct.
Students read section 22 as a closed list.
Fix: Remember the word "includes" and the Director's power under section 21(1) to inquire into other conduct.
Mixing up the penalty limits of the Board and the Committee.
Both can reprimand, remove and fine, so the numbers blur.
Fix: Link Board to 3 months and ₹1,00,000, and Committee to permanent removal and ₹5,00,000.
Sending a case with both Schedules to the Board.
Students focus on the First Schedule element alone.
Fix: Section 21(3) says Second Schedule or both Schedules go to the Disciplinary Committee.
Forgetting the hearing before an order.
Students jump straight to penalties.
Fix: Always state that both bodies must afford the member an opportunity of being heard before making any order.
Saying the Director (Discipline) can punish the member.
He investigates, so students assume he decides.
Fix: He forms a prima facie opinion and places the matter before the Board or Committee. Only they impose penalties.

Worked examples

Example 1

CS Meera, a company secretary in practice, is accused of misconduct falling only in the First Schedule. Explain who will decide the matter, how it will proceed and the maximum action that can be taken.

Show the solution

Provision: under section 21(2), the Director (Discipline) forms a prima facie opinion on receiving the complaint with the prescribed fee.
If he thinks she is guilty of First Schedule misconduct, section 21(3) requires him to place the matter before the Board of Discipline.
The Board follows summary disposal procedure (section 21A(2)) and must hear Meera before making an order.
Under section 21A(3), it may reprimand her, remove her name from the Register for up to three months, or fine her up to ₹1,00,000, in any combination.
Conclusion: the Board of Discipline decides, and the limit is three months removal and ₹1,00,000 fine.

Answer: The Board of Discipline decides after hearing her. It can reprimand, remove her name for up to three months, or fine up to ₹1,00,000, in any one or more combination.

Example 2

A complaint against CS Arjun alleges acts covered by both the First and Second Schedules. The Director (Discipline) finds a prima facie case. Which body hears it, who sits on it, and what is the most serious action possible?

Show the solution

Under section 21(3), a case involving the Second Schedule or both Schedules goes to the Disciplinary Committee.
Composition under section 21B(1): the President or Vice-President as Presiding Officer, two Council members elected from the Council, and two Central Government nominees of eminence.
Arjun must be given an opportunity of being heard before any order (section 21B(3)).
The Committee may reprimand, remove his name from the Register permanently or for such period as it thinks fit, or impose a fine up to ₹5,00,000.
Conclusion: the most serious action is permanent removal, and a fine can be up to ₹5,00,000.

Answer: The Disciplinary Committee hears it. After giving Arjun a hearing, it can reprimand him, remove his name from the Register permanently or for a period, or fine him up to ₹5,00,000.

Exam tips

Draw a small two-column comparison in your answer: Board of Discipline versus Disciplinary Committee, with Schedule, composition and penalty.
Quote the monetary limits and the three-month cap exactly. Examiners check them.
In case questions, state the prima facie step before naming the forum.
Mention the hearing requirement and civil court powers to earn extra marks.
If a question asks about appeals, answer from the Appellate Authority provisions of the Act. Section 22A is the Authority referred to in the definitions, but check the study material for appeal details.

Practice questions from Legal Framework Governing Company Secretaries

Professional Misconduct and Disciplinary Mechanism in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Actuarial Core Principles (IAI)Professional Conduct and Disciplinary Mechanism

Professional Misconduct and Disciplinary Mechanism: frequently asked questions

What is the difference between the First and Second Schedule?

The Schedules list acts and omissions that count as professional or other misconduct. First Schedule matters go to the Board of Discipline. Second Schedule matters, or cases covering both, go to the Disciplinary Committee, which can impose heavier penalties.

Who investigates a complaint against a company secretary?

The Disciplinary Directorate headed by the Director (Discipline). On receiving a complaint with the prescribed fee, he forms a prima facie opinion and places the matter before the Board or Committee.

What punishment can the Disciplinary Committee give?

It can reprimand the member, remove the name from the Register permanently or for a period it thinks fit, and impose a fine up to ₹5,00,000. It must hear the member first.

Can a complainant withdraw a complaint?

Yes, but the Director (Discipline) must place the withdrawal before the Board or Committee. They may permit it at any stage if the circumstances warrant.