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CS Professional · Compliance Management, Audit and Due Diligence

Values, Ethics and Professional Conduct for Company Secretaries

This chapter covers the ethical values a Company Secretary must follow and the legal framework that enforces them under the Company Secretaries Act, 1980. You solve questions by stating the provision, applying it to the facts, and concluding who hears the case and what action can follow.

What this chapter covers

This chapter has two halves. The first is conceptual: what values and ethics mean, why they matter in a profession built on trust, and the principles a CS is expected to follow. The second is statutory: the Company Secretaries Act, 1980 and how it deals with the conduct of members.

The statutory half is where the exam questions are usually framed. You need to know the functions of the Council and of the Institute, the idea of professional and other misconduct under Section 22, and the disciplinary route from the Director (Discipline) to the Board of Discipline or the Disciplinary Committee. Section 21B sets out the penalties.

The chapter connects to the rest of Paper 3 (Compliance Management, Audit and Due Diligence). A CS signs certificates, reports and compliance statements. Those acts carry the risk of misconduct. So the chapter gives the conduct frame for the audit, certification and due diligence topics that follow. Paper 3 is a written, case-based paper, so expect a fact situation and a question on what the member should have done.

This chapter is short and rule-based, so it rewards precise recall. Questions are often case-based: a member does something, and you must say whether it is misconduct, which authority deals with it and what penalty is possible. If you know the sections and the sequence of authorities, you can write a structured answer of provision, analysis and conclusion. It also shapes how you write answers in the audit and due diligence chapters, where independence, confidentiality and care are tested. Because many students skip it as theory, a clear answer here separates you from the average script.

Values, Ethics and Professional Conduct: topics in the order to study them

  1. 1Values and Ethics: Concepts and ImportanceStart with the vocabulary of values, ethics and morals, since every later topic assumes it.
  2. 2Ethical Principles and Professional Conduct of a CSNext, learn the principles a CS applies in practice, which explain why the law treats certain acts as misconduct.
  3. 3Functions of the Council under the Company Secretaries Act, 1980Then learn who runs the Institute and what the Council and the Institute are each responsible for, as the discipline machinery sits inside this structure.
  4. 4Professional and Other Misconduct under Section 22With the structure clear, study what counts as misconduct, including the Schedules and the Director (Discipline)'s wider power of inquiry.
  5. 5Disciplinary Mechanism and PenaltiesFinish with the process and outcomes, which depend on knowing the First and Second Schedules and the bodies involved.

How to prepare Values, Ethics and Professional Conduct

Treat the chapter as a short legal topic with a conceptual lead-in. Aim to answer in the provision, analysis, conclusion format.

  1. Read the concept topics once and write a two-line definition of values and ethics in your own words, plus a list of the core principles of conduct.
  2. Read the Council and Institute functions from Sections 15 and 15A. Make two lists and keep them separate, because students often mix them up.
  3. Learn Section 22 in plain words: misconduct includes any act or omission in the Schedules, but the Director (Discipline)'s power to inquire under Section 21(1) is not limited to them.
  4. Draw the disciplinary flow on one page: complaint with prescribed fee, prima facie opinion of the Director (Discipline), then the Board of Discipline for First Schedule matters or the Disciplinary Committee for Second Schedule or both.
  5. Note the Section 21B penalties and the composition of the Disciplinary Committee, and add the right to be heard before any order.
  6. Practise two or three short fact-based questions. For each, write the provision, apply it to the facts and state the conclusion, then check your answer against the Act's wording.
  7. Revise the flow chart and the lists twice in the final week.

Common mistakes in Values, Ethics and Professional Conduct

  • Sending every misconduct case to the Disciplinary Committee.

    Fix: Link the First Schedule to the Board of Discipline and the Second Schedule, or both, to the Disciplinary Committee.

  • Saying misconduct is limited to the acts listed in the Schedules.

    Fix: State that the definition includes Schedule acts, but the Director (Discipline) can inquire into conduct in other circumstances.

  • Mixing up Council duties with Institute functions.

    Fix: Remember that the Council oversees and decides policy, such as approving courses and prescribing fees. The Institute carries out operations, such as examinations, training and registers.

  • Quoting penalties wrongly or omitting the hearing.

    Fix: Write that the member must be heard first, then list reprimand, removal from the Register, and a fine up to ₹5,00,000.

  • Writing only general ethics essays in case questions.

    Fix: Open with the provision, apply it to the facts given, and end with a clear conclusion on the outcome.

  • Citing section numbers from memory without certainty.

    Fix: Use only the sections you have verified, such as 15, 15A, 21, 21B, 22 and 29B, and describe other rules in plain words.

Last-day revision: Values, Ethics and Professional Conduct

  • Section 22: misconduct is deemed to include any act or omission in any of the Schedules.
  • Section 22 does not limit the Director (Discipline)'s power under Section 21(1) to inquire into conduct in other circumstances.
  • Section 21: the Council establishes the Disciplinary Directorate, headed by the Director (Discipline).
  • The Director (Discipline) forms a prima facie opinion after receiving the information or complaint with the prescribed fee.
  • First Schedule misconduct goes to the Board of Discipline.
  • Second Schedule misconduct, or both Schedules, goes to the Disciplinary Committee.
  • Section 21B: the Disciplinary Committee must give the member an opportunity of being heard before any order.
  • Section 21B penalties: reprimand, removal from the Register permanently or for a period, and a fine up to ₹5,00,000.
  • The Disciplinary Committee is presided over by the President or Vice-President, with two Council members and two Central Government nominees.
  • Section 15 lists Council duties; Section 15A lists Institute functions such as examining candidates and regulating training.
  • Section 29B: the Quality Review Board reviews service quality and forwards non-compliance cases to the Disciplinary Directorate.
  • If a complainant withdraws, the Board or Committee may permit withdrawal at any stage if circumstances warrant.

Values, Ethics and Professional Conduct practice questions

Values, Ethics and Professional Conduct in other exams

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

Values, Ethics and Professional Conduct: frequently asked questions

Is this chapter theory or law?

It is both. The first topics are conceptual, but the last three are based on the Company Secretaries Act, 1980. Prepare them as law, with sections and procedure.

Who decides a misconduct case under the Act?

The Director (Discipline) first forms a prima facie opinion. The case then goes to the Board of Discipline for First Schedule misconduct, or to the Disciplinary Committee for Second Schedule misconduct or both Schedules.

What penalties can the Disciplinary Committee impose?

It can reprimand the member, remove the name from the Register permanently or for a period, or impose a fine up to ₹5,00,000. It must give the member a hearing before making any order.

Do I need to memorise the Schedules item by item?

Know the main categories and be able to identify which Schedule a fact pattern falls under. Check the Schedules in your study material, as they are not reproduced here.

How should I write a case-based answer here?

State the relevant provision, apply it to the facts, and conclude on whether misconduct arises, which body hears it and what action is possible. Keep it short and structured.