Compliance Management, Audit and Due Diligence · Values, Ethics and Professional Conduct

Ethical Principles and Professional Conduct of a Company Secretary

Updated 11 October 2026 · Fact-checked

Ethical principles are the standards of behaviour a company secretary must follow beyond the letter of the law: integrity, objectivity, confidentiality and professional competence. To answer an exam question, identify the principle at stake, apply it to the facts, note any legal consequence under the Company Secretaries Act, 1980, and conclude.

Understand Ethical Principles and Professional Conduct of a CS

A company secretary sits between the board, shareholders, regulators and the public. They rely on your word. That trust is why the profession needs ethical principles and not just rules.

Four principles are core. Integrity means being straightforward and honest: you do not sign, certify or file anything you know is false or misleading. Objectivity means your judgement is not bent by bias, conflict of interest or pressure from a promoter, director or client. Confidentiality means you do not disclose information gained in your work unless there is a legal or professional duty or proper authority to do so, and you do not use it for personal gain. Professional competence means you take up only work you can do well, and keep your knowledge of law and practice up to date.

Ethics and law overlap but are not the same. Law sets the minimum. Ethics asks what is right even where the law is silent. The Company Secretaries Act, 1980 links the two: under section 22, the expression professional or other misconduct includes any act or omission provided in any of the Schedules to the Act. The section also does not limit the power of the Director (Discipline) to inquire into a member's conduct under other circumstances. So a breach of ethics can become a disciplinary matter.

The Act also protects the profession's integrity from outside. Section 7 says a member in practice must, and any other member may, use the designation Company Secretary, and must not use any other description in addition or in substitution. Section 27 says no person other than a member shall sign any document on behalf of a Company Secretary in practice or a firm of such Company Secretaries in his or its professional capacity. Section 26 bars companies, including an LLP that has a company as partner, from practising as Company Secretaries.

In the exam you will usually get a short case: a director asks you to backdate minutes, a client wants a certificate without verification, or you learn price-sensitive information. Spot the principle, apply it, and give a practical course of action.

Key rules to remember

Four core principles: Integrity + Objectivity + Confidentiality + Professional competence; Name the principle breached first, then apply it to the facts.
Meaning of professional or other misconduct (Section 22): Any act or omission provided in any of the Schedules, without limiting the Director (Discipline)'s power under section 21(1) to inquire into conduct in other circumstances; Misconduct is not confined to the Schedules. Do not say the list is exhaustive.
Designation (Section 7): Member in practice must, and any other member may, use the designation Company Secretary, with no other description in addition or substitution; A member may add letters showing other recognised memberships or qualifications.
Signing documents (Section 27): Only a member of the Institute may sign a document on behalf of a CS in practice or a firm of such CS in professional capacity; Penalty on first conviction: fine of ₹1,00,000 to ₹5,00,000. On later conviction: imprisonment up to one year, or fine of ₹2,00,000 to ₹10,00,000, or both.
Companies not to practise (Section 26): No company, Indian or foreign, shall practise as Company Secretaries; includes an LLP having a company as partner; Officers knowingly party are fined ₹2,00,000 to ₹10,00,000 on first conviction and ₹4,00,000 to ₹20,00,000 on later conviction.
Misuse of name or designations (Section 25): No person shall use the Institute's name or seal or a resembling one, award a similar degree or designation, or seek to regulate the profession; First conviction: up to six months' imprisonment, or fine of ₹1,00,000 to ₹5,00,000, or both. Later conviction: up to one year, or fine of ₹2,00,000 to ₹10,00,000, or both.
Offences by companies (Section 28): Company and persons in charge are deemed guilty, unless they prove lack of knowledge or due diligence; Officers are also liable where the offence is with their consent or connivance or due to their neglect.

How to solve Ethical Principles and Professional Conduct of a CS questions

Use this method for any case-based question on ethics and conduct. It gives the examiner the provision, analysis and conclusion they look for.

1Read the facts and underline the pressure or temptation: instruction from a director, a gift, a leak, a request to sign.
2Name the principle at stake: integrity, objectivity, confidentiality or competence. More than one may apply.
3State the rule in plain words. Add the section of the Company Secretaries Act, 1980 only if you are sure of it, such as section 22, 7, 26 or 27.
4Apply the rule to the facts. Say what the CS did or should do, and why the conduct is or is not acceptable.
5Check for exceptions, such as disclosure required by law or authorised by the client, before concluding on confidentiality.
6Give the practical action: refuse, record the objection in writing, escalate to the board or audit committee, disclose where the law requires, or decline the work.
7State the consequence: possible professional misconduct, disciplinary action, or penalty under the Act.
8Close with a one-line conclusion that answers the exact question asked.

Quickest way: Principle, Facts, Action

When to use it: Use this when you have about five to six minutes for a short ethics case question.

Write the principle in the first line, in bold if you can.
Write two lines linking the facts to the principle.
Write the action the CS should take, in one or two bullets.
Write the consequence, mentioning misconduct under section 22 where relevant.
Stop. Do not add general essays on ethics.

Common mistakes in Ethical Principles and Professional Conduct of a CS

Treating ethics and law as the same thing.
Students quote only sections and skip the principle behind the conduct.
Fix: Say that law is the minimum and ethics goes further. Name the principle, then add the legal link.
Saying confidentiality is absolute.
The word suggests never disclosing anything.
Fix: State that disclosure is allowed or required where the law demands it or proper authority is given. It is never allowed for personal gain.
Saying section 22 lists all misconduct exhaustively.
Students remember the Schedules and stop there.
Fix: Add that the Director (Discipline) can inquire into conduct in other circumstances too.
Confusing objectivity with independence from the company.
Both words sound alike.
Fix: Objectivity is freedom from bias and conflict in your judgement. Show how the facts create a bias or pressure.
Mixing up sections 25, 26 and 27.
All three deal with offences and penalties around the profession.
Fix: Remember: 25 is misuse of the Institute's name or awarding similar degrees, 26 is companies practising, 27 is unqualified persons signing.
Ending without a practical action.
Students think the answer is complete once they spot the breach.
Fix: Always say what the CS should do: refuse, document, escalate or decline.

Worked examples

Example 1

Ms Rao, a company secretary, is asked by the managing director of Sundaram Foods Ltd to date the minutes of a board meeting two weeks earlier than the day they were actually prepared, so that a compliance deadline appears met. Advise Ms Rao.

Show the solution

Principle: this tests integrity. A CS must be straightforward and honest and must not be party to false or misleading records.
Facts: the meeting minutes would show a date different from the true one, to hide a delay. That is a false record made on instruction.
Objectivity: the managing director's pressure must not influence her judgement.
Action: she should refuse, explain in writing the risk of the delay and its consequences, and escalate to the board or audit committee if the instruction continues. The late compliance should be disclosed and regularised rather than hidden.
Consequence: knowingly participating would be an act that can amount to professional or other misconduct under section 22, exposing her to disciplinary action.

Answer: Ms Rao must refuse to backdate the minutes. Doing so breaches integrity and objectivity and may be professional misconduct under section 22. She should record her objection in writing, escalate to the board, and recommend regularising the delay.

Example 2

CS Kiran, while preparing a board paper on a proposed acquisition, learns the deal price before it is public. A friend asks him to buy shares of the target company. Discuss his position.

Show the solution

Principle: this tests confidentiality and integrity.
Rule: information gained through work must not be disclosed without proper authority, and must not be used for personal gain or for the benefit of third parties.
Facts: the deal price is non-public and was learned only because of his role. Passing it to the friend, or trading on it, misuses that information.
Action: he should decline, keep the information within those authorised to know it, and follow the company's code on handling unpublished price-sensitive information.
Consequence: misuse would be a serious breach of professional conduct that can attract disciplinary action as misconduct, and may also attract action under securities law.

Answer: Kiran must not disclose the information or trade on it. Confidentiality and integrity bar both. He should decline the friend's request, and a breach could be treated as misconduct and invite action under securities law.

Exam tips

Write the principle name in your first line. Examiners look for it.
Use the structure provision, analysis, conclusion even for a five-mark case.
Mention section 22 for misconduct, but add that it does not limit the Director (Discipline)'s power to inquire.
Learn the penalty bands in sections 25, 26 and 27 with their rupee amounts so you can quote them accurately.
Always end with a practical action, since the paper values drafting and compliance points.

Practice questions from Values, Ethics and Professional Conduct

Ethical Principles and Professional Conduct of a CS in other exams

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

Ethical Principles and Professional Conduct of a CS: frequently asked questions

What are the main ethical principles for a company secretary?

The core principles are integrity, objectivity, confidentiality and professional competence. Together they ensure the CS acts honestly, without bias, protects information and works with proper skill.

Can a company secretary ever disclose confidential information?

Yes, where the law requires it or proper authority has been given. The CS must never disclose it for personal gain or to benefit others.

What does section 22 of the Company Secretaries Act, 1980 say?

It says professional or other misconduct includes any act or omission provided in any of the Schedules. It also keeps the Director (Discipline)'s power to inquire into a member's conduct in other circumstances.

Can a company practise as company secretaries?

No. Section 26 bars any company, Indian or foreign, from practising as Company Secretaries. An LLP with a company as partner is treated as a company for this purpose.