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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Empowerment of the Company Secretary Profession

Sahyadri Growers Producer Company has had an average annual turnover of Rs 7 crore in each of the last three consecutive financial years. Its board proposes to appoint its finance manager, who is not an ICSI member, as the whole-time secretary. Which statement is correct under the Companies Act, 2013?

The appointment is invalid. A Producer Company whose average annual turnover exceeds five crore rupees in three consecutive years must have a whole-time secretary, and only a member of the Institute of Company Secretaries of India may be appointed. Shareholder approval or full-time employment does not substitute for membership.

  1. AThe appointment is valid because the finance manager already works full time in the company
  2. BThe appointment is valid if the shareholders approve it by ordinary resolution
  3. CThe company need not have a whole-time secretary because producer companies are exempt
  4. DThe appointment is not valid because only an ICSI member can be appointed as whole-time secretaryCorrect

Explanation

Section 378X requires a Producer Company with average annual turnover above Rs 5 crore (or the prescribed amount) in each of three consecutive years to have a whole-time secretary. No individual may be appointed unless he is a member of ICSI. Shareholder approval cannot cure the lack of membership.

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