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

The managing director of Kaveri Power Ltd argues that because the company secretary must report to the Board on compliance, the MD and the Board no longer carry any responsibility for compliance under the Companies Act, 2013. Which response is correct?

The MD is wrong. The company secretary reports to the Board on compliance, but section 205(2) provides that this does not affect the duties and functions of the Board, chairperson, managing director or whole-time director under the Act or any other law.

  1. ACorrect, as section 205 transfers compliance duties to the company secretary
  2. BCorrect, but only for laws other than the Companies Act
  3. CIncorrect, as the company secretary's functions do not affect the duties and functions of the Board, chairperson, managing director or whole-time director under the Act or any other lawCorrect
  4. DIncorrect, because the company secretary has no duty to report on compliance at all

Explanation

Section 205(1)(a) requires the company secretary to report to the Board on compliance with the Act, rules and other applicable laws. Section 205(2) states that sections 204 and 205 do not affect the duties and functions of the Board, chairperson, MD or whole-time director. So responsibility is not shifted.

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