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

Vidarbha Cotton Producer Company Limited has a whole-time secretary, Ms. Neha. At a board meeting, a director argues that, since the secretary reports on compliance, the board and the managing director are relieved of their own compliance duties. Which statement is correct under the Companies Act, 2013?

The director is wrong. Section 205(2) says the secretary's functions, including reporting to the Board on compliance and ensuring secretarial standards are followed, do not affect the duties and functions of the Board, chairperson, managing director or whole-time director, whose own responsibilities continue.

  1. AThe argument is wrong; the secretary's functions do not affect the duties and functions of the Board, chairperson, managing director or whole-time directorCorrect
  2. BThe argument is right; the secretary's reporting function replaces the board's duties
  3. CThe argument is right for the managing director only, not for the board
  4. DThe argument is wrong only for the chairperson, whose duties alone are preserved

Explanation

Section 205(2) provides that the provisions on the secretary's functions do not affect the duties and functions of the Board of Directors, chairperson, managing director or whole-time director under the Act or other laws. The secretary reports to the Board on compliance and ensures compliance with secretarial standards, but this does not transfer responsibility from those office-holders.

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