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COMPANY SECRETARIAL PRACTICE IN BANGLADESH

Legal status

According to The Companies Act, 1994, Section 2(u) - ‘Secretary’ means- “any individual possessing the prescribed qualifications appointed to perform the duties which may be performed by the secretary under this act and any other ministerial or administrative duties”

Scope of work of a Company Secretary

  1. Company Secretaries works at the centre point of the decision making process in an organisation, which is a powerful position of influence.
  2. Generally the Company Secretary assists and guides the directors in their quest of profit and growth but also act with integrity and independence to protect the interests of the company, its shareholders and employees.
  3. Today’s Company Secretary plays a pro-active and central role in the governance of the company. This requires excellent communication skills, a thorough knowledge of the company’s business and applicable regulations, strength of character, integrity, and above all a professional approach.
  4. The appointment of Company Secretary is the responsibility of the board of directors; yet despite this legal requirement, the law, whether in the form of the Companies Acts, does not state overtly what the Company Secretary should do once appointed.
  5. The limited number of references to the Company Secretary in the Companies Acts and in some circular by Securities and Exchange Commission (SEC) might lead a person newly appointed to the post to underestimate the scope of the responsibilities acquired.
  6. All directors should have access to the advice and services of the Company Secretary, who is responsible to the board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with.
  7. Any question of the removal of the Company Secretary should be a matter for the board as a whole. Company Secretary is the key to the efficiency and effectiveness of the board and to the smooth running of the company. To fulfill the role, the Company Secretary must not only keep up to date with relevant legal, statutory and regulatory requirements but also be able to give impartial advice and support to directors (in particular, non-executive directors who might not have such detailed knowledge of the company as the executive directors).
  8. To distinguish between the duties which all Company Secretaries should perform (core duties) and those which they often perform (additional duties).Core duties are defined as those for which the Company Secretary is responsible as an officer of the company and those undertaken by the Company Secretary as a matter of established and best practice. The list of core duties is therefore a refinement of statute, common law and good practice.
  9. There has been an increasing need over the recent years for the Company Secretaries in the corporate sectors.
  10.  Since long the role of Company secretary is recognized by the developed countries but in Bangladesh there are so many invisible obstacles to get the Chartered Secretaries Act approved/passed by the parliament. As we know that it is better if we can set one or more control points in business houses to check every unlawful activity by the other professional services or management of a company.
  11. This type of control points can help Government to check whether the company comply every legal obligation, Owner to check if there is any malpractice or fund defalcation, employees to get their wages paid appropriately and shareholders to have their dividend on timely and in terms of amount actually.
  12. As the secretary is an officer of the company, they may be criminally liable for defaults committed by the company. The liability could include failure to file: in the time allowed; any change in the details of the company's directors and secretary; and the company's annual return.

The company secretary generally performs following duties

  1. To maintain statutory registers of members, directors and directors' interests
  2. To ensure statutory forms to file & submit promptly & properly
  3. To Send the Registrar copies of resolutions and agreements
  4. Tosafeguard and protect such interests of the company at all levels viz. legal, statutory, administrative, arbitrational and in other policy matter 
  5. On approval of Board-
    1. To convene Board or Shareholders meetings in time
    2. To sign notices of such meetings
    3. To send annual and half yearly accounts to shareholders
    4. To prepare minutes of the meeting timely and correctly
    5. To make sure that the quorum requisite is present in the meeting etc.
  6. Before execution to verify all agreements/deeds/contracts are properly framed & worded.
  7. To work as public relations officer of the company etc.

Role of the Company Secretary
The three main areas, a Company Secretary has the role to play viz. to the Board, to the Company and to the Shareholder. Within each, the Company Secretary’s role can be very diverse.

  1. To the Board
    A Company Secretary must ensure that the procedure for the appointment of directors is properly carried out and assist in the proper induction of Directors, including assessing the specific training needs of directors/executive management. Secretary needs also to be available to provide comprehensive practical support and guidance to directors both as individuals and as a collective with particular emphasis on supporting the non-executive directors. He/she should also facilitate the acquisition of information by all board and committee members so that they can make best use of their ability to have a say to board meetings, discussions etc. Further to these tasks, he/she needs to assist in the compilation of board papers and to filter them to ensure compliance with the required standards of good governance. It may also be part of the Company Secretary’s role to raise matters which may warrant the attention of the board
  2. To the Company
    Secretary ensures compliance with all relevant statutory and regulatory requirements and that due regard is paid to the specific business interests of the company, for example, a manufacturing company may require a different approach from that of a bank or a financial services company or from that of a charitable company. Secretary also need to assist in the implementation of corporate strategies by ensuring that the board’s decisions and instructions are appropriately carried out and communicated. Further to this, he/she should be available to provide a central source of guidance and advice within the company on matters of business ethics and good governance.
  3. To the Shareholder
    The Company Secretary needs to communicate with the shareholders as appropriate and to ensure that due regard is paid to their interests. He/she also need to act as a primary point of contact for institutional and other shareholders, especially with regard to matters of Corporate Governance.
  4. Duties as an Administrative Officer
    The Companies Act 1994 imposes numerous obligations on companies regarding, the conduct of their affairs. As an officer of the company, the Company Secretary can be prosecuted for most of these offences. Responsibility for ensuring compliance with these matters ultimately rests with the directors. However, by making the Company Secretary liable, the Act not only recognizes that the directors usually rely on the Company Secretary in this regard, but also provides a strong indication that they should give the Company Secretary responsibility for (or an involvement in) these matters. This is reinforced in the case of public companies by the requirement that the directors appoint as Company Secretary someone they believe is capable of performing the functions. Indeed, a director will often escape personal liability if they are able to show that the breach was not caused by their own acts or omissions and that the board had appointed a suitably qualified Company Secretary with responsibility for these matters. It is clear that, in view of their potential liabilities, Company Secretaries should not close their eyes to cases of non-compliance even if the directors have purported to make someone else responsible for those matters. Company Secretary should draw such cases to the attention of the directors and advise on the company's duties and obligations. It can therefore be argued that the Company Secretary has a duty as an officer of the company to keep an eye on these matters, regardless of the terms of their employment control. Company Secretaries should also ensure that where certain of their responsibilities are delegated, such tasks are properly executed, since they can still be held accountable in law for any failure by the company to comply. The fiduciary duties of directors can apply equally to executives occupying senior management positions in the company and authorized to act on its behalf. This usually includes the Company Secretary who, in any occasion, as an officer of the company has the following fundamental duties:• act in good faith in the interests of the company;• not to act for any collateral purpose• to avoid conflicts of interest• not to make secret profits from dealings for or on behalf of the company.

Core Duties of the Company Secretary
Below mentioned duties includes both those duties which are legal obligations as well as those which result from best practice. Besides, a Secretary may have to use his/her inventiveness to ensure that all core duties are fulfilled.

  1. Meetings of the Board of Directors
  2. General Meetings
  3. Memorandum and Articles of Association
  4. Requirements of Stock Exchanges & Regulatory bodies
  5. Maintenance of Statutory Registers
  6. Statistical Books
    Company Secretary has to maintain the following statistical books also-
    1. Application and allotment register
    2. Register of share transfer
    3. Attendance record book
    4. Agenda book
    5. Proxy register
    6. Index cards for maintaining specimen signatures of members
    7. Share certificate and debenture book. etc.
  7. Submission of Statutory Returns
    Following periodic statutory returns required to file with certain changes, to RJSC, like :
    1. Annual returns (Schedule X): within 21 days of general meeting
    2. Filing of Audited Accounts : within 30 days of general meeting with the annual return
    3. Return of Allotment (Form XV): within 60 days of allotment of shares
    4. Amended Memorandum and Articles of Association
    5. Notices of appointment, removal and resignation of directors (Form XII): within 14 days of any change therein
    6. Consent of Directors to act (Form IX) : at the time of appointment of director
    7. List of persons consenting to be Directors : at the time of appointment of director
    8. Agreement to take qualification shares in a proposed company (Form XI)
    9. Notices of appointment, removal or resignation of auditors
    10. Change of registered office (Form VI), within 28 days of incorporation or of any change thereon
    11. Special resolution (Form XIII) within 15 days of passing resolution thereof 
    12. Increase of Authorize Capital (form IV), within 15 days of passing resolution thereof etc
  8. Report and Accounts
    A Company Secretary has also to co-coordinate the publication and distribution of the company’s annual report , accounts and interim statements, in consultation with the company’s internal and external advisers, in particular, when preparing the directors’ report.
  9. Registration of Shares
    He/she has to maintain the company’s register of members; dealing with transfers and other matters affecting share-holdings; dealing with queries and requests from shareholders and different stakeholders.
  10. Communications to and from Shareholder 
    Communicating with the shareholders (e.g. through circulars); arranging payment of dividends, interest; issuing documentation regarding rights issues and capitalization issues; maintaining good shareholder relations; maintaining good relations with institutional shareholders and their investment committees.
  11. Shareholder Monitoring

    Monitoring movements on the register of members to identify any apparent ‘stake-building’ in the company’s shares by potential take-over bidders; making appropriate inquiries of members as to beneficial ownership of holdings.

Present performers In Bangladesh
Company Secretarial practice are being performed by professionals of –
Chartered Secretary (ACS / FCS)
Chartered Accountants (ACA/FCA)
Cost Management Accountants (ACMA/FCMA) and
Experienced Officials of different Disciplines.

Duties of CompS
to work as a Custodian
to safeguard interest of the company
to work for share issue, transfer
to work for deed finalisation & execution
to work as a PRO

Responsibilities of CompS
responsible for all lapses, frauds or wrong doing in legal works
responsible for meeting convening different statutory meetings
responsible for maintaining strict secrecy on company info
responsible for filing various statutory returns
responsible for maintaining various statutory registers
responsible for compliance with different authorities like RJSC, BOI, SEC etc
responsible for maintaining statutory time requisite for shareholders notice etc

(Info source : Muqtadir’s Handbook for Company Secretary & www.scribd.com)

 
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