Ranjeet Pandey, president, The Institute of Company Secretaries of India (ICSI), was recently in Goa to attend a conference. In the interview with Shoma Patnaik, he talks, of the company secretary transforming into a happening professional. The interview sheds light on several changes taking place in the profession
With reforms affecting the way businesses are run, what is the position of a company secretary now in an organization?
What is happened in the past five- six years is that, the ministry of corporate affairs (MCA) is become very active. The ministry feels that compliance is non-negotiable. We cherish this thinking because it has put our profession in the front. Earlier businesses were treating the job of company secretaries as a burden and a non-profit center. Because governance was on the back burner and the focus then was on running the company. But now with so many frauds and scams, corporate governance is become very important. If governance fails the company fails. That is giving lot of teeth to our services. It is a great confidence boost to our profession as we now know that we are no more a cost center but contributing to the growth of the organisation. Our profession has gained in stature.
How is the role of company secretaries changed over the years?
It has changed a lot. We are more accountable now. Whatever we do we are held responsible. If there is a wrongdoing and we have not pointed it then we are assumed to be party to it. We are named as Key Managerial Personnel (KMP) and our new responsibility is ensuring corporate governance.
Chartered accountants are giving up audit if they are not comfortable with the management. Do you foresee similar trend for company secretaries?
I have strong views on this. One cannot run away from the responsibility. If the management is not cooperative the reason for the non-cooperation has to be disclosed. One needs to be present in the situation and tackle it. A company secretary is the new whistle blower and has done it in the past. For instance in the Satyam Computer case, the company secretary was the first person to say something is wrong as he was not privy to information and could not complete the report. We are not only whistle blowers but have a preventive role to play in averting a crash.
The secretarial audit report annexed to the annual report was a big milestone for the profession. It was supposed to prevent frauds but failed to do so. Your comment?
The audit report in its present form has a structural lacuna. It talks about global things and needs serious revisions. We need to make the secretarial auditor independent. Today if one company secretary is not willing to certify documents then he is removed and another comes in.
So some compromise is taking place at the management level for getting clean reports. The MR-3 form is not serving the purpose. It should cover governance audit. At ICSI we are vigilant of this fact and have appointed a task force to come out with an amendment in secretarial audit. The task force is suggested broader framework of governance audit. The report needs to cover all non-financial transactions is one more suggestion of the task force.
Secondly we asked the government to broaden the secretarial audit net and include non-public listed companies in it to improve corporate governance. Presently only public limited companies are covered.
What are your suggestions for the Company Act, does it need further changes?
As far as the Company’s Act 2013 is concerned, it has settled down. Over the past five six years three amendment have come and more than 200 changes have been incorporated to improve compliance, governance and ease of doing business. At the same time discipline has not been compromised. So the Act has cracked down on shell companies, non- acting directors, ghost directors. As far as new changes are concerned some fine tuning can be done in CSR and in the audit framework of non-financial transactions. The Act also needs to give teeth to the company secretary so that they become more independent. Today management appoints the auditor and removes at their whims and fancies. So if I am trying to become the whistleblower then it becomes difficult.
The ICSI is mooted UDIN, how will it help shareholders?
We have proposed a unique document identification number (UDIN) for certificates, reports, audit reports and any other letter issued by the practicing company secretary to the company. The UDIN will help in preventing frauds, falsifications, wrong certification. It will certainly benefit shareholders by tracing the person responsible for wrong certification. For instance if the company secretary has certified that the company has net worth of Rs 10 crore while actually the net worth is Rs 10 lakh, UDIN will help to book the offending certifier and take them through the legal process.
What are the plans of ICSI to make members future ready?
We want our professionals to get skilled and elevate our member’s knowledge. Regulatory changes are happening every day and we should be ready to meet the changes. We want the focus of our profession to shift to skill development and not certificate based. It will improve our employability. In future with artificial intelligence expected to come in a big way the process of audit and certification is bound to change. The government is proposed e-assessment in the Budget which is an indication of how things are going to be in future.
Is there as shortage of company secretaries in India?
No shortage and no excess also as the institute tries to maintain the demand-supply balance. The statutory requirement for a company to maintain a company secretary is Rs five crore capital. Total of 39,800 companies are in the threshold. Our membership is at 59,000 company secretaries. So definitely no shortage.