A company secretary (CS) plays a significant part in discharging various administrative functions in an enterprise. Large corporations ensure that an experienced and reputed professional is appointed to the post who can provide able assistance to the company board. However, many small businesses and startups do not feel it necessary to engage a professional or outsource the work to company secretarial services. They are unaware that failure to appoint a corporate secretary will not only affect their business’ administration but can also cause legal issues. Let’s take a look at some major reasons which necessitate that startups must engage company secretaries.
1. Conducting Important Meetings For The Enterprise
One of the most important duties of corporate secretaries is to call key company meetings and record their minutes. Such professionals are responsible for conducting board and general meetings of a commercial organization. In most jurisdictions, it is mandatory to hold an Annual General Meeting (AGM) during the course of a financial year. The professional has to make sure that the gathering takes place during the prescribed time frame and all the participants receive the relevant notice well in advance. They are also responsible for preparing the agenda and supplying all necessary information to the board members.
2. Maintaining And Updating Key Corporate Records
A major reason due to which enterprises hire such professionals is for maintaining vital corporate records. While creating a business setup in India or in some other nations, entrepreneurs are statutorily required to create the memorandum and articles of association. These documents define the ownership of the organization, it’s shareholding structure and the relationship between the company and the various stakeholders. Most small businesses in locations like India hire a company secretary in Delhi or other business centers to maintain these records. The professionals are also responsible for recording any changes to these documents.
3. Ensuring Regulatory Compliance
Another benefit of hiring a company secretary is that the professional will be helpful in ensuring that the organization remains compliant with all applicable laws. A business is governed by multiple regulations and violation of any of them can attract legal penalties. Corporate secretaries will see to it that all the taxes that the corporation deducts are deposited with the relevant government authority. They will also make sure that the tax returns are filed on time. In many jurisdictions, they are responsible for signing balance sheets or profit/loss records. A lot of businesses, therefore, choose a professional who has an in-depth understanding of corporate and securities laws.
4. Reporting Changes Related To The Company
Corporate laws require that any change made to an enterprise’s constitution or its physical location has to be reported to authorities as well as small investors. The corporate secretary is the person who is saddled with the duty of conveying such information to all relevant entities. For instance, if the corporation issues new shares or the stakeholding pattern undergoes a modification, then this development must be recorded and communicated to all concerned parties and the government by the CS.
6. Ensuring The Application Of Corporate Governance Best Practices
Corporate secretaries’ responsibilities are no longer limited to administrative functions. Enterprises look to them for creating an effective corporate governance structure. The professionals make sure that the best governance practices are applied across the organization. They guide the board members and other decision-makers to avoid conflicts of interest and unethical choices. In the event of a transgression, they have to see to it that all relevant facts are disclosed by the organization to the authorities. These individuals also keep track of the latest developments in corporate governance and convey them to the enterprise.
Startups must hire company secretary so that they run their business in accordance with the law. The professionals will also be helpful in improving the efficiency of the organization by ensuring all administrative functions are completed on time.