Home | Databases | WorldLII | Search | Feedback Indian Numbered Acts

COMPANY SECRETARIES (AMENDMENT) ACT 2006

THE COMPANY SECRETARIES (AMENDMENT) ACT, 2006
NO. 8 OF 2006
[17th March, 2006.]
An Act further to amend the Company Secretaries Act, 1980.
BE it enacted by Parliament in the Fifty-seventh
Year of the Republic
of India as follows:-
1.
Short title and commencement.
1. Short title and commencement.-(1) This Act may be
called the
Company Secretaries (Amendment) Act, 2006.
(2) It shall come into force on such date as the Central Government
may, by notification in the Official Gazette, appoint:
Provided
that different dates may be appointed for different
provisions of this Act and any reference in any such provision to the
commencement
of this Act shall be construed as a reference to the
commencement of that provision.
2.
Amendment of section 2.
2. Amendment of section
2.-In the Company Secretaries Act, 1980 (56
of 1980) (hereinafter referred to as the principal Act), in sub-
section (1) of section
2,-
(i) after clause (a), the following clauses shall be inserted,
namely:-
'(aa) "Authority" means the Appellate Authority referred
to in
section 22A;
(aaa) "Board" means the Quality Review Board constituted under
section 29A;';
(ii) after clause (g), the following
clause shall be inserted,
namely:-
'(ga) "notification" means a notification published in the Official
Gazette;';
(iii) after clause
(j), the following clauses shall be inserted,
namely:-
'(ja) "specified" means specified by rules made by the Central
Government
under this Act;
(jb) "Tribunal" means a Tribunal established under sub-section (1) of
section 10B;'.
3.
Amendment of section 4.
3.
Amendment of section 4.-In section 4 of the principal Act, for
sub-section (3), the following sub-section shall be substituted,
namely:-
"(3) Every person belonging to any of the classes mentioned in
clauses (c), (d) and (e) of sub-section (1) shall have his name
entered
in the Register on application being made and granted in the
prescribed manner and on payment of such fees, as may be determined,
by notification, by the Council, which shall not exceed rupees three
thousand:
Provided that the Council may with the prior approval
of the Central
Government, determine the fee exceeding rupees three thousand, which
shall not in any case exceed rupees six thousand.".
4.
Amendment of section 5.
4. Amendment of section 5.-In section 5 of the principal Act, for
sub-section (3), the following sub-section
shall be substituted,
namely:-
"(3) A person, being an Associate who has been in continuous practice
in India as a Company Secretary
for at least five years and a person
who has been an Associate for a continuous period of not less than
five years and who possesses
such qualifications or practical
experience as the Council may prescribe with a view to ensuring that
he has experience equivalent
to the experience normally acquired as a
result of continuous practice for a period of five years as a Company
Secretary shall, on
payment of such fees, as may be determined, by
notification, by the Council, which shall not exceed rupees five
thousand, and on
application made and granted in the prescribed
manner, be entered in the Register as a Fellow:
Provided that the Council may with
the prior approval of the Central
Government, determine the fee exceeding rupees five thousand, which
shall not in any case exceed
rupees ten thousand.
Explanation I.- For the purposes of this sub-section, a person shall
be deemed to have practised in India for
any period for which he has
held a certificate of practice under section 6, notwithstanding that
he did not actually practise during
that period.
Explanation II.- In computing the continuous period during which a
person has been an Associate of the Institute, there
shall be
included any continuous period during which the person has been an
Associate of the dissolved company immediately before
he became an
Associate of the Institute.".
5.
Amendment of section 6.
5. Amendment of section 6.-In section 6 of the principal Act,-
(i) for sub-section (2), the following sub-section shall be
substituted, namely:-
"(2) A member who desires to be entitled to practise
shall make an
application in such form and pay such annual fee, for his certificate
as may be determined, by notification, by the
Council, which shall
not exceed rupees three thousand, and such fee shall be payable on or
before the 1st day of April in each year:
Provided that the Council may with the prior approval of the Central
Government, determine the fee exceeding rupees three thousand, which
shall not
in any case exceed rupees six thousand.";
(ii) after sub-section (2), the following sub-section shall be
inserted, namely:-
"(3)
The certificate of practice obtained under sub-section (1) may
be cancelled by the Council under such circumstances as may be
prescribed.".
6.
Amendment of section 9.
6. Amendment of section 9.-In section 9 of the principal Act,-
(i) for sub-section (2), the following
sub-section shall be
substituted, namely:-
"(2) The Council shall be composed of the following persons, namely:-
(a) not more than
fifteen persons elected by the members of the
Institute, from amongst the Fellows of the Institute chosen in such
manner and from
such regional constituencies as may be specified:
Provided that a Fellow of the Institute, who has been found guilty of
any professional
or other misconduct and whose name is removed from
the Register or has been awarded penalty of fine, shall not be
eligible to contest
the election,-
(i) in case of misconduct falling under the First Schedule of this
Act, for a period of three years;
(ii) in case
of misconduct falling under the Second Schedule of this
Act, for a period of six years,
from the completion of the period of removal
of name from the
Register or payment of fine, as the case may be;
(b) not more than five persons nominated in the specified manner
by
the Central Government.";
(ii) after sub-section (2), the following sub-sections shall be
inserted, namely:-
"(3) No person holding
a post under the Central Government or a State
Government shall be eligible for election to the Council under clause
(a) of sub-section
(2).
(4) No person who has been auditor of the Institute shall be eligible
for election to the Council under clause (a) of sub-section
(2) for a
period of three years after he ceases to be an auditor.".
7.
Substitution of new section for section 10.
7. Substitution
of new section for section 10.-For section 10 of the
principal Act, the following section shall be substituted, namely:-
"10. Re-election
or re-nomination to Council.-A member of the
Council, elected or nominated under sub-section (2) of section 9,
shall be eligible
for re-election or, as the case may be, re-
nomination:
Provided that no member shall hold the office for more than two
consecutive
terms:
Provided further that a member of the Council, who is or has been
elected as President under sub-section (1) of section 12,
shall not
be eligible for election or nomination as a member of the Council.".
8.
Insertion of new sections 10A and 10B.
8. Insertion
of new sections 10A and 10B.-After section 10 of the
principal Act, the following sections shall be inserted, namely:-
"10A. Settlement
of disputes regarding election.-In case of any
dispute regarding any election under clause (a) of sub-section (2) of
section 9, the
aggrieved person may make an application within thirty
days from the date of declaration of the result of election to the
Secretary
of the Institute, who shall forward the same to the Central
Government.
10B. Establishment of Tribunal.-(1) On receipt of any application
under section 10A, the Central Government shall, by notification,
establish a Tribunal consisting of a Presiding Officer and two
other
Members to decide such dispute and the decision of such Tribunal
shall be final.
(2) A person shall not be qualified for appointment,-
(a) as a Presiding Officer of the Tribunal unless he has been a
member of the Indian Legal Service and has held a post in Grade I
of
the service for at least three years;
(b) as a Member unless he has been a member of the Council for at
least one full term and
who is not a sitting member of the Council or
who has not been a candidate in the election under dispute; or
(c) as a Member unless
he holds the post of a Joint Secretary to the
Government of India or any other post under the Central Government
carrying a scale
of pay which is not less than that of a Joint
Secretary to the Government of India.
(3) The terms and conditions of service of the Presiding
Officer and
Members of the Tribunal, their place of meetings and allowances shall
be such as may be specified.
(4) The expenses of
the Tribunal shall be borne by the Council.".
9.
Amendment of section 12.
9. Amendment of section 12.-In section 12 of the principal
Act,-
(i) in sub-section (2), for the words "Chief Executive Authority",
the word "Head" shall be substituted;
(ii) in sub-section
(3), after the words "he shall be eligible for
re-election", the words, brackets and figure "under sub-section (1)"
shall be inserted;
(iii) for sub-section (4), the following sub-section shall be
substituted, namely:-
"(4) On the expiration of the duration of the
Council, or of the term
of office of the President and the Vice-President thereof, the
President and the Vice-President shall continue
to hold office until
such time as a new President and the Vice-President is elected and
takes over charge of their duties.".
10.
Amendment of section 13.
10. Amendment of section 13.-In section 13 of the principal Act,-
(i) in sub-section (2), after the words
"meetings of the Council",
the words "or he has been found guilty of any professional or other
misconduct and awarded penalty of
fine," shall be inserted;
(ii) in the proviso to sub-section (3), for the words "six months",
the words "one year" shall be substituted.
11.
Amendment of section 14.
11. Amendment of section 14.-In section 14 of the principal Act, in
sub-section (1), for the words "three
years", the words "four years"
shall be substituted.
12.
Substitution of new section for section 15.
12. Substitution of new section
for section 15.-For section 15 of the
principal Act, the following section shall be substituted, namely:-
"15. Functions of Council.-(1)
The Institute shall function under the
overall control, guidance and supervision of the Council and the duty
of carrying out the
provisions of this Act shall be vested in the
Council.
(2) In particular, and without prejudice to the generality of the
foregoing
powers, the duties of the Council shall include-
(a) to approve academic courses and their contents;
(b) the prescribing of fees
for the examination of candidates for
enrolment;
(c) the prescribing of qualifications for entry in the Register;
(d) the recognition
of foreign qualifications and training for
purposes of enrolment;
(e) the prescribing of guidelines for granting or refusal of
certificates
of practice under this Act;
(f) the levy of fees from members, examinees and other persons;
(g) the regulation and maintenance of
the status and standard of
professional qualifications of members of the Institute;
(h) the carrying out, by granting financial assistance
to persons
other than members of the Council or in any other manner, of research
in such matters of interest to Company Secretaries
as may be
prescribed;
(i) to enable functioning of the Director (Discipline), the Board of
Discipline, the Disciplinary Committee
and the Appellate Authority
constituted under the provisions of this Act;
(j) to enable functioning of the Quality Review Board;
(k) consideration of the recommendations of the Quality Review Board
made under clause (a) of section 29B and details of action taken
thereon in its annual report; and
(l) to ensure the functioning of the Institute in accordance with the
provisions of this Act and
in performance of other statutory duties
as may be entrusted to the Institute from time to time.".
13.
Insertion of new sections
15A and 15B.
13. Insertion of new sections 15A and 15B.-After section 15 of the
principal Act, the following sections shall be inserted,
namely:-
"15A. Functions of Institute.-The functions of the Institute shall
include-
(a) the examination of candidates for enrolment;
(b) the regulation of training of students;
(c) the maintenance and publication of a Register of persons
qualified to practice as
Company Secretaries;
(d) collection of fees from members, examinees and other persons;
(e) subject to the orders of the appropriate authorities under this
Act, the removal of names from the Register and the restoration to
the Register of names which have been removed;
(f) the maintenance
of a library and publication of books and
periodicals relating to management of companies and allied subjects;
(g) the conduct of
elections to the Council of the Institute; and
(h) the granting or refusal of certificates of practice as per
guidelines issued by
the Council.
15B. Imparting education by Universities and other bodies.-(1)
Subject to the provisions of this Act, any University
established by
law or any body affiliated to the Institute, may impart education on
the subjects covered by the academic courses
of the Institute.
(2) The Universities or bodies referred to in sub-section (1) shall,
while awarding degree, diploma or certificate
or bestowing any
designation, ensure that the award or designation do not resemble or
is not identical to one awarded by the Institute.
(3) Nothing contained in this section shall enable a University or a
body to adopt a name or nomenclature which is in any way similar
to
that of the Institute.".
14.
Substitution of new section for section 16.
14. Substitution of new section for section 16.-For section
16 of the
principal Act, the following section shall be substituted, namely:-
"16. Officers and employees, salary, allowances, etc.-(1)
For the
efficient performance of its duties, the Council shall-
(a) appoint a Secretary of the Council to perform such duties as
may
be prescribed;
(b) appoint a Director (Discipline) to perform such functions as
assigned to him under this Act and the rules
and regulations framed
thereunder;
(c) designate an officer of the Council or the Institute to carry out
the administrative functions
of the Institute as its chief executive.
(2) The Council may also-
(a) appoint such other officers and employees to the Council and
the
Institute as it considers necessary;
(b) require and take from the Secretary or from any other officer or
employee of the Council
and the Institute such security for the due
performance of his duties, as the Council considers necessary;
(c) prescribe the salaries,
fees, allowances of the officers and
employees of the Council and the Institute and their terms and
conditions of service;
(d) with
the previous sanction of the Central Government, fix the
allowances of the President, Vice-President and other members of the
Council
and members of its Committees;
(3) The Secretary of the Council shall be entitled to participate in
the meetings of the Council but
shall not be entitled to vote
thereat.".
15.
Amendment of section 17.
15. Amendment of section 17.-In section 17 of the principal
Act,-
(a) in sub-section (1), for clause (b), the following clause shall
be substituted, namely:-
"(b) a Finance Committee; and";
(b) for sub-section (3), the following sub-section shall be
substituted, namely:-
"(3) Each of the Standing Committees shall consist
of the President
and the Vice-President ex officio, and minimum of three and maximum
of five members to be elected by the Council
from amongst its
members.";
(c) sub-sections (4) and (5) shall be omitted;
(d) in sub-section (6), for the words "two-thirds of the
total
membership of the Committee", the words "one-third of the total
membership of the Committee " shall be substituted.
16.
Amendment
of section 18.
16. Amendment of section 18.-In section 18 of the principal Act,-
(i) for sub-sections (3), (4) and (5), the following
sub-sections
shall be
substituted, namely:-
"(3) The Council shall keep proper accounts of the fund
distinguishing capital from revenue
in the manner prescribed.
(4) The Council shall prepare in the manner prescribed and approve,
prior to the start of the financial
year, an annual financial
statement (the budget) indicating all its anticipated revenues as
well as all proposed expenditures for
the forthcoming year.
(5) The annual accounts of the Council shall be prepared in such
manner as may be prescribed and be subject to audit by a Chartered
Accountant in practice to be appointed annually by the Council:
Provided that no member of the Council or a person who has been a
member of the Council during the last four years or a person who is
in partnership with such member shall be eligible for appointment
as
an auditor under this sub-section:
Provided further that, in the event it is brought to the notice of
the Council that the accounts
of the Council do not represent a true
and fair view of its finances, then, the Council may itself cause a
special audit to be conducted:
Provided also that if such information, that the accounts of the
Council do not represent a true and fair view of its finances, is
sent to the Council by the Central Government, then, the Council may,
wherever appropriate cause a special audit or take such other
action
as it considers necessary and shall furnish an action taken report on
it to the Central Government.";
(ii) after sub-section
(5), the following sub-sections shall be
inserted, namely:-
"(5A) As soon as may be practicable at the end of each year, the
Council
shall circulate the audited accounts to its members at least
fifteen days in advance and consider and approve these accounts in a
special meeting convened for the purpose.
(5B) The Council shall cause to be published in the Gazette of India
not later than the
30th day of September of the year next following,
a copy of the audited accounts and the Report of the Council for that
year duly
approved by the Council and copies of the said accounts and
Report shall be forwarded to the Central Government and to all the
members
of the Institute.".
17.
Amendment of section 19.
17. Amendment of section 19.-In section 19 of the principal Act,-
(i) in sub-section
(3), the words "on payment of such amount as may
be prescribed" shall be inserted at the end;
(ii) for sub-section (4), the following
sub-section shall be
substituted, namely:-
"(4) Every member of the Institute shall, on his name being entered
in the Register, pay
such annual membership fee as may be determined,
by notification, by the Council, which shall not exceed rupees five
thousand:
Provided
that the Council may with the prior approval of the Central
Government, determine the fee exceeding rupees five thousand which
shall
not in any case exceed rupees ten thousand.".
18.
Amendment of section 20.
18. Amendment of section 20.-In section 20 of the principal
Act,
after sub-section (2), the following sub-section shall be inserted,
namely:-
"(3) If the name of any member has been removed
from the Register
under clause (c) of sub-section (1), on receipt of an application,
his name may be entered again in the Register
on payment of the
arrears of annual fee and entrance fee along with such additional
fee, as may be determined, by notification, by
the Council, which
shall not exceed rupees two thousand:
Provided that the Council may with the prior approval of the Central
Government,
determine the fee exceeding rupees two thousand, which
shall not in any case exceed rupees four thousand.".
19.
Substitution of new
section for section 21.
19. Substitution of new section for section 21.-For section 21 of the
principal Act, the following section
shall be substituted, namely:-
"21. Disciplinary Directorate.-(1) The Council shall, by
notification, establish a Disciplinary Directorate
headed by an
officer of the Institute designated as Director (Discipline) and such
other employees for making investigations in respect
of any
information or complaint received by it.
(2) On receipt of any information or complaint along with the
prescribed fee, the
Director (Discipline) shall arrive at a prima
facie opinion on the occurrence of the alleged misconduct.
(3) Where the Director (Discipline)
is of the opinion that a member
is guilty of any professional or other misconduct mentioned in the
First Schedule, he shall place
the matter before the Board of
Discipline and where the Director (Discipline) is of the opinion that
a member is guilty of any professional
or other misconduct mentioned
in the Second Schedule or in both the Schedules, he shall place the
matter before the Disciplinary
Committee.
(4) In order to make investigations under the provisions of this Act,
the Disciplinary Directorate shall follow such procedure
as may be
specified.
(5) Where a complainant withdraws the complaint, the Director
(Discipline) shall place such withdrawal before
the Board of
Discipline or as the case may be, the Disciplinary Committee, and the
said Board or Committee may, if it is of the view
that the
circumstances so warrant, permit the withdrawal at any stage.".
20.
Insertion of new sections 21A, 21B, 21C and 21D.
20.
Insertion of new sections 21A, 21B, 21C and 21D.-After section 21
of the principal Act, the following sections shall be inserted,
namely:-
'21A. Board of Discipline.-(1) The Council shall constitute a Board
of Discipline consisting of-
(a) a person with experience
in law and having knowledge of the
disciplinary matters and the profession, to be its presiding officer;
(b) two members one of whom
shall be a member of the Council elected
by the Council and the other member shall be the person designated
under clause (c) of sub-section
(1) of section 16;
(c) the Director (Discipline) shall function as the Secretary of the
Board.
(2) The Board of Discipline shall
follow summary disposal procedure
in dealing with all the cases before it.
(3) Where the Board of Discipline is of the opinion that
a member is
guilty of a professional or other misconduct mentioned in the First
Schedule, it shall afford to the member an opportunity
of being heard
before making any order against him and may thereafter take any one
or more of the following actions, namely:-
(a)
reprimand the member;
(b) remove the name of the member from the Register up to a period of
three months;
(c) impose such fine as
it may think fit which may extend to rupees
one lakh.
(4) The Director (Discipline) shall submit before the Board of
Discipline all
information and complaints where he is of the opinion
that there is no prima facie case and the Board of Discipline may,
if it agrees
with the opinion of the Director (Discipline), close the
matter or in case of disagreement, may advise the Director
(Discipline)
to further investigate the matter.
21B. Disciplinary Committee.-(1) The Council shall constitute a
Disciplinary Committee consisting
of the President or the Vice-
President of the Council as the Presiding Officer and two members to
be elected from amongst the members
of the Council and two members to
be nominated by the Central Government from amongst the persons of
eminence having experience in
the field of law, economics, business,
finance or accountancy:
Provided that the Council may constitute more Disciplinary Committees
as and when it considers necessary.
(2) The Disciplinary Committee, while considering the cases placed
before it, shall follow such
procedure as may be specified.
(3) Where the Disciplinary Committee is of the opinion that a member
is guilty of a professional or
other misconduct mentioned in the
Second Schedule or both the First Schedule and the Second Schedule,
it shall afford to the member
an opportunity of being heard before
making any order against him and may thereafter take any one or more
of the following actions,
namely:-
(a) reprimand the member;
(b) remove the name of the member from the Register permanently or
for such period, as it thinks
fit;
(c) impose such fine as it may think fit, which may extend to rupees
five lakhs.
(4) The allowances payable to the members nominated
by the Central
Government shall be such as may be specified.
21C. Authority, Disciplinary Committee, Board of Discipline and
Director
(Discipline) to have powers of civil court.-For the purposes
of an inquiry under the provisions of this Act, the Authority, the
Disciplinary
Committee, Board of Discipline and the Director
(Discipline) shall have the same powers as are vested in a civil
court under the Code of
Civil Procedure, 1908 (5 of 1908), in respect
of the following matters, namely:-
(a) summoning and enforcing the attendance of any
person and
examining him on oath;
(b) the discovery and production of any document; and
(c) receiving evidence on affidavit.
Explanation.-For
the purposes of sections 21, 21A, 21B, 21C and 22,
"member of the Institute" includes a person who was a member of the
Institute
on the date of the alleged misconduct although he has
ceased to be a member of the Institute at the time of the inquiry.
21D. Transitional
provisions.-All complaints pending before the
Council or any inquiry initiated by the Disciplinary Committee or any
reference or
appeal made to a High Court prior to the commencement of
the Company Secretaries (Amendment) Act, 2006 shall continue to be
governed by the provisions of this Act, as if this Act had not been
amended by the Company Secretaries (Amendment) Act, 2006.'.
21.
Substitution of new section for section 22.
21. Substitution of new section for section 22.-For section 22 of the
principal
Act, the following section shall be substituted, namely:-
'22. Professional or other misconduct defined.-For the purposes of
this
Act, the expression "professional or other misconduct" shall be
deemed to include any act or omission provided in any of the
Schedules,
but nothing in this section shall be construed to limit or
abridge in any way the power conferred or duty cast on the Director
(Discipline)
under sub-section (1) of section 21 to inquire into the
conduct of any member of the Institute under any other
circumstances.'.
22.
Insertion of new section 22A, 22B, 22C, 22D and 22E.
22. Insertion of new section 22A, 22B, 22C, 22D and 22E.-After
section 22 of
the principal Act, the following sections shall be
inserted, namely:-
'22A. Constitution of Appellate Authority.-The Appellate Authority
constituted under sub-section (1) of section 22A of the Chartered
Accountants Act, 1949 (38 of 1949), shall be deemed to be the
Appellate Authority for the purposes of this Act subject to the
modification that for clause
(b) of said sub-section (1), the
following clause had been substituted, namely:-
"(b) the Central Government shall, by notification
appoint two part-
time members from amongst the persons who have been members of the
Council of the Institute of Company Secretaries
of India for at least
one full term and who is not a sitting member of the Council;".
22B. Term of office of members of Authority.-A
person appointed as a
member shall hold office for a term of three years from the date on
which he enters upon his office or until
he attains the age of sixty-
two years, whichever is earlier.
22C. Procedure, etc., of Authority.-The provisions of section 22C,
section 22D and section 22F of the Chartered Accountants Act, 1949
(38 of 1949) shall apply to the Authority in relation to allowances
and terms and conditions of service of its Chairperson and members,
and in the discharge of its functions under this Act as they apply to
it in the discharge of its functions under the Chartered Accountants
Act, 1949.
22D. Officers and other staff of Authority.-(1) The Council shall
make available to the Authority such officers and other staff
members
as may be necessary for the efficient performance of the functions of
the Authority.
(2) The salaries and allowances and
conditions of service of the
officers and other staff members of the Authority shall be such as
may be prescribed.
22E. Appeal to
Authority.-(1) Any member of the Institute aggrieved
by any order of the Board of Discipline or the Disciplinary Committee
imposing
on him any of the penalties referred to in sub-section (3)
of section 21A and sub-section (3) of section 21B, may within ninety
days
from the date on which the order is communicated to him, prefer
an appeal to the Authority:
Provided that the Director (Discipline)
may also appeal against the
decision of the Board of Discipline or the Disciplinary Committee to
the Authority if so authorised by
the Council, within ninety days:
Provided further that the Authority may entertain any such appeal
after the expiry of the said period
of ninety days, if it is
satisfied that there was sufficient cause for not filing the appeal
in time.
(2) The Authority may, after
calling for the records of any case,
revise any order made by the Board of Discipline or the Disciplinary
Committee under sub-section
(3) of section 21A and sub-section (3) of
section 21B and may-
(a) confirm, modify or set aside the order;
(b) impose any penalty
or set aside, reduce, or enhance the penalty
imposed by the order;
(c) remit the case to the Board of Discipline or Disciplinary
Committee for such further enquiry as the Authority considers proper
in the circumstances of the case; or
(d) pass such other order
as the Authority thinks fit:
Provided that the Authority shall give an opportunity of being heard
to the parties concerned before
passing any order.'.
23.
Amendment of section 25.
23. Amendment of section 25.-In section 25 of the principal Act, sub-
section (3)
shall be omitted.
24.
Amendment of section 27.
24. Amendment of section 27.-In section 27 of the principal Act, for
sub-section (2),
the following sub-section shall be substituted,
namely:-
"(2) Any person who contravenes the provisions of sub-section (1)
shall,
without prejudice to any other proceedings which may be taken
against him, be punishable on first conviction with a fine not less
than five thousand rupees but which may extend to one lakh rupees,
and in the event of a second or subsequent conviction with
imprisonment
for a term which may extend to one year or with a fine
not less than ten thousand rupees but which may extend to two lakh
rupees
or with both.".
25.
Insertion of new chapter VIIA.
25. Insertion of new Chapter VIIA.-After Chapter VII of the principal
Act, the
following Chapter shall be inserted, namely:-
"CHAPTER VII A
QUALITY REVIEW BOARD
29A. Establishment of Quality Review Board.-(1)
The Central
Government shall, by notification, constitute a Quality Review Board
consisting of a Chairperson and four other members.
(2) The Chairperson and members of the Board shall be appointed from
amongst the persons of eminence having experience in the field
of
law, economics, business, finance or accountancy.
(3) Two members of the Board shall be nominated by the Council and
other two
members shall be nominated by the Central Government.
29B. Functions of Board.-The Board shall perform the following
functions, namely:-
(a) to make recommendations to the Council with regard to the quality
of services provided by the members of the Institute;
(b) to
review the quality of services provided by the members of the
Institute including secretarial services; and
(c) to guide the members
of the Institute to improve the quality of
services and adherence to the various statutory and other regulatory
requirements.
29C.
Procedure of Board.-The Board shall meet at such time and place
and follow in its meetings such procedure as may be specified.
29D.
Terms and conditions of service of Chairperson and members of
Board and its expenditure.-(1) The terms and conditions of service of
the Chairperson and the members of the Board,
and their allowances
shall be such as may be specified.
(2) The expenditure of the Board shall be borne by the Council.".
26.
Omission
of section 30.
26. Omission of section 30.-Section 30 of the principal Act shall be
omitted.
27.
Substitution of new section for
section 36.
27. Substitution of new section for section 36.-For section 36 of the
principal Act, the following section shall be substituted,
namely:-
"36. Protection of action taken in good faith.-No suit, prosecution
or other legal proceeding shall lie against the Central
Government or
the Council or the Authority or the Disciplinary Committee or the
Tribunal or the Board or the Board of Discipline
or the Disciplinary
Directorate or any officer of that Government, Council, Authority,
Disciplinary Committee, Tribunal, Board, Board
of Discipline or the
Disciplinary Directorate, for anything which is in good faith done or
intended to be done under this Act or
any rule, regulation,
notification, direction or order made thereunder.".
28.
Insertion of new section 36A.
28. Insertion of new
section 36A.-After section 36 of the principal
Act, the following section shall be inserted, namely:-
"36A. Members, etc. to be public
servants.-The Chairperson, Presiding
Officer, members and other officers and employees of the Authority,
Disciplinary Committee,
Tribunal, Board, Board of Discipline or the
Disciplinary Directorate shall be deemed to be public servants within
the meaning of
section 21 of the Indian Penal Code.".
29.
Insertion of new section 38A.
29. Insertion of new section 38A.-After section 38 of the
principal
Act, the following section shall be inserted, namely:-
"38A. Power of Central Government to make rules. (1) The Central
Government may, by notification, make rules to carry out the
provisions of this Act.
(2) In particular, and without prejudice to
the generality of the
foregoing powers, such rules may provide for all or any of the
following matters, namely:-
(a) the manner of
election and nomination in respect of members to
the Council under sub-section (2) of section 9;
(b) the terms and conditions of
service of the Presiding Officer and
Members of the Tribunal, place of meetings and allowances to be paid
to them under sub-section
(3) of section 10B;
(c) the procedure of investigation under sub-section (4) of section
21;
(d) the procedure while considering the
cases by the Disciplinary
Committee under sub-section (2) and fixation of allowances of the
nominated members under sub-section (4)
of section 21B;
(e) the procedure to be followed by the Board in its meetings under
section 29C; and
(f) the terms and conditions
of service of the Chairperson and
members of the Board under sub-section (1) of section 29D.".
30.
Amendment of section 39.
30. Amendment
of section 39.-In section 39 of the principal Act,-
(i) in sub-section (2),-
(a) in clause (a), for the word, brackets and figures
"items (1),
(3)", the word, brackets and figure "item (2)" shall be substituted;
(b) in clause (d), the words, brackets and letter
"clause (a) of"
shall be omitted;
(c) clause (g), clause (l) and clause (q) shall be omitted;
(d) in clause (i), for the word, brackets
and letter "clause (i)",
the word, brackets and letter "clause (g)" shall be substituted;
(e) in clause (j), for the word, brackets
and letter "clause (j)",
the word, brackets and letter "clause (h)" shall be substituted;
(f) in clause (k), for the words, brackets,
letter and figures
"clause (k) of sub-section (2) of section 15", the words, brackets,
letters and figures "clause (f) of section
15A" shall be substituted;
(ii) sub-section (4) shall be omitted.
31.
Insertion of new section 40.
31. Insertion of new section 40.-After
section 39 of the principal
Act, the following section shall be inserted, namely:-
"40. Rules, regulations and notifications to be
laid before
Parliament.-Every rule and every regulation made and every
notification issued under this Act shall be laid, as soon as may be
after it is made or issued,
before each House of Parliament, while it
is in session, for a total period of thirty days which may be
comprised in one session
or in two or more successive sessions, and
if, before the expiry of the session immediately following the
session or the successive
sessions aforesaid, both Houses agree in
making any modification in the rule, regulation or notification, or
both Houses agree that
the rule, regulation or notification should
not be made, or issued, the rule, regulation or notification shall
thereafter have effect
only in such modified form or be of no effect,
as the case may be; so, however, that any such modification or
annulment shall be
without prejudice to the validity of anything
previously done under that rule, regulation or notification.".
32.
Substitution of
new Schedules for First Schedule and Second Schedule.
32. Substitution of new Schedules for First Schedule and Second
Schedule.-For
the First Schedule and the Second Schedule to the
principal Act, the following Schedules shall be substituted, namely:-
'THE FIRST
SCHEDULE
[See sections 21 (3), 21A(3) and 22]
PART I
Professional misconduct in relation to company secretaries in
practice
A Company
Secretary in practice shall be deemed to be guilty of
professional misconduct, if he-
(1) allows any person to practice in his name
as a Company Secretary
unless such person is also a Company Secretary in practice and is in
partnership with or employed by him;
(2) pays or allows or agrees to pay or allow, directly or indirectly,
any share, commission or brokerage in the fees or profits of
his
professional business, to any person other than a member of the
Institute or a partner or a retired partner or the legal
representative
of a deceased partner, or a member of any other
professional body or with such other persons having such
qualifications as may be
prescribed, for the purpose of rendering
such professional services from time to time in or outside India.
Explanation.- In this
item, "partner" includes a person residing
outside India with whom a Company Secretary in practice has entered
into partnership which
is not in contravention of item (4) of this
Part;
(3) accepts or agrees to accept any part of the profits of the
professional work
of a person who is not a member of the Institute:
Provided that nothing herein contained shall be construed as
prohibiting a member
from entering into profit sharing or other
similar arrangements, including receiving any share commission or
brokerage in the fees,
with a member of such professional body or
other person having qualifications, as is referred to in item (2) of
this part;
(4) enters
into partnership, in or outside India, with any person
other than a Company Secretary in practice or such other person who
is a member
of any other professional body having such qualifications
as may be prescribed, including a resident who but for his residence
abroad
would be entitled to be registered as a member under clause
(e) of sub-section (1) of section 4 or whose qualifications are
recognised
by the Central Government or the Council for the purpose
of permitting such partnerships;
(5) secures, either through the services
of a person who is not an
employee of such company secretary or who is not his partner or by
means which are not open to a Company
Secretary, any professional
business:
Provided that nothing herein contained shall be construed as
prohibiting any arrangement permitted
in terms of items (2), (3) and
(4) of this Part;
(6) solicits clients or professional work, either directly or
indirectly, by circular,
advertisement, personal communication or
interview or by any other means:
Provided that nothing herein contained shall be construed
as
preventing or prohibiting-
(i) any company secretary from applying or requesting for or inviting
or securing professional work
from another company secretary in
practice; or
(ii) a member from responding to tenders or enquiries issued by
various users of professional services or organisations
from time to
time and securing professional work as a consequence;
(7) advertises his professional attainments or services, or uses
any
designation or expressions other than Company Secretary on
professional documents, visiting cards, letterheads or sign boards,
unless it be a degree of a University established by law in India or
recognised by the Central Government or a title indicating membership
of the Institute of Company Secretaries of India or of any other
institution that has been recognised by the Central Government or
may
be recognised by the Council:
Provided that a member in practice may advertise through a write up
setting out the services provided
by him or his firm and particulars
of his firm subject to such guidelines as may be issued by the
Council;
(8) accepts a position
as a Company Secretary in practice previously
held by another Company Secretary in practice without first
communicating with him
in writing;
(9) charges or offers to charge, accepts or offers to accept, in
respect of any professional employment, fees which are
based on a
percentage of profits or which are contingent upon the findings, or
results of such employment, except as permitted under
any regulation
made under this Act;
(10) engages in any business or occupation other than the profession
of Company Secretary unless
permitted by the Council so to engage:
Provided that nothing contained herein shall disentitle a Company
Secretary from being a director
of a company except as provided in
the Companies Act, 1956 (1 of 1956);
(11) allows a person not being a member of the Institute in practice,
or a member not being his partner to sign on his
behalf or on behalf
of his firm, anything which he is required to certify as a Company
Secretary, or any other statements relating
thereto.
PART II
Professional misconduct in relation to members of the Institute in
service
A member of the Institute (other than a member in practice)
shall be
deemed to be guilty of professional misconduct, if he, being an
employee of any company, firm or person-
(1) pays or allows
or agrees to pay, directly or indirectly, to any
person any share in the emoluments of the employment undertaken by
him;
(2) accepts
or agrees to accept any part of fees, profits or gains
from a lawyer, a Company Secretary or broker engaged by such company,
firm
or person or agent or customer of such company, firm or person
by way of commission or gratification.
PART III
Professional misconduct in relation to members of the Institute
generally
A member of the Institute, whether in practice or not,
shall be
deemed to be guilty of professional misconduct, if he-
(1) not being a Fellow of the Institute, acts as a Fellow of the
Institute;
(2) does not supply the information called for, or does not comply
with the requirements asked for, by the Institute,
Council or any of
its Committees, Director (Discipline), Board of Discipline,
Disciplinary Committee, Quality Review Board or the
Appellate
Authority;
(3) while inviting professional work from another Company Secretary
or while responding to tenders or enquiries
or while advertising
through a write up, or anything as provided for in items (6) and (7)
of Part I of this Schedule, gives information knowing it to be false.
PART IV
Other misconduct in relation to members of the Institute generally
A member of the Institute, whether in practice or not, shall be
deemed to be guilty of other misconduct, if-
(1) he is held guilty by any civil or criminal court for an offence
which is punishable
with imprisonment for a term not exceeding six
months;
(2) in the opinion of the Council, he brings disrepute to the
profession or
the institute as a result of his action whether or not
related to his professional work.
THE SECOND SCHEDULE
[See sections 21 (3),
21B(3) and 22]
PART I
Professional misconduct in relation to company secretaries in
practice
A Company Secretary in practice shall be deemed to be guilty
of
professional misconduct, if he-
(1) discloses information acquired in the course of his professional
engagement to any person
other than his client so engaging him,
without the consent of his client, or otherwise than as required by
any law for the time being
in force;
(2) certifies or submits in his name, or in the name of his firm, a
report of an examination of the matters relating to
company
secretarial practice and related statements unless the examination of
such statements has been made by him or by a partner
or an employee
in his firm or by another Company Secretary in practice;
(3) permits his name or the name of his firm to be used in
connection
with any report or statement contingent upon future transactions in a
manner which may lead to the belief that he vouches
for the accuracy
of the forecast;
(4) expresses his opinion on any report or statement given to any
business or enterprise in which
he, his firm, or a partner in his
firm has a substantial interest;
(5) fails to disclose a material fact known to him in his report
or
statement but the disclosure of which is necessary in making such
report or statement, where he is concerned with such report
or
statement in a professional capacity;
(6) fails to report a material mis-statement known to him and with
which he is concerned
in a professional capacity;
(7) does not exercise due diligence, or is grossly negligent in the
conduct of his professional duties;
(8) fails to obtain sufficient information which is necessary for
expression of an opinion or its exceptions are sufficiently material
to negate the expression of an opinion;
(9) fails to invite attention to any material departure from the
generally accepted procedure
relating to the secretarial practice;
(10) fails to keep moneys of his client other than fees or
remuneration or money meant to be
expended in a separate banking
account or to use such moneys for purposes for which they are
intended within a reasonable time.
PART II
Professional misconduct in relation to members of the Institute
generally
A member of the Institute, whether in practice or not,
shall be
deemed to be guilty of professional misconduct, if he-
(1) contravenes any of the provisions of this Act or the regulations
made thereunder or any guidelines issued by the Council;
(2) being an employee of any company, firm or person, discloses
confidential
information acquired in the course of his employment,
except as and when required by any law for the time being in force or
except
as permitted by the employer;
(3) includes in any information, statement, return or form to be
submitted to the Institute, Council
or any of its Committees,
Director (Discipline), Board of Discipline, Disciplinary Committee,
Quality Review Board or the Appellate
Authority any particulars
knowing them to be false;
(4) defalcates or embezzles moneys received in his professional
capacity.
PART
III
Other misconduct in relation to members of the Institute generally
A member of the Institute, whether in practice or not, shall
be
deemed to be guilty of other misconduct, if he is held guilty by any
civil or criminal court for an offence which is punishable
with
imprisonment for a term exceeding six months.'.
T.K. VISWANATHAN,
Secy. to the Govt. of India.
{}