MCA amends rules for Appointment of Company Secretary and Applicability of Secretarial Audit

The Ministry of Corporate Affairs through its Notification dated January 03, 2020, hereby amends the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The aforesaid notification has made changes to the following rules under the Companies Act, 2013.

Rule 8A - Company Secretaries’ Appointment in Companies

• Under the new Rules, Companies having paid-up capital in excess of Ten (10) Crore are mandatory to appoint Company Secretary.
• Effect of Amendment  - Companies having more than 10 Crore Paid Up Capital would be required to appoint Company Secretary instead of previous limit of Five (5) Crore Capital.

Rule 9 - Secretarial Audit Applicability

• In view of the new rules that have been formulated, Any Company which may have outstanding loans or borrowings of one hundred crore rupees (100) or more from banks and public financial institutions.
• Effect of Amendment-  This amendment is introduced to include Private Limited Companies with huge borrowing to comply with Secretarial Audit. Earlier only public companies were required to conduct secretarial Audit.

Below is the Notification from MCA for your reference.

[To be published Scction (i)l in the Gazette of India, Extraordinary, Part II, Section 3,

Sub MINISTRY OF CORPORATE AFFAIRS NOTIFICATION New Delhl,

3rd January, 2020 

• G.S.R. -At the moment of the powers to issue the rules stipulated by sub-section (1) of section 203 of the Companies Act, 2013 (18 of 2013) and to be read alongside section 469 of the said Act, the Central Government, hereby, provides the following rules and an addition to the already existing rules on the same named Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following rules, namely:
• The rules will be referred to as the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020. (2) The rules will apply to the financial years on or after 1 st April, 2020.
• In the said rules, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in rule 8A, the following shall be replaced as under:
• “8A. Any personal company that has share capital of one hundred crore rupees and above will be compelled to have a whole-time company secretary.
• In the rules mentioned above, in the rule 9 of the said rules, sub-rule (1), (i) after the clause (b) at the end, the word or will be added. (ii) following clause (b), the following clause would be added, that is,
• (c) all firms with outstanding loans or borrowings with banks or other public financial institutions with a hundred crore rupees or above. The following description will be added, viz.:-
• Explanation;- It is explained further that, pursuant to this sub-rule, the amount paid up capital of the company, turnover or the loan or borrowing pending as the case may be, as at the last date of the last audited financial statement shall be considered.

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