Governance, Ethics and Professional Responsibilities of the Company Secretary
Domain overview
Governance, Ethics and Professional Responsibilities of the Company Secretary tests ethical judgment, conflicts, confidentiality, insider trading, and professional misconduct. The examiner looks for the standards expected of a CS as a governance professional.
Core rules
- The ICSI Code of Conduct requires integrity, objectivity, confidentiality, professional competence, due care, and professional behaviour.
- A CS must disclose conflicts of interest and recuse from decision-making where personal or related-party interests arise.
- Confidentiality is not absolute: disclosure may be required by law, court order, or regulatory direction, or with consent.
- Under SEBI PIT 2015, unpublished price-sensitive information must not be traded on or communicated, except for legitimate purposes.
- The Companies Act, 2013 imposes duties on directors and governs related-party transactions, secretarial standards, and insider trading.
- Professional misconduct under the Company Secretaries Act, 1980 can attract disciplinary action by ICSI.
Worked example
A CS learns that a client is about to announce a major acquisition. A friend asks whether to buy the shares. The CS must not tip the friend or trade personally; doing so violates PIT and the Code. The CS should escalate to the compliance officer and maintain confidentiality. The reasoning: the information is price-sensitive and not in the public domain, and legitimate purpose is absent.
Traps
Treating client confidentiality as absolute; failing to disclose a conflict; signing a false compliance certificate; sharing price-sensitive information casually; assuming ethical duties apply only to directors.