The Company Secretary Appointed by Circulation
Sahasra Foods Limited has paid-up capital of ₹12 crore, eight directors and 450 members. The board appoints Priya as its whole-time company secretary by a resolution passed by circulation; all eight directors sign the resolution, but no board meeting is held. The managing director issues her appointment letter. Priya later finds that Form DIR-12 for her appointment was never filed, that the annual return was signed only by a director, and that a director wants her to sign a compliance certificate stating that all statutory registers are complete when the register of contracts is blank. The audit committee has asked for a note on her status and duties. Priya is willing to regularise the past filings but refuses to certify what is untrue.
1. Is Priya's appointment by circulation valid? Consider the requirements for a company of this size and the effect of the missing filing.
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The appointment is valid in substance but incomplete in compliance. Section 203 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 requires a public company with paid-up capital of ₹10 crore or more to appoint a whole-time company secretary, and Sahasra has ₹12 crore. Section 175 permits the board to pass a resolution by circulation if it is circulated to all directors and approved by a majority; all eight directors signed, so the internal approval exists. Appointment of key managerial personnel is not among the matters that must be decided only at a board meeting, although best practice is to hold a meeting because terms, disclosure of interest and authority to issue the appointment letter should be minuted. The managing director's letter is effective if the resolution authorised it. However, the company must file Form DIR-12 within 30 days of appointment under the Companies (Appointment and Qualification of Directors) Rules, 2014. Non-filing is a continuing default and leaves the statutory record incomplete. The board should confirm the appointment at its next meeting, record it in the minutes, and file DIR-12 with additional fees.
2. What is the correct position on the annual return signature and the overdue DIR-12? Can Priya sign the annual return now?
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Under Section 92(1), the annual return must be signed by a director and the company secretary, and only where there is no company secretary may it be signed by a director alone. Priya is the company secretary, so her signature is required; an annual return signed only by a director is defective. She can and should sign the annual return once she has verified its contents, but she should not sign it blindly to regularise the past. The company should check whether the return for the relevant year is still to be filed; if it is, file Form MGT-7 with her signature and the additional fee. If it has already been filed without her signature, the board should record the defect and take advice on filing a corrected form; the secretary should document the correction. DIR-12 for her appointment is separately overdue and must be filed with additional fees. She should also ensure the register of directors and key managerial personnel is updated with her appointment and that the board minutes record the authorisation for her appointment letter.
3. How should Priya respond to the director's demand that she certify all statutory registers as complete when the register of contracts is blank?
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Priya should refuse to sign a false certificate. As company secretary she is a key managerial personnel and an officer in default, and a certificate that all registers are complete when the register of contracts is blank would be misleading and could expose her to liability for false statements and misconduct. Her response should be in writing and should separate the true position from the demanded wording: state that the register of contracts under Section 189 has not been maintained, set out the corrective action already taken or proposed, and offer a qualified certificate that discloses the exception. She should place the matter before the audit committee and the board, asking for authority to reconstruct the register from contracts, board resolutions and bank records. If the board directs her to sign the false certificate, she should record her dissent in the minutes, decline in writing, and consider whether to report the matter under the company's whistle-blower policy. Resignation is a last resort and does not erase past acts; regularising the record is the proper course.