chapter-21, Question Answers

Questions related to Legal Framework Governing Company Secretaries (Chapter 21)

Questions related to matter other than Professional/Other Misconduct covered under Schedule 1 (5 Marks Each)

  1. Who shall be deemed “to be in practice” according to Company Secretaries Act and regulations made thereunder.
    Ans. A member of the Institute shall be deemed “to be in practice” when, individually or in partnership with one or more members of the Institute in practice or in partnership with members of such other recognised professions as may be prescribed, he, in consideration of remuneration received or to be received,—
    1. engages himself in the practice of the profession of Company Secretaries to, or in relation to, any company; or
    2.  offers to perform or performs services in relation to the promotion, forming, incorporation,
      amalgamation, reconstruction, reorganisation or winding up of companies; or
    3. offers to perform or performs such services as may be performed by—
      • an authorised representative of a company with respect to filing, registering, presenting,
        attesting or verifying any documents (including forms, applications and returns) by or on behalf of the company
      • a share transfer agent,
      • an issue house,
      • a share and stock broker,
      • a secretarial auditor or consultant,
      • an adviser to a company on management, including any legal or procedural matters
      • issuing certificates on behalf of, or for the purposes of, a company; or
    4. holds himself out to the public as a Company Secretary in practice; or
    5. renders professional services or assistance with respect to matters of principle or detail relating to the practice of the profession of Company Secretaries; or
    6. renders such other services as, in the opinion of the Council, are or may be rendered by a Company Secretary in practice;

2. Write a short note on- Register of Members
Ans-According to Section 19 of CS Act, 1980, The Council shall maintain in the prescribed manner a Register of the members of the Institute. The Register shall include the following particulars about every member of the Institute, namely:—

  1. his full name, date of birth, domicile, residential and professional addresses;
  2. the date on which his name is entered in the Register;
  3. his qualifications;
  4. whether he holds a certificate of practice; and
  5. any other particulars which may be prescribed.

    The Council shall cause to be published in such manner as may be prescribed a list of members of the Institute as on the 1st day of April of each year, and shall, if requested to do so by any such member, send him a copy of such list on payment of such amount as may be prescribed.

    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 Rs. 5000.

    But Council may with the prior approval of the Central Government, determine the fee exceeding Rs.5000 which shall not in any case exceed Rs. 10,000. 

    -Disciplinary Directorate
    The Council of ICSI has established 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.

    On receipt of any information or complaint, the Director (Discipline) shall arrive at a prima facie opinion on the occurrence of the alleged misconduct.

    If 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.

    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.

    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, advise the Director (Discipline) to further investigate the matter.

  • Board of Discipline
    The Council has constituted a Board of Discipline consisting of–
    1. Presiding Officer – a person with experience in law and having knowledge of the disciplinary matters and the profession;
    2. 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 section 16(1)(c) [an officer of the Council or the Institute to carry out the administrative functions of the Institute as its chief executive];

    3. Secretary of the Board – Director (Discipline).
      If 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.

    4. Disciplinary Committee
      The Council has constituted a Disciplinary Committee consisting of

      •  Presiding Officer – the President or the Vice-President of the Council 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

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.

Council may constitute more Disciplinary Committees as and when it considers necessary.  

3. What is the procedure to file an appeal against decision of Board of Discipline and Disciplinary Committees under Section 22E of Company Secretaries Act, 1980?

Ans. Appeal by Member within 90 Days
According to Section 22E of Company Secretaries Act, 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, may within 90 days from the date on which the order is communicated to him, prefer an appeal to the Authority.

Appeal after 90 days
The Authority may entertain any such appeal after the expiry of the said period of 90 days, if it is satisfied that there was sufficient cause for not filing the appeal in time.

Order by Authority
The Authority may, after calling for the records of any case, revise any order made by the Board of Discipline or the Disciplinary Committee and may —

  • confirm, modify or set aside the order;
  •  impose any penalty or set aside, reduce, or enhance the penalty imposed by the order;
  • 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
  •  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

4. List out the cases when the name of a member can be removed from the register of members by the council.
According to Section 20 of Company Secretaries Act, 1980, the Council may remove from the Register the name of any member of the Institute—

  • who is dead; or
  •  from whom a request has been received to that effect; or
  • who has not paid any prescribed fee required to be paid by him; or
  • who is found to have been subject at the time when his name was entered in the Register, or who at any time thereafter has become subject, to any of the disabilities mentioned in section 8, or who for any other reason has ceased to be entitled to have his name borne on the Register.

The Council shall remove from the Register the name of any member in respect of whom an order has been passed under this Act removing him from membership of the Institute.

5.What is the procedure to handle the complaints and enquiries relating to professional or other misconduct of members?
The Council of ICSI has established 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.

Action by Director (Discipline) on receipt of information/complaint
On receipt of any information or complaint, the Director (Discipline) shall arrive at a prima facie opinion on the occurrence of the alleged misconduct.

If the Director (Discipline) is of the opinion that a member is guilty of any professional or other misconduct mentioned in the First ScheduleHe shall place the matter before the Board of Discipline.
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.

Withdrawal of Complaint
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.

Where Director (Discipline) is of the opinion that there is no prima facie case
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, advise the Director (Discipline) to further investigate the matter.

6. List out the disabilities referred under Section 8 of Company Secretaries Act, 1980.
A person shall not be entitled to have his name entered in, or borne on, the Register if he—

  • has not attained the age of 21 years at the time of his application for the entry of his name in the Register; or
  • is of unsound mind and stands so adjudged by a competent court; or
  • is an undischarged insolvent; or
  • being a discharged insolvent, has not obtained from the court a certificate stating that his insolvency was caused by misfortune without any misconduct on his part; or
  • has been convicted by a competent court whether within or without India,
    • of an offence involving moral turpitude and punishable with imprisonment or
    • of an offence, not of a technical nature, committed by him in his professional capacity unless in respect of the offence committed he has either been granted a pardon or, on an application made by him in this behalf, the Central Government has, by an order in writing, removed the disability; or
  • has been removed from membership of the Institute on being found on inquiry to have been guilty of professional or other misconduct

7. What orders can be passed by Board of Discipline when it is of the opinion that a member is guilty of a professional or other misconduct mentioned in the 1st Schedule?
On receipt of any information or complaint, the Director (Discipline) shall arrive at a prima facie opinion on the occurrence of the alleged misconduct.
If 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.

The Board of Discipline shall follow summary disposal procedure in dealing with all the cases before it.

Where the Board of Discipline is of the opinion that a member is guilty, it may give any of the following orders after giving reasonable opportunity of being heard to the concerned member

  • reprimand the member;
  • remove the name of the member from the Register up to a period of 3 months;
  • impose such fine as it may think fit which may extend to Rs. 1 lakh.

8. What orders can be passed by Disciplinary Committee when it is of the opinion that a member is guilty of a professional or other misconduct mentioned in the Second Schedule or both the 1st Schedule and the 2nd Schedule?

On receipt of any information or complaint, the Director (Discipline) shall arrive at a prima facie opinion on the occurrence of the alleged misconduct.

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.

Where the Disciplinary Committee is of the opinion that a member is guilty of a professional or other misconduct, it may give any of the following orders after giving reasonable opportunity of being heard to the concerned member

  • Reprimand the member;
  • Remove the name of the member from the Register permanently or for such period, as it thinks fit;
  • impose such fine as it may think fit, which may extend to Rs. 5 lakhs.

9. How would you substantiate the view that the members of the Institute of Company Secretaries of India (ICSI) are subject to disciplinary mechanism? (June 2019)
Disciplinary mechanism means a mechanism to maintain the discipline among the members of a professional institute. Disciplinary mechanism usually consists of 3 main elements:

  • Code of Conduct to be followed by members
  • Officers/Committee/Other Personals to handle complaints and to take appropriate actions
  • Authority to whom appeal against orders/actions can be preferred

Code of Conduct to be followed by members
The member of the Institute is subject to the Disciplinary mechanism provided for under Chapter V of the Company Secretaries Act, 1980. Under Company Secretaries Act, 1980, all the misconducts (professional or other) are divided into 2 categories:

  • Misconducts listed under Schedule I
  • Misconducts listed under Schedule II

Any action of a member of ICSI shall not come within the ambit of such misconducts; otherwise appropriate disciplinary action shall be taken against him by appropriate authorities.

Officers/Committee/Other Personals to handle complaints and to take appropriate actions
For making investigations in respect of any information or complaint related to any misconduct covered under Schedule 1 or Schedule, the Council of ICSI has established Disciplinary Directorate headed by an officer of the Institute designated as Director (Discipline) and such other employees as required.

Where the Director (Discipline) is of the opinion that a member is guilty of any professional or other misconduct mentioned in the First Schedule or Second Schedule or both, he shall place the matter before the Board of Discipline or Disciplinary Committee, as the case may be.

Where Board of Discipline/Disciplinary Committee is of the opinion that a member is guilty of any professional or other misconduct, it shall take appropriate action against member which may include reprimand the member, remove the name of the member from the Register for some time, impose such fine as it may think fit.

Authority to whom appeal against orders/actions can be preferred
Any member aggrieved by any order of the Board of Discipline or the Disciplinary Committee imposing on him any of the penalties may prefer an appeal to the Authority section 22A of the Chartered Accountants Act, 1949.

Questions related to Part I/II/III/IV of the First Schedule to the Act (Professional Misconducts in relation to PCS)

  1. Anurag Jain (PCS) is sharing an office with Mrs. Neetu Jain (PCS) just to lower the burden of fixed cost associated with the office. They are spouse but both are practicing in their individual capacity. Due to some reasons, certificate of practice of Mrs. Neetu Jain is suspended by the council. Can Mr. Anurag Jain allow Mrs. Neetu Jain to practice as company secretary under his name using his membership number and signature? Will it amount to professional misconduct?
    According to Point 1 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he 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. 

In the case given in the question,

  • Anurag Jain and Mrs. Neetu Jain are not partners; neither there is any employer employee relationship between them.
  • Futher, certificate of practice of Mrs. Neetu Jain is suspended by the council.

Thus, Mr. Anurag Jain cannot allow Mrs. Neetu Jain to practice as company secretary under his name using his membership number and signature.

Conclusion: If Mr. Anurag Jain allows Mrs. Neetu Jain to practice as company secretary under his name, it will amounts amount to Professional Misconduct.

2. Anurag Jain is a PCS. Mrs. Neetu Jain, company secretary of Deep Gyan Pvt. Ltd. approaches to Mr. Anurag Jain for some secretarial services. Mrs. Neetu Jain agrees to take the services of Mr. Anurag Jain on a condition that she will take 20% as commission from the professional fee which Mr. Anurag Jain will charge from Deep Gyan Pvt. Ltd. Can Mr. Anurag Jain share his fee in this case? Will it amount to professional misconduct?
According to Point 2 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he 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 company secretary in employment.

In the case given in the question, Mr. Anurag Jain cannot share his fee with Mrs. Neetu Jain.

Conclusion: If Mr. Anurag Jain shares his fee with Mrs. Neetu Jain, it will amounts amount to Professional Misconduct.

3. Anurag Jain is a PCS. He wants to become partner in a steel firm which manufactures utensils. Can he do so? Will it amount to professional misconduct?
According to Point 4 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he enters into partnership, in or outside India, with any person (other than a CS in practice or such other person who is a member of any other professional body having such qualifications as may be prescribed or whose qualifications are recognized by the Central Government or the Council for the purpose of permitting such partnerships).

In the case given in the question, Mr. Anurag Jain cannot become partner in a steel firm which manufactures utensils.
Conclusion: If Mr. Anurag Jain becomes partner in a steel firm, it will amounts amount to Professional Misconduct.

4. A true professional should command honour and not demand it. Comment.
According to Point 6 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he solicits clients or professional work, either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means.

The bedrock of this rule is that a professional should gain recognition by rendering expert services, to a few though in the beginning, who would themselves lead others to him.

The conduct of the member is noted all the times by the society at large and their ethics and integrity towards the profession itself is sufficient for growth. So, the purpose of this clause is, to ensure that a professional secures work by his credibility, reliability and integrity in the public eyes and not by advertisement adversely affecting the image of the professional and also the profession.

5. Can a PCS advertise in newspaper or on radio or on social media about the range of services offered by him?
According to Point 6 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he solicits clients or professional work, either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means.

Therefore, advertisement by PCS in newspaper or on radio or on social media about the range of services offered by him would be considered as professional misconduct.

A professional shall secures work by his credibility, reliability and integrity in the public eyes and not by advertisement.

6. Anurag Jain is a PCS. He creates his accounts on many social websites like facebook, twitter, youtube etc. where he generally publishes/posts the details of services offered by him, or about his specialisation in specific areas/fields. Is this amount to soliciting of professional work? It is covered under professional misconduct?
According to Point 6 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he solicits clients or professional work, either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means.

If a PCS publishes the details of services offered by him, it would attract the provisions of this clause for it amount to soliciting of professional work.

Thus, such acts would be considered as professional misconduct.

7. Anurag Jain is a PCS. From the database of defaulted companies published on the portal of MCA, he picks few companies and send them a letter about the services he provides, and how he can help in removing the concerned defaults. Is this amount to soliciting of professional work using unethical means?
According to Point 6 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he solicits clients or professional work, either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means.

Therefore, sending letters to companies about the services provided by PCS would attract the provisions of this clause for it amount to soliciting of professional work.

Therefore, a PCS should avoid such practices. But a member may respond to tenders or enquires made to him personally by any company/organisation.

8. Anurag Jain is a PCS. On his professional website, he highlighted the words “Get your company registered within 2 days”. It is covered under professional misconduct?
According to Point 6 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he solicits clients or professional work, either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means.

Any circular, advertisement or communication, which creates an impression that certain professional work would be done much more expeditiously than is normally the case, would attract the provisions of this clause for it amount to soliciting of professional work using unethical means.

Showing supremacy and superiority in professional attainments will tantamount to solicitation of clients, indirectly.

Conclusion: Highlighting the words “Get your company registered within 2 days” on the professional website would amount to professional misconduct.

9. Anurag Jain is a PCS. On his professional website, he highlighted the words “Get your company pampered by a Specialist in the Field”. It is covered under professional misconduct?

Answer would be same as in case of Question No. 8 above

10. Anurag Jain is a PCS. On his business card, he highlighted the words “10 years experience in secretarial work”. It is covered under professional misconduct?

Answer would be same as in case of Question No. 8 above

11.Anurag Jain is a PCS. On the handbills, he highlighted the words “Get the best for the least”. It is covered under professional misconduct?

Answer would be same as in case of Question No. 8 above

12. Anurag Jain is a PCS. He is on the panel of Canara Bank but for last 1 year he did not get any work from the bank. He made a compliant to the bank about the same. It is covered under professional misconduct?
According to Point 6 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he solicits clients or professional work, either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means.

Writing to any institution/agency that though, he is in the panel, no work has been allotted to him amounts to solicitation of professional work.

Conclusion: Such act or conduct would of a PCS would amount to professional misconduct.

13. A Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he solicits clients or professional work, either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means. What are the exceptions?
According to Point 6 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he solicits clients or professional work, either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means.

But following cases are not covered in this clause:

  • publishing in the journal of the Institute or newspaper any change in the professional address;
  • sending New Year or any other seasonal greetings without narrating the list of services, professional attainments, supremacy or any kind of indication seeking clients.
  • editing/publishing any professional journal, newspaper and magazines;
  • Issuing advertisement in Chartered Secretary for opening branch or seeking partnership with other members.
  • Issuing advertisement or launching website within the frame work of guidelines issued by the council about advertisement by PCS.
  • Securing professional work from another PCS
  • Responding to tenders or enquires issued by various users of professional services and securing professional work as a consequence

14. Can a Company Secretary in Practice request for securing professional work from another Company Secretary in practice? Is this amount to solicitation of professional work?
According to Point 6 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he 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 any Company Secretary from applying or requesting for or inviting or securing professional work from another Company Secretary in practice.

Conclusion: A PCS can securing professional work from another PCS as it not amount to professional misconduct.

15.Anurag Jain, a PCS allows a company to carry in its prospectus that ‘Mr. Anurag Jain, a specialist in corporate laws is the adviser to the company’. Will this amount to professional misconduct?
According to Point 6 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he solicits clients or professional work, either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means.

Allowing a company to carry in its prospectus or other circular letters that ‘Mr. Anurag Jain a specialist in corporate laws is the adviser to the company’ would offend this clause.

Showing supremacy and superiority in professional attainments will tantamount to solicitation of clients, indirectly.

Conclusion: Such statement in the prospectus or other circular of any company would amount to professional misconduct.

16.Anurag Jain, a PCS was invited by a TV News Channel on a discussion on “New Era of Corporate Governance”. There, during the discussion, he indirectly highlighted his professional attainments and professional experience. Will this amount to professional misconduct?
According to Point 6 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he solicits clients or professional work, either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means.

According to the exceptions, appearance or participation in professional capacity in the AIR/TV or other forums is allowed only if the member does not highlight his services or his professional attainments or his expertise.

In the case given in the question, Mr. Anurag Jain indirectly highlighted his professional attainments and professional experience.

Conclusion: The act of Mr. Anurag Jain may amount to Professional Misconduct.

17.Anurag Jain is a PCS practicing in Delhi. He is a member of Google Group having many other PCS all over India. Mrs. Neetu Jain, director of a company located in Mumbai, inquired on the group about someone who can represent the company in MCA Office. Mr. Anurag Jain, with the intention of soliciting that work, responded to such enquiry along with his professional fee. Will this amount to professional misconduct?
According to Point 6 of Part 1 of First Schedule to Company Secretaries Act, 1980, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he 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 a member from responding to tenders or enquires issued by various users of professional services of an organisations from time to time and securing professional work as a consequence.

Conclusion: A member may respond to tenders or enquires issued by various users of professional services and securing professional work as a consequence; and this will not amount to professional misconduct.

18. A member in practice had described himself in visiting cards and letter heads as “Company Secretary & Advocate, High Court”. Is this amount to professional misconduct?
According to Clause (7) of Part I of the First Schedule, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he uses any designation or expressions other than Company Secretary on professional documents, visiting cards, letterheads or signboards.

The use of descriptions indicating membership of the ICAI, ICWAI and the Bar Councils is permitted provided members are not holding certificate of practice issued by the Institute or using the description ‘Company Secretary’.

Where a member in practice had described himself in visiting cards and letter heads as “Company Secretary & Advocate, High Court”, the Council held the member guilty of professional misconduct under this clause.

Conclusion:  Use of designation “Advocate, High Court” along with “Company Secretary” by a PCS is professional misconduct under this clause.

19. A member in practice had described himself in visiting cards and letter heads as “Company Law & Tax Consultant” instead of “Company Secretary”. Is this amount to professional misconduct?
According to Clause (7) of Part I of the First Schedule, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he uses any designation or expressions other than Company Secretary on professional documents, visiting cards, letterheads or signboards.

Designations like Company Law Consultant, Income Tax Consultant, Corporate Adviser, Investment Adviser, Management Consultant etc. are prohibited.

Conclusion: Use of designations “Company Law Consultant & Tax Consultant” instead of “Company Secretary” amount to professional misconduct.

20.Anurag Jain, wants to accept the position of practicing company secretary in Deep Gyan Ltd. Current Practicing Company Secretary of Deep Gyan Ltd. is Mrs. Neetu Jain (another PCS). Can Mr. Anurag Jain accept the position without taking the consent of Mrs. Neetu Jain?
According to Clause (8) of Part I of the First Schedule, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he accepts the position of a Company Secretary in Practice previously held by another Company Secretary in Practice without first communicating with him in writing.

It is expressly clarified that the communication mentioned in this clause does not mean that no-objection or consent of the previous incumbent is a prerequisite of accepting the said assignment.

Conclusion: Mr. Anurag Jain shall communicate the same to Mrs. Neetu Jain; but consent of Mrs. Neetu Jain is not required for accepting the position of PCS.

21. Rakesh, practising Company Secretary, has accepted the position of Secretarial Auditor previously held by another Company Secretary in practice by communicating through SMS. He also used designation ‘Company Law Consultant’ in his visiting cards. Examine with reference to the relevant provisions of Company Secretaries Act, 1980 and/or Companies Act, 2013 whether these are in order. (Dec 2018)
According to Clause (8) of Part I of the First Schedule, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he accepts the position of a Company Secretary in Practice previously held by another Company Secretary in Practice without first communicating with him in writing.

With the advent of use of the technology, communication using electronic medium viz., SMS, Whats App etc. is also permitted.

Conclusion: Before accepting the position of Secretarial Auditor, Rakesh must communicate the same to the previous PCS. Further, communication through SMS is valid communication in this regard.

According to Clause (7) of Part I of the First Schedule, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he uses any designation or expressions other than Company Secretary on professional documents, visiting cards, letterheads or signboards.

Designations like Company Law Consultant, Income Tax Consultant, Corporate Adviser, Investment Adviser, Management Consultant etc. are prohibited.

Conclusion: Rakesh should not use designation ‘Company Law Consultant’ in his visiting cards. It amounts to Professional Misconduct.

22. Anurag Jain, wants to accept the position of practicing company secretary in Deep Gyan Ltd. Current Practicing Company Secretary of Deep Gyan Ltd. is Mrs. Neetu Jain (another PCS). Before accepting the position, Mr. Anurag Jain communicated the same to Mrs. Neetu Jain orally. Is it the sufficient compliance of Clause 8 of Part 1 of First Schedule to Company Secretaries Act?
According to Clause (8) of Part I of the First Schedule, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he accepts the position of a Company Secretary in Practice previously held by another Company Secretary in Practice without first communicating with him in writing.

It is clearly stated in the clause that communication shall be in writing. It means oral communication cannot be considered as proper compliance of this clause.

Conclusion: Mr. Anurag Jain communicated to Mrs. Neetu Jain orally. It is not the sufficient compliance of Clause 8 of Part 1 of First Schedule.

23. In which of the following cases, it shall be mandatory for a PCS to send a prior written communication to the earlier incumbent:

  1. certifying e-forms for various companies.
  2. giving Due Diligence Certificate for consortium borrowers.
  3. holding assignment as retainer for a company or group of companies .
  4. issuing search reports.
  5. Issuing certificates as contemplated under SEBI (LODR) Regulation, 2015.
  6. Giving legal opinion
  7. Signing / Certification of Annual Return
  8. Issuance of Secretarial Audit Report in terms of Section 204 of the Companies Act, 2013
  9. Issuance of Certificate of Securities Transfers.
  10. Certificate of reconciliation of capital, updation of Register of Members, etc.
  11. Conduct of Internal Audit of Operations of the Depository Participants.
  12. Certification of corporate governance under SEBI (LODR) Regulation, 2015.

24. Anurag Jain is a PCS practicing in Delhi. Mrs. Neetu Jain, approaches him for his representation services in excise department w.r.t refund of excise duty. As fee for services, Mr. Anurag Jain quotes 40% of the total refund amount. Comment.
According to Clause (9) of Part I of the First Schedule, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he charges or offers to charge, accepts or offers to accept, in respect of any professional employment, fees which are based on percentage of profits or which are contingent upon the findings or results of such employment.

It means fee should be related to the expertise required and the time spent on a particular case without in any way linking the fee with the final results.

Conclusion: Mr. Anurag Jain cannot charge fee based on percentage of return; otherwise it would amount to professional misconduct.

25.Fee of a PCS should be more related to the expertise required and the time spent on a particular case without in any way linking the fee with the final results. Comment.
According to Clause (9) of Part I of the First Schedule, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he charges or offers to charge, accepts or offers to accept, in respect of any professional employment, fees which are based on percentage of profits or which are contingent upon the findings or results of such employment.

The fundamental is that the fee should be more related to the expertise required and the time spent on a particular case without in any way linking the fee with the final results.

26. Can a member holding certificate of practice engage himself in whole-time employment?
According to Clause (10) of Part I of the First Schedule, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he engages in any business or occupation other than the profession of Company Secretary unless permitted by the Council so to engage.

In a case, the Council held a member guilty of professional misconduct under this clause for engaging himself in employment while holding a certificate of practice from the Institute.

Conclusion: A person cannot engaging himself in employment while holding a certificate of practice from the Institute.

27. Can a person hold certificate of practice of both institute, ICSI & ICAI?
According to Clause (10) of Part I of the First Schedule, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he engages in any business or occupation other than the profession of Company Secretary unless permitted by the Council so to engage.

In a case, the Council held a member guilty of professional misconduct under this clause for holding the certificate of practice of both the Institutes, i.e., ICAI & ICSI without the permission of the Council and also practicing both the professions on whole-time bases simultaneously.

Conclusion: A person cannot hold certificate of practice of both institute, ICSI & ICAI simultaneously. It will amount to professional misconduct.

28. List out the vocations which Council has expressly permitted a PCS to take up without specific permission of Council.
The Council has expressly permitted a PCS to take up following vocations:

  • Acting as Private tutor.
  • Authoring Books and Articles.
  • Holding of Life Insurance Agency License for the limited purpose of getting renewal commission.
  • Holding of public elective offices such as M.P., M.L.A., M.L.C. and others.
  • Honorary office-bearership of charitable, educational or other non-commercial organisations.
  • Acting as Justice of Peace, Special Executive Magistrate and the like
  • Teaching assignment under the Coaching Organisation (so long as the hours during which a member in practice is so engaged in teaching do not exceed average 3 hours in a day).
  • carrying out valuation of papers, acting as a paper-setter, head examiner or a moderator, for any examination.
  • Acting as editor of professional journals

29.Can a PCS hold office of Managing Director or whole-time Director of a body corporate?
According to Clause (10) of Part I of the First Schedule, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he 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.

But a PCS may hold office of Managing Director or whole-time Director of a body corporate after obtaining the specific and prior approval of the Executive Committee of the Council.

30. Anurag Jain, a PCS, wants to hold position of non-executive director in Deep Gyan Ltd. Does it require prior permission of council?
According to Clause (10) of Part I of the First Schedule, a Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he 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.

Conclusion: Mr. Anurag Jain may hold the position of non-executive director in Deep Gyan Ltd.
This does not require any prior approval Executive Committee of the Council.

31. What are the four indicia of a contract of service?

The four indicia of a contract of service, namely: 

  • master’s power of selection of his servant;
  • payment of wages or other remuneration;
  • master’s right to control the method of doing the work; and
  • the master’s right of suspension or dismissal.

32. Anurag Jain is a member of ICSI. He is looking for a job as Company Secretary. Mrs. Neetu Jain promises him that she can help him in getting the desire job if he agrees to share 10% of his remuneration every month. Advise Mr. Anurag Jain whether he can share his remuneration or not.
According to Clause (1) of Part II of the First Schedule, a member of the Institute (other than member in practice) shall be deemed to be guilty of professional misconduct, if he, being an employee of any company, firm or person, pays or allows or agrees to pay, directly or indirectly, to any person any share in the emoluments of the employment undertaken by him.

A member in employment shall not share emoluments of the employment with any other person, not even a member. Both direct and indirect sharing of the emoluments is prohibited.

In the case given in question, Mr. Anurag Jain cannot share his remuneration with Mrs. Neetu Jain.

Conclusion: If Mr. Anurag Jain will share his remuneration, directly or indirectly, with Mrs. Neetu Jain, it will amount to professional misconduct.

33.A member of the Institute, whether in practice or not, shall be deemed to be guilty of other misconduct, if 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. Which of the following shall be considered as “disrepute”:

  • Sending an e-mail to number of members (e-groups ) criticizing the decisions of the Council in derogatory and filthy language.
  • Discussing through e forums failures of the Council/ president/ secretary by using derogatory and filthy language.
  • Writing letter(s) in an aggressive, loud and filthy language to the Ministry of Corporate Affairs, about working of ROC offices/ MCA site, inability to upload forms etc.
  • Arranging DHARANA/ agitations at the gates of the Govt. Offices/Institute’s offices in a manner not befitting a professional.
  • Instigating Students or other members by creating a pandemonium in or around Institute’s offices by raising issues pertaining to syllabus, training, examination or any other reason what so ever.
  • Misusing the confidential data available with the offices of the Institute for personal purposes.
  • Inviting Govt. Officers for Chapter’s / Regional Council’s Programs by spending heavily on their travel & stay arrangements, with an intention to get personal mileage.
  • Tampering with the Books of Accounts/ Minutes of the meetings of the Managing Committees of Chapter/ Regional Councils.

Questions related to Part I of the Second Schedule to the Act (Professional Misconducts in relation to PCS which require action by a Disciplinary Committee)

  1. Anurag Jain, a PCS, looks after the secretarial work of Deep Gyan Ltd. At a family function, he discloses to his friend that he is quite busy now-a-days because his client company Deep Gyan Ltd. is acquiring another leading company in the same field. On the basis of this information, his friend purchased the shares of Deep Gyan Ltd. in the anticipation of increase in share’s price of Deep Gyan Ltd. Is this amount to professional misconduct? Comment.
    According to Clause (1) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct if he discloses information acquired in the course of his professional engagement to any person other than the client so engaging him, without the consent of such client, or otherwise than as required by any law for the time being in force.

    In the case given in the question, though the intention of Mr. Anurag Jain is not mala fide, he still discloses undisclosed price sensitive information to his friend without the consent of his client. Further, such information is misused by his friend.

    Conclusion: Disclosure of such information to the friend amounts to professional misconduct.

2. Can a PCS retains the digital signature of his client along with the password for the administrative convenience of uploading the forms from the office of PCS? Comment.
According to Clause (1) of Part I of the Second Schedule, it is the duty of a PCS to protect the information and other assets of client which he acquires in the course of his professional engagement.

It is observed these days that PCS retains the digital signature of his client along with the password for the administrative convenience of uploading the forms from the office of PCS. It is suggested that in such a situation PCS should retain a formal letter signed by his client authorising PCS to make use of his Digital signature.

Conclusion: A PCS may retain digital signature of his client with proper care and authority.

3.Anurag Jain, a PCS, has signed compliance certificate of Deep Gyan Pvt. Ltd. without personally examined the concerned documents. Documents were inquired by his wife Neetu Jain, who is also a PCS. Is this amount to professional misconduct? Comment.
What will be your answer

  • If documents were examined by Mr. Prem, the employee of Mr. Anurag Jain
  • If documents were examined by Miss. Saanvi, a trainee under Mr. Anurag Jain
    According to Clause (2) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he, 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 any employee in his firm or by another Company Secretary in practice.

    In the case given in the question, documents were inquired by the wife of Mr. Anurag Jain, who is also a PCS. Thus, this will not amount to professional misconduct as Mrs. Neetu Jain is also a PCS.

    What if documents were examined by Mr. Prem, the employee of Mr. Anurag Jain
    According to Clause (2) of Part I of the Second Schedule, documents may be examined by employee of concerned PCS.

    What if documents were examined by Miss. Saanvi, a traninee under Mr. Anurag Jain
    According to Clause (2) of Part I of the Second Schedule, documents may be examined by employee of concerned PCS; but a trainee is not considered as employee for this purpose. Thus, if documents were examined by Miss. Saanvi and signed by Mr. Anurag Jain, it will amount to professional misconduct.

4.Anurag Jain, a PCS, allowed his client company Deep Gyan Pvt. Ltd. to use his name in connection with a report issued by the company on the estimated future earning, without knowing the accuracy of such report and without having confidence in such report. Is this amount to professional misconduct? Comment.
According to Clause (3) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he, 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.

In the case given in the question, Mr. Anurag Jain allowed his client company Deep Gyan Pvt. Ltd. to use his name in connection with a report without having confidence in such report. This amounts to professional misconduct.

5.Anurag Jain, a PCS, is a shareholder in Deep Gyan Pvt. Ltd. He holds 24% equity shares in the company. Company has issued a report on business risk management on which Mr. Anurag Jain has expressed his opinion in the favour of company. Is this amount to professional misconduct? Comment.
According to Clause (4) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he, expresses his opinion on any report or statement given to any business enterprise in which he, his firm or a partner in his firm has a substantial interest.

Here substantial interest means an interest to the extent of 25%.

In the case given in the question, Mr. Anurag Jain is holding 24% equity shares in the company. Thus, he is not having substantial interest in the company.

Conclusion: Mr. Anurag Jain can express his opinion on the report issued by company; and this will not amount to professional misconduct.

6. Ragini, a practicing company secretary expressed her opinion on a report given to a business firm called ‘‘Quick March Consultants’’. Ragini has an interest in the same to be extent of 12% of shares in the firm. Is she guilty of professional misconduct? (June 2019)
Same as given in question no . 5

7.Prospectus of a company is signed by Mr. Anurag Jain (PCS) in the professional capacity. There is a statement in the prospectus that company has continuous track record of dividend declaration since incorporation. The fact is that for last three years dividend was being declared from accumulated profits and not from current year’s profit. This fact is not stated in the prospectus. Is this amount to misleading statement in the prospectus? If yes, whether Mr. Anurag Jain is guilty of professional misconduct?
According to Clause (5) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he 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.

In the case given in the question, prospectus of a company signed by Mr. Anurag Jain (PCS) in the professional capacity contains incomplete information. The company has declared dividend since incorporation but for last three years dividend was being declared from accumulated profits and not from current year’s profit.

Conclusion: Incomplete information in the prospectus amounts to misleading statement; and Mr. Anurag Jain shall be deemed to be guilty of professional misconduct.

8. Anurag Jain, a PCS, looks after the secretarial work of Deep Gyan Ltd. There is a material misstatement in the annual returns of the company w.r.t share capital. Mr. Anurag Jain, knowing this fact, signed annual return as PCS without disclosing that misstatement. Is Mr. Anurag Jain guilty of professional misconduct?
According to Clause (5) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he 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.

In the case given in the question, annual returns of a company signed by Mr. Anurag Jain (PCS) in the professional capacity contains material misstatement w.r.t share capital. Such, material misstatement is known to him before signing the annual statement. It is the duty of PCS to disclose such misleading information. 

Conclusion: Mr. Anurag Jain shall be deemed to be guilty of professional misconduct.

9.What constitute “grossly negligent” in the conduct of professional duties by a PCS? Are purely clerical errors covered within the scope of “grossly negligent”?
According to Clause (7) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he does not exercise due diligence, or is grossly negligent in the conduct of his professional duties.

What constitutes gross negligence would depend upon the facts and circumstances of each case.

But purely clerical errors or an omission to give more details in any recommended course of action will not fall within the sweep of this clause.

It is the duty of a professional to bring to bear on the work he has to perform that skill, care and caution which a reasonably competent professional would use. What is reasonable skill, care and caution must depend on the particular circumstances of each case.

In NemiChand v. Commissioner, it was held that gross negligence imports high degree of careless conduct.

10. A PCS gives a certificate to a financial institution regarding necessary powers of a company and its directors to enter into an agreement without thoroughly verifying the Memorandum and Articles of Association of the Company. Is this amount to professional misconduct?
According to Clause (7) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he does not exercise due diligence, or is grossly negligent in the conduct of his professional duties.

It is the duty of a professional to bring to bear on the work he has to perform that skill, care and caution which a reasonably competent professional would use.

Therefore, giving a certificate to a financial institution without thoroughly verifying the Memorandum and Articles of Association of the Company (especially where powers of company is required to be checked) amounts to professional misconduct.

11.A PCS certifies copies of resolutions without checking the resolutions in the minutes books. Is this amount to professional misconduct?
According to Clause (7) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he does not exercise due diligence, or is grossly negligent in the conduct of his professional duties.

It is the duty of a professional to bring to bear on the work he has to perform that skill, care and caution which a reasonably competent professional would use.

Therefore, certifies copies of resolutions without checking the resolutions in the minutes books would amount to “not exercising due diligence”, and it is professional misconduct.

12.Whether signing of Annual Returns by a company secretary not in whole-time practice amount to professional misconduct? Comment.
According to Clause (7) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he does not exercise due diligence, or is grossly negligent in the conduct of his professional duties.

A Company Secretary who is not in wholetime practice under Companies Act, 2013, certifies Annual Return pursuant to section 92 of Companies Act, he would be guilty of being grossly negligent under this clause.

It is the duty of a professional to bring to bear on the work he has to perform that skill, care and caution which a reasonably competent professional would use.

Conclusion: Yes, it would amount to misconduct.

13. Anurag, a PCS issues a consumption certificate under the Import Export Regulations for instance, without obtaining all necessary information required for the purpose. Is Mr. Anurag Jain guilty of professional misconduct?
According to Clause (8) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he 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.

There are two limbs of this clause:

  • The first limb of this clause deals with the duty of a member in practice to obtain sufficient information to warrant expression of an opinion.
  • The second limb of this clause requires that any opinion expressed by a Company Secretary in Practice may be subject to certain exceptions.

    Conclusion: Issuing of a wrong consumption certificate under the Import Export Regulations for instance, without obtaining all necessary information required for the purpose, would get attracted to first limb of this clause; and thus amount to professional misconduct.

14.Making the expression of an opinion with certain minor exception, which are not important /material as to negate the very expression of opinion itself, does not amount to professional misconduct. Comment.
According to Clause (8) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he 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.
Thus, where the exceptions are sufficiently material, he should refrain from expressing an opinion.

But making the expression of an opinion with certain minor exception, which are not important /material as to negate the very expression of opinion itself, would not attract the provisions of this clause.

Conclusion: It may not amount to professional misconduct.

15. Is it the duty of PCS to advise his/her client about the generally accepted secretarial practices? What if a PCS fails to invite attention to any material departure from the generally accepted procedure relating to the secretarial practice?
According to Clause (9) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he fails to invite attention to any material departure from the generally accepted procedure relating to the secretarial practice.

It now ICSI has issued 3 secretarial standards. Out of these 3, 2 secretarial standards (SS-1 on Meetings of Board of Directors and SS-2 on General Meetings) are mandatory. They shall be complied by every company.

SS-3 (Secretarial Standard on Dividend) is non-mandatory but it is the duty of a PCS to advise his/her client about the adherence of same. This to stop diverse practice followed by different companies.

There certain widely accepted sound practices in regard to, say, share issue and transfers, share transmission, servicing of corporate securities, meetings procedure and other approvals, which are generally accepted as good secretarial practices.

16. Deep Gyan Pvt. Ltd. approaches to Mr. Anurag Jain, a PCS for increasing the authorised capital of the company. Mr. Anurag Jain quotes Rs. 5000 as his professional fee for his services. Client pays Rs. 10,000 as advance to Mr. Anurag Jain solely for the payment of statutory fee, and agrees to pay the professional fee of Mr. Anurag Jain after completion of the work.


When Mr. Anurag completes half of the work, a dispute arises between him and his client due to which client denies to continue with the services of Mr. Anurag, and requests him to refund the complete advance.
Mr. Anurag deducts Rs. 3000 as his professional fee for his services and pays back Rs. 7000. Can he do so? Comment.

According to Clause (10) of Part I of the Second Schedule, Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he 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.

The purpose of this clause is firstly to ensure that the client’s money is separately accounted for and secondly such money is specifically used only for the purpose for which it is paid by the client.

Advance received from clients for expenses like traveling, conveyance to be incurred by PCS need not be kept in a separate account, however advance received from a client for payment of Statutory / filing fees, Stamp duty to be paid by PCS on Client’s behalf , must be kept in a separate account.

If the decision to incorporate a company or increase in capital is postponed/ cancelled, PCS should promptly return such advance and should not adjust his fees from the amount so received for services rendered , if any, by him, unless such adjustment is authorised by the client.

Questions related to Part II of the Second Schedule to the Act (Professional Misconducts in relation to member (whether PCS or not) which require action by a Disciplinary Committee)

  1. ICSI Council has issued guidelines on various matters like display of particulars on website, issue of advertisement by PCS, use of own Logo by PCS etc. Is it mandatory to comply with these guidelines? What if any member does not follow these guidelines?
    According to Clause (1) of Part II of the Second Schedule, a member of the Institute whether in practice or not, shall be deemed to be guilty of professional misconduct, if he contravenes any of the provisions of this Act or the regulations made there under or any guidelines issued by the Council.

    Every member shall pay due obedience to the Act, the Regulations and Guidelines issued by the council from time to time.

    ICSI Council has issued many guidelines so far w.r.t display of particulars on website, issue of advertisement by PCS, use of own Logo by PCS etc. It is necessary for all the members to understand the guidelines and follow the same in spirit and letter.

2. A member of ICSI certifies annual return of a company without holding certificate of practice. Is he guilty of professional misconduct?
According to Clause (1) of Part II of the Second Schedule, a member of the Institute whether in practice or not, shall be deemed to be guilty of professional misconduct, if he contravenes any of the provisions of this Act or the regulations made there under or any guidelines issued by the Council.

The Council of the Institute, found a member guilty of professional misconduct under this clause for contravention of Section 6 of the Act as he certified an Annual Return of a company without holding a certificate of practice.

3. Anurag Jain is working in Deep Gyan Ltd. as a company secretary. Due to his position, he is in possession of price sensitive unpublished information of company. He shared the information with his small brother who is a trainee to a PCS. His brother shared that information with his boss, who used the information for his personal benefit.
Here the intention of Mr. Anurag or his brother is not mala fide; but unknowing they are passing confidential information to an outsider.

Is Mr. Anurag Jain guilty of professional misconduct?
According to Clause (2) of Part II of the Second Schedule, a member of the Institute whether in practice or not, shall be deemed to be guilty of professional misconduct, if he 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.

The employer and employee relationship is of trust and confidence. Confidential information is a valuable asset for any employer. Confidential information includes all non-public information that might be harmful or may have potential to cause harm to the employer, if disclosed.

Conclusion
: Mr. Anurag Jain is guilty of professional misconduct in the case given in the question.

4.Shalini, practising Company Secretary, has disclosed information acquired in the course of her professional engagement to a person other than the client, without the consent of such client. Can she do so? Can she retain the digital signature of her client for uploading e-forms on MCA portal? (Dec 2018)
According to Clause (2) of Part II of the Second Schedule, a member of the Institute whether in practice or not, shall be deemed to be guilty of professional misconduct, if he 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.

The employer and employee relationship is of trust and confidence. Confidential information is a valuable asset for any employer. Confidential information includes all non-public information that might be harmful or may have potential to cause harm to the employer, if disclosed.

Thus, Shalini can’t disclosed information acquired in the course of her professional engagement to a person other than the client, without the consent of such client.

Further, it is observed these days that PCS retains the digital signature of his client along with the password for the administrative convenience of uploading the forms from the office of PCS. It is suggested that in such a situation PCS should retain a formal letter signed by his client authorising PCS to make use of his Digital signature.
Shalini may retain digital signature of his client with proper care and authority.

Questions related to Part III of the Second Schedule to the Act (Other Professional Misconducts in relation to member (whether PCS or not) which require action by a Disciplinary Committee)

Mr. Anurag, a member of ICSI is held guilty by a civil court for an offence which is punishable with imprisonment for a term exceeding 6 months. Is he also guilty of misconduct under Company Secretaries Act, 1980?
According to Part III of the Second Schedule, a member of the Institute whether in practice or not, shall be deemed to be guilty of professional 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.

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