ICSI proposes rule change for companies over ₹50 crore borrowing

• ICSI has proposed mandatory appointment of a Whole-time Company Secretary for companies with borrowings above ₹50 crore.
• The move aims to mitigate governance risks associated with high levels of borrowing.
• The proposal is in line with efforts to strengthen corporate governance and ensure compliance with regulatory requirements.

The ICSI's proposal is significant, as it aligns with the MCA's ongoing review of company law amendments to enhance corporate governance standards.

The Institute of Company Secretaries of India (ICSI) has submitted a proposal to the Ministry of Corporate Affairs (MCA) to make it mandatory for companies with borrowings exceeding ₹50 crore to appoint a Whole-time Company Secretary. This move aims to mitigate governance risks associated with high levels of borrowing. The ICSI's proposal is in line with its efforts to strengthen corporate governance and ensure compliance with regulatory requirements.

The MCA has been actively reviewing company law amendments to enhance corporate governance standards. In this context, the ICSI's proposal for mandatory appointment of a Whole-time Company Secretary is significant. The proposed amendment would likely be introduced under Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. This rule governs the appointment of managerial personnel in companies, including company secretaries.

The potential introduction of this rule change could have significant implications for companies with substantial borrowings. Lawyers advising such clients should be aware of the proposed amendment and its potential impact on their clients' governance structures. The mandatory appointment of a Whole-time Company Secretary would require companies to reassess their existing arrangements and potentially incur additional costs. This development highlights the ongoing efforts to strengthen corporate governance in India, particularly for companies with high levels of borrowing.

Lawyers should watch for potential changes to Indian company law, which could impact clients with significant borrowings and require them to appoint a whole-time Company Secretary.

Source: Original reporting via SCC Times