Rights and Duties of a Company Secretary under the Companies Act, 2063 — A Critical Comment

1. Who is a Company Secretary?

Section 2(1)(j) of the Companies Act, 2063 defines a company secretary as a person appointed under Section 79(1) who possesses the prescribed qualifications. Section 79(1) requires every public company to appoint a company secretary, while a private company may appoint one voluntarily. The Act thus makes the office mandatory only for public companies — a significant limitation, since private companies, however large, are not legally bound to have a professional secretary. Qualifications are left to be "prescribed" by rules, which were later provided under the Company Secretary Rules, 2065.

2. Rights (Powers) of the Company Secretary

The Act does not confer "rights" in a separate chapter; they are drawn from the duties, functions and liabilities assigned to the office, primarily under Section 80:

1. Right to be appointed and to hold office — Section 79(1) gives a qualified person the right to be appointed as secretary of a public company. The appointment is made by the Board of Directors (Section 79(2)) and must be reported to the Office of the Company Registrar within 15 days (Section 79(3)).
2. Right to sign and authenticate documents — Under Section 80(2), the secretary must sign the annual report and other documents prescribed. The secretary authenticates the company's statutory records and signs documents as required by the Act.
3. Right to participate in Board and general meetings — The secretary is entitled to attend Board meetings and general meetings to record proceedings and give advice on compliance matters.
4. Right to access company records — Since the secretary is responsible for maintaining the statutory books (register of members, register of debenture holders, minute books, etc.), the office carries the right of access to all such records and to information from directors and officers.
5. Right to remuneration — The secretary is entitled to the remuneration determined by the Board or as provided in the articles.
6. Right to be indemnified — Where the secretary acts in good faith within the scope of authority, the company may indemnify him against liabilities, though the Act does not expressly provide this; it is inferred from general company law principles.

3. Duties of the Company Secretary

The duties are both statutory (mainly under Section 80) and general:

A. Statutory duties (Section 80 and related provisions)

1. Maintenance of statutory registers and records — Section 80 requires the secretary to keep the register of members, register of debenture holders, register of directors and their shareholdings, minute books of Board and general meetings, and other prescribed records.
2. Filing and reporting — The secretary must file the annual report (Sections 80 and 81), the notice of appointment (Section 79(3)), and other returns with the Office of the Company Registrar within the prescribed time.
3. Convening meetings — The secretary issues notices of general meetings (Sections 82–100), prepares the agenda, records minutes, and ensures the meeting is conducted as per the Act and the articles.
4. Compliance with the Act — Section 80 requires the secretary to ensure that the company complies with all provisions of the Companies Act, 2063 and other applicable laws, and to inform the Board of any violation.
5. Assistance in audit — The secretary must provide the auditor with all books, accounts and information required under Section 109 (books of account) and related provisions.
6. Signature on documents — The secretary signs the annual report and other documents as required by Section 80(2).

B. General duties

1. To act as the chief administrative officer of the company.
2. To advise the Board on legal and procedural matters.
3. To maintain the company seal and affix it on documents as authorised.
4. To communicate with shareholders, the Registrar, and regulatory bodies.
5. To act in good faith and in the best interest of the company.

4. Critical Comment

(a) Strengths of the legal framework

• The Act gives the secretary a statutory status in public companies, making the office a compliance watchdog rather than a mere clerical post.
• The requirement to sign the annual report (Section 80(2)) and to file returns imposes personal accountability, which strengthens corporate governance.
• The secretary acts as a bridge between the Board, shareholders and the Registrar, ensuring transparency.

(b) Weaknesses and criticisms

1. No exclusive rights chapter — The Act nowhere lists the "rights" of the secretary expressly. Rights are only inferred from duties. This creates legal uncertainty and weakens the bargaining position of the secretary.
2. Mandatory only for public companies — Section 79(1) exempts private companies. In Nepal, most companies are private; hence the office remains underutilised and the profession underdeveloped.
3. Qualification not specified in the Act — The Act leaves qualifications to be "prescribed" by rules. This has led to ambiguity and inconsistent standards.
4. No independent authority — The secretary must act under the direction of the Board. If directors themselves violate the Act, the secretary has no independent power to stop them; he can only report or resign.
5. Weak enforcement of duties — Penalties under the Act for non-compliance are modest (mostly fines), so the deterrent effect is limited.
6. Overlap with other officers — The Act does not clearly demarcate the secretary's role from that of the auditor, legal advisor or chief executive, leading to duplication and confusion.
7. No express provision for indemnity — Unlike the UK Companies Act, the Nepali Act does not expressly provide for indemnification of the secretary, exposing him to personal liability for good-faith acts.

5. Conclusion

The Companies Act, 2063 has elevated the company secretary to a statutory office in public companies and imposed significant compliance duties, which is a positive step for corporate governance in Nepal. However, the Act suffers from definitional gaps, absence of express rights, limited coverage of private companies, and weak enforcement. For the office to be truly effective, the Act should expressly enumerate the secretary's rights, prescribe clear qualifications, extend the requirement to large private companies, and provide for indemnity and stronger penalties. Only then will the company secretary function as an independent compliance officer rather than a subordinate clerk.