COMPANY SECRETARIES HAVE TO BE CAREFUL WHILE CERTIFYING FORMS ELSE HE IS LIKELY TO BE PUNISHED FOR NEGLIGENCE. Company Secretary cannot be punished for Misconduct for Mere Negligence in filing Form-32:

COMPANY SECRETARIES HAVE TO BE CAREFUL WHILE CERTIFYING FORMS  ELSE HE IS LIKELY TO BE PUNISHED FOR NEGLIGENCE.

Company Secretary cannot be punished for Misconduct for Mere Negligence in filing Form-32:

PROFESSIONAL MISCONDUCT

While quashing an order by the Disciplinary Committee of the Institute of Company Secretaries of India (ICSI), the Appellate Authority held that no professional misconduct can be alleged against a Company Secretary for mere negligence in filing Form-32.

CERTIFICATION AS REGARDS TO APPOINTMENT AS A ADDITIONAL DIRECTOR

The Appellant was practicing as a Company Secretary for M/s. Khosla Steel Industries Private Ltd. the allegation against the appellant was that in a Form-32, signed by Mr. Kishor Khosla, a Director of the Company and verified by the Appellant, wherein, the appointment of one Mr. Bishendra Singh was shown as a Director under the category of ‘Promoter’ and not as Additional Director.

NOT EXERCISING DUE DILIGENCE

A complaint was lodged against the appellant on the ground that while working as Company Secretary for the company, he did not exercise due diligence in verifying and certifying Form-32 on certain occasions.

GUILTY OF PROFESSIONAL MISCONDUCT

The Appellate Authority noted that the Disciplinary Committee after the remand of the matter has gone through the entire controversy in detail, given cogent reasons in holding that the Appellant was Guilty of Professional Misconduct under item (7) of Part-I of the Second Schedule of the Act in as much as he did not exercise due diligence while certifying the two Forms-32 on both the occasions and as such he was grossly negligent in the conduct of his professional duties.

FINDINGS BY APPELATTE AUTHORITY

Diving deeply into the facts of the case, the AA found that it is not a case where the professional i.e. the Appellant was expected to act as an investigator. “What was required for him was to only see the contents of the resolution passed and relied upon in support of Form-32 himself and in case, it was shown to him in minute books, than he should have been very categorical as to who was in possession of minute books shown to him containing the resolutions in question. However, in this regard, no assistance has been provided to us,” the AA said.

COURTESY : TAX SCAN