Sebi urged to use CS' to audit intermediaries

The Institute of Company Secretaries of India (ICSI) has urged the Securities and Exchange Board of India (Sebi) to utilise the services of company secretaries for auditing the works of securities and market intermediaries like stock brokers, share transfer agents and merchant bankers.

ICSI president Mahesh Anant Athawale told Business Standard here on Friday that ICSI had submitted a report to Sebi on how company secretaries could be used as extended employees of the market regulator for the securities and market intermediaries audit.

Sebi, which lacks expertise and large-scale human resources needed for the purpose, can utilise the services of company secretaries to carry out the audit periodically, at least twice a year, he said and added that ICSI was expecting a favourable response from the Sebi to its plea.

Athawale said that in the changing scenario of market regulations in the country ICSI was actively looking at ways to broaden the scope of functions of company secretaries. ICSI is at present examining modalities for their foray into new areas like excise, customs, service tax and Fema (Foreign Exchange Management Act).

He also said that the services of company secretaries could act as facilitators of e-filing of various forms to be submitted by companies to registrars of companies. From January 2005, the physical submission of all forms by the companies in the country would be dispersed with and only electronic or online filing would be allowed with digital signatures, he said.

He saw considerable scope of outsourcing such jobs to the company secretaries. He said ICSI had also explained in a report to the government how the company secretaries, numbering around 17,000, could help easy transition to e-filing regime.

The ICSI president said that convergence of professionals like advocates, company secretaries, chartered accountants and cost accountants was taking place in the country.

The proposed National Company Law Tribunal (NCLT) which was likely to be entrusted with winding up, revival or rehabilitation of sick companies would bring about this change. These professionals from different backgrounds could come together to set up consultancies and take up the job of official liquidator.

At present, winding up of companies could take place only after receiving the consent of high courts. NCLT was likely to be set up in the latter half of the current year, he said. NCLT is expected to act as the single nodal agency to deal with all the matters of companies registered under the companies act.

NK Jain, the secretary of ICSI, said the institute had prepared a report on how corporate governance could be effectively implemented in the country and the relavence of company secretaries in ensuring the same.

He said Sebi was currently awaiting the report of the committee on corporate governance headed by NR Narayana Murthy. After examining their recommendations, Sebi would take up the report of ICSI. The institute has designed a course for independent directors and is seeking the government's permission to launch it.

Earlier addressing media persons, Athawale said there would not be any adverse impact of the direct entry of multinational consultancy firms in second quarter of 2005. Instead, the Indian company secretaries could look forward to taking up consultancy works in the developing countries in South America and Africa.

The company secretaries are at present recognised only in the Commonwealth and the South Asian Association for Regional Cooperation (Saarc) countries.

Recognising the need for international co-operation among all the institutes of company secretaries, ICSI was mooting an international federation of company secretaries institutes (IFCSI) for developing and promoting the profession of company secretaries internationally. An international convention of these institutes would be held in the country in July to chalk out the course of action, Athawale said.