Contractual Liabilities of Company Secretary - QS Study
QS Study

Contractual liabilities of Company Secretary

Though company secretary is entitled to enjoy some rights and powers as laid down in the Companies Act, his position is not free from liabilities. Companies Act and other laws related to company management provides the framework of certain liabilities for company secretary.

Contractual liabilities: Company secretary is the employee of the company. Being an employee, he has to enter into a service contract with the company. Therefore, company secretary has some liabilities arising out from his service contract. A company secretary has also definite liabilities arising out of his agreement of service with the company. But he will be held personally liable to make good the loss to the company for determined carelessness, or misbehavior or fraud committed within the course of his employment.

The major contractual liabilities of the company secretary are as follows:

  • Complying with the conditions of his service contract;
  • Acting according to the orders of the directors;
  • Discharging the duties with reasonable care, precautions and skills;
  • Maintaining the secrecy of company affairs;
  • Not to make an’ secret profit by using his position;
  • Not to act anything beyond his authority.

He also becomes individually accountable if he acts beyond his authority, for any loss suffered by the business or any third party on account of his action. However, he is not responsible for fraud committed by his subordinates unless his involvement is proved.