Contractual Liabilities of Company Secretary

Contractual Liabilities of Company Secretary

Contractual liabilities of Company Secretary

Though a 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 provide the framework of certain liabilities for the company secretary. According to the agreement signed between the company and the secretary different types of liabilities imposed on the secretary.

Contractual liabilities: The company secretary is the employee of the company. Being an employee, he has to enter into a service contract with the company. Therefore, the company secretary has some liabilities arising out of 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 determining carelessness, or misbehavior or fraud committed within the course of his employment. He must not do anything beyond his authority if he does he will be personally liable for the loss. He/She must maintain the rules and procedures of the Memorandum of Association and Articles of Association, Act.

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

  • Abide by all terms and conditions of the service contract and follow the order instructions and act as per authorization of the board of directors;
  • Complying with the conditions of his service contract, they are accountable to the Board of Directors for duties
  • Acting according to the orders of the directors, and perform duties with due care and skills, not to do anything beyond his/her capacity;
  • Discharging the duties with reasonable care, precautions, and skills. Not to show any kind of negligence in performing the responsibility;
  • Maintaining the secrecy of company affairs;
  • Not to make an’ secret profit by using his position; he is under the obligation to not disclose any secret information about the company to outsiders.
  • Not to act anything beyond his authority, and never act beyond his authority and not to make any secret profit through any illegal activity.
  • Protect the interest of the company and obeying the terms and conditions of the service.

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. If the Company Secretary commits any fraud, he must indemnify to the company for any loss that occurred. However, he is not responsible for fraud committed by his subordinates unless his involvement is proved.

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