CODE OF CONDUCT

15TH NATIONAL CONFERENCE OF COMPANY SECRETARIES

27TH JUNE 2014MUMBAI

BY MAHESH ANANT ATHAVALEKANJ & ASSOCIATES

PUNE

OVERVIEW

The Company Secretaries Act, 1980:

Chapter V – Section 21 to 22E

First Schedule

Second Schedule

The Company Secretaries (Procedure of

Investigations of Professional and Other

Misconduct and Conduct of Cases) Rules, 2007

MISCONDUCT

AUTHORITIES

DISCIPLINARY DIRECTORATE

BOARD OF DISCIPLINE

DISCIPLINARY COMMITTEE

DISCIPLINARY DIRECTORATE

Council has constituted Disciplinary

Directorate (DD).

Complaint would be first received by DD

then he will form a prima facie opinion.

Depending on the Schedule which covers

the Misconduct, DD further places the

matter before Board of Discipline or

Disciplinary Committee.

Misconduct

Schedule I

Board of Discipline

Schedule II

Disciplinary Committee

WITHDRAWAL

The Complaint can be withdrawn subject to the permission of BOD

or DC

21A. BOARD OF DISCIPLINE

CONSTITUTION

Council of ICSI constitutes BOD:

Presiding Officer : Expert in

disciplinary

matters and profession

2 Members : 1 Elected Council

member

1 Officer of the Institute

DD functions as Secretary to the BOD

Summary procedure adopted by

BOD for disposal of matters

If found guilty, an Opportunity

of being heard given to the

member before making any

order.

PUNISHMENT

Reprimand

Removal from the Register

of members upto 3 months

Fine upto Rs. 1 Lakh

If DD is of the view that there is no

prima facie case in the complaint, he

will inform accordingly to the board.

If Board

Agrees - File closed

Disagrees - DD shall further

investigate

21B. DISCIPLINARY COMMITTEE

CONSTITUTION

Council constitutes DC consisting of:

President or VP of Council as

Presiding Officer

2 Council members

2 Eminent persons nominated

by Central Government

Present Disciplinary Committee

Presiding officer- Mr. R. Sridharan

Members - Mr. Sanjay Grover

Mr. Sudhir Babu C

Mr. S. Balasubramaniam

Mr. S. K. Tuteja

Council may constitute more

Disciplinary Committees

DC free to prescribe own

procedure

Before making any order,

Opportunity of being heard

given to the Member.

PUNISHMENT

Reprimand

Removal from the Register of

Members (Even Permanently)

Fine upto Rs. 5 Lakhs

POWERS OF CIVIL COURT

Certain powers of civil court can be

exercised by DD:

Summoning & Enforcing attendance

Examining on oath

Discovery & Production of Documents

Receiving evidence on Affidavit

Person ceasing to be a member of ICSI

is subject to code of conduct if alleged

misconduct is during the period of his

membership.

Misconduct could be professional as

well as other misconduct, which

includes any act of Omission or

Commission which travells beyond

Schedule I or Schedule II

APPELLATE AUTHORITY

Appellate Authority for CA and

CS is same.

Provisions of Chartered

Accountant Act, 1949 in

respect of appellate authority

are also relevant.

Section 22E provides for appeal to authority:

Any member aggrieved by order of BOD/DC

may within 90 days from communication of

order to him, prefer an appeal

DD (subject to authority from the Council)

may also file an appeal against decision of

BOD/ DC

Delay beyond 90 days can be condoned by

Appellate Authority

Appellate Authority may

Confirm Modify Order/ PenaltySet Aside

OR Remit the case back to BOD/

DC

Opportunity of being heard

given to the concerned parties

There is no provision for filing

appeal by the complainant if he

is a NON MEMBER

In such a scenario writ is the

only option

Members of DC/ BOD/DD are

deemed to be public servants

within the meaning of Section 21

of IPC

FIRST SCHEDULE

PART I- Misconduct in relation to PCS

Allowing a non-member to practice in

one’s name

Sharing fees with a non member

Accepting profits of a Professional work

of a person, who is a non-member

Entering into Partnership with a non-

member

Securing Professional assignment

through a person unless he is an

employee or a partner

Soliciting clients or professional work

directly or indirectly.

---Applying/ Requesting/ Inviting/

Securing work from other PCS permitted

---Replying to tenders or enquiries

permitted.

Advertising his attainment or services

or using designation other than CS

---Displaying degree of University or

membership of other professional

bodies, if approved by Council, is

permitted.

---Limited advertisement subject to

guidelines issue by Council permitted

Accepting position of PCS without

communicating with earlier incumbent in

writing.

Charging fees as a percentage of profit or

contingent on finding of result of the

assignment.

Engaging in any business/ occupation

other than profession of PCS

---Directorship in other companies is

permitted

Allowing a non partner to sign on one’s

behalf any certificate to be given as PCS.

PART II- Misconduct in relation to members in service

Sharing of Emoluments with any other

person

Accepting fees or profits from lawyers,

CS, brokers, agents or customers by

way of Commission or Gratification

PART III- Misconduct in respect of all Members

Describing oneself as fellow without

being FCS.

Not supplying information called by

Council/ Committee of the Council/ DD/

BOD/ DC/ QRB or Appellate Authority

Giving false information for procuring

assignment.

PART IV- Other Misconduct

If held guilty by any court for an

offence punishable with imprisonment

for a term upto 6 months

Bringing disrepute to the profession

or the institute due to his action

whether related to Professional work

or otherwise.

SECOND SCHEDULE

PART I- Misconduct in relation to PCS

Disclosing confidential information

of client to others

Issuing certificate or report without

examining the facts by himself or by

his partner or employee or other

PCS

Vouching accuracy of forecast or

future transaction

Expressing opinion in respect of an

enterprise in which he/ his partner has

substantial interest

Suppressing material fact in report or

certificate

Failing to report material misstatement

Not exercising due diligence or being

negligent in Professional duties

Failing to obtain sufficient information

before reporting or certifying.

Failing to bring out material

departure from acceptable procedure

relating to Secretarial practice.

Not keeping advances received from

client for expenses in separate bank

account.

PART II- General Misconduct

Contravening provisions of CS Act, 1980 or

regulations or guidelines issued by the Council.

Disclosing confidential information of a employee

to others

Including false information to Institute, Council,

Committee of Council, DD, BOD, DC, QRB or

Appellate authority.

Embezzling money received in Professional

capacity

PART III- Others

If held guilty by the court for an

offence punishable with an

imprisonment for a term

exceeding six months.

The Company Secretaries (Procedure of Investigations of

Professional and Other Misconduct and Conduct of

Cases) Rules, 2007

SUMMARY OF RULES

Complaint is to filed in Form I in

triplicate before DD

If complainant is a company, Board

Resolution is necessary

Prescribed fee (non-refundable) of

Rs. 2500/- to be paid

Fee to be paid by Demand Draft in

favour of ICSI

Unique reference number given by DD

if complaint found to be in order

A fresh complaint may be clubbed with

the previous complaint on the same

matter against the same member

Complainant has right to rectify the

defects in complaint & resubmit the

same. Such rectification to be done

within given time

Council has authority to take action

suo moto on receipt of any

information about misconduct.

Any anonymous information

received by DD is not to be

entertained.

Within 60 days of receipt of

complaint a copy of complaint has

to be forwarded to PCS or Member

Written statement to be filed

within 21 days by the defendant

Rejoinder to be filed within 21

days by the Complainant.

Every communication from DD/

BOD/DC has to be done by RPAD

In case addressee refuses to receive it

is deemed to have been served on

addressee

Under rule 12 complaint has to be filed

within 7 years from alleged misconduct

Principle of natural justice required to

be followed

DHANYAWAAD