The Supreme Court on Wednesday sought response from the Centre on a plea against a notification which exempts public and private companies, having paid-up capital of less than Rs 10 crore, from appointing a full-time company secretary.
As per the notification, the government necessitated that every private company which has a paid-up share capital of Rs 10 crore or more shall have a whole-time company secretary. The plea has sought to declare as ultra-vires of the Constitution a notification issued by the Centre on January 3, 2020.
The plea, filed by advocate Shanshank Deo Sudhi said, “the consequence thereof, all the public and private companies having the paid-up capital of less than Rs 10 crore were totally exempted from the appointment of the whole-time company secretary.”
The plea sought a direction to the Centre to issue guidelines for a robust mechanism for enforcement of corporate governance, lack of which leads to a large number of companies being involved in financial shenanigans and misfeasance of the public money by the corporate fraudster which causes huge loss to the interests of the nation.
A bench comprising Chief Justice S A Bobde and justices A S Bopanna and V Ramasubramanian issued notice to the centre on a plea that has sought to form a high powered committee to look into the lapses which led to the closure of more than six lakh companies across the country.
The bench, further, sought to fix the corporate accountability and responsibility to the perpetrators who were responsible for the formation and operations of the fictitious and shell companies through which thousands of crores were manipulated to the detriment of the financial infrastructure of the country.