1. FOR COMPANY SECRETARIES DISCIPLINARY MECHANISM
CODE OF CONDUCT
&
PROFESSIONAL ETHICS
FOR COMPANY SECRETARIES
AND
DISCIPLINARY MECHANISM

3. CODE OF CONDUCT
The fundamental principles governing the conduct of a professional:
integrity;
professional independence;
professional competence;
objectivity;
ethical behavior;
conformance to technical standards, if any, prescribed; and
confidentiality of information acquired in the course of professional work.

4. ETHICS CANNOT BE TAUGHT AND BOUGHT
IT COMES FROM WITHIN
Professional ethics concerns one's conduct of behavior and practice when carrying out professional work

6. The Company Secretaries Act, 1980
An Act to make provisions for the regulation and development of the profession of the Company Secretaries.

7. Structure of Disciplinary Mechanism under the Company Secretaries Act, 1980
Disciplinary Directorate (Sec 21)
Board of Discipline (Sec 21A)
Disciplinary Committee (Sec 21B)
Appellate Authority(Sec 22A)

8. Professional or Other Misconduct
Section 22 of the Company Secretaries Act, 1980 states that professional or other misconduct shall be deemed to include any act or omission specified in any of the Schedules to the Act.
It also provides that nothing shall be construed to limit or abridge in any way the power conferred or duty cast on the Director (Discipline) to enquire into the conduct of any member under any other circumstances.

9. The First and the Second Schedule to the Company Secretaries Act, contains instances of professional misconduct and other misconduct.

10. PROFESSIONAL MISCONDUCT
Professional misconduct in relation to members is broadly structured in relation to-
Members in Practice
Members in Service
Members generally

11. Disciplinary Directorate
The Disciplinary Directorate established under section 21 of the Act, makes the investigations in respect of any information or complaint received by it, along with prescribed fee against a member and form prima-facie opinion on the occurrence of the alleged misconduct.

12. Board of Discipline
The Board of Discipline constituted under section 21A of the Act deals with matters of professional or other misconduct given in the First Schedule. It can award any one or more of the following punishment, if the Company Secretary is found to be Guilty. (a) Reprimand the member; (b) Remove the name of the member from the Register up to a period of three months; (c) Impose such fine as it may think fit ,which may extend to rupees one lakh.

13. Disciplinary Committee
The Disciplinary Committee constituted under section 21B of the Act deals with matters of professional or other misconduct given in the Second Schedule or both the Schedules. It can award any one or more of the following punishment, if the Company Secretary is found to be Guilty. (a) Reprimand the member; (b) Remove the name of the member from the Register permanently or for such period, as it thinks fit; (c) Impose such fine as it may think fit, which may extend to rupees five lakhs.

14. Appellate Authority
The Appellate Authority constituted under Section 22A of the Chartered Accountants Act, It comprises - (a) Chairperson - a retired Judge of High Court or a person eligible to be appointed as Judge of the High Court. (b) Two part time members to be nominated by Central Government. (c) Two members to be appointed by Central Government.

15. Powers of the Appellate Authority
The Appellate Authority can pass any one of the following orders under section 22E of the Act- (a) Confirm, modify or set aside the order of the Board of Discipline or Disciplinary Committee; (b) Impose any penalty or set aside, reduce, or enhance the penalty imposed by the order; (c) Remit the case to Board of Discipline or Disciplinary Committee for such further enquiry as the Authority considers proper in the circumstances of the case; or (d) Pass such other order as the authority thinks fit.

16. Appellate Authority, Disciplinary Committee, Board of Discipline and Director (Discipline) to have powers of Civil Court. (Sec 21C)
For the purposes of an inquiry under the provisions of this Act, the Authority, the Disciplinary Committee, Board of Discipline and the Director (Discipline) shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, in respect of the following matters, namely:— (a) summoning and enforcing the attendance of any person and examining him on oath; (b) the discovery and production of any document; and (c) receiving evidence on affidavit.

17. The Company Secretaries (Procedure of Investigations of Professional and other Misconduct and Conduct of Cases) Rules, 2007.
These Rules have been issued by the Central Government and provides the procedures of investigation related to information and complaints of professional or other misconduct against the members of the Institute.  

19. THE FIRST SCHEDULE
PART I Professional misconduct in relation to Company Secretaries in Practice (11 clauses )
PART II Professional misconduct in relation to members of the Institute in service (2 clauses)
PART III Professional misconduct in relation to members of the Institute generally (3 clauses )
PART IV Other misconduct in relation to members of the Institute generally (2 clauses)

20. Allows any person to practice
A Company Secretary in Practice shall be deemed to be guilty of professional misconduct under Part I of the First Schedule, if he-
Allows any person to practice
in his name
(1) allows any person to practice in his name as a Company Secretary unless such person is also a Company Secretary in practice and is in partnership with or employed by him;

21. SHARING OF HIS FEES OR PROFITS
(2) pays or allows or agrees to pay or allow, directly or indirectly, any share, commission or brokerage in the fees or profits of his professional business, to any person other than a member of the Institute or a partner or a retired partner or the legal representative of a deceased partner, or a member of any other professional body or with such other persons having such qualifications as may be prescribed for the purpose of rendering such professional services from time to time in or outside India.
  Explanation. – In this item, “partner” includes a person residing outside India with whom a Company Secretary in practice has entered into partnership which is not in contravention of item (4) of this Part;

22. ACCEPTS PROFITS OF OTHER PERSON
(3) accepts or agrees to accept any part of the profits of the professional work of a person who is not a member of the Institute:
Provided that nothing herein contained shall be construed as prohibiting a member from entering into profit sharing or other similar arrangements, including receiving any share commission or brokerage in the fees, with a member of such professional body or other person having qualifications, as is referred to in item (2) of this part;

23. Partnership with any person other than a CS
(4) enters into partnership, in or outside India, with any person other than a Company Secretary in practice or such other person who is a member of any other professional body having such qualifications as may be prescribed, including a resident who but for his residence abroad would be entitled to be registered as a member under clause (e) of sub-section (1) of section 4 or whose qualifications are recognized by the Central Government or the Council for the purpose of permitting such partnerships;

24. Secures Professional work by means not open to a CS
(5) secures, either through the services of a person who is not an employee of such company secretary or who is not his partner or by means which are not open to a Company Secretary, any professional business:
Provided that nothing herein contained shall be construed as prohibiting any arrangement permitted in terms of items (2), (3) and (4) of this Part;

25. Soliciting clients or professional work
(6) solicits clients or professional work, either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means:
Provided that nothing herein contained shall be construed as preventing or prohibiting–
(i) any company secretary from applying or requesting for or inviting or securing professional work from another company secretary in practice; or
(ii) a member from responding to tenders or enquiries issued by various users of professional services or organizations from time to time and securing professional work as a consequence;

26. Advertisement of professional attainments/services or Use of any designation other than Company Secretary
(7) advertises his professional attainments or services, or uses any designation or expressions other than Company Secretary on professional documents, visiting cards, letterheads or sign boards, unless it be a degree of a University established by law in India or recognized by the Central Government or a title indicating membership of the Institute of Company Secretaries of India or of any other institution that has been recognized by the Central Government or may be recognized by the Council:
Provided that a member in practice may advertise through a write up setting out the services provided by him or his firm and particulars of his firm subject to such guidelines as may be issued by the Council;

27. Advertisement by PCS
The Council of the Institute has framed the Guidelines pertaining to the Advertisement by a PCS which shall be strictly adhered to.

28. Accepting position of Company Secretary in Practice without prior communication with the previous incumbent in writing
(8) accepts a position as a Company Secretary in practice previously held by another Company Secretary in practice without first communicating with him in writing;

29. Consent not required
It is expressly clarified that the communication mentioned in this clause does not mean that no-objection or consent of the previous incumbent is prerequisite of accepting the said assignment.

30. Communication by Registered Post is desirable
It is desirable that the communication, in order to be effective, shall be by a registered post with acknowledgement so that there is positive evidence of the communication having been complete.

31. Effective Communication
The Rajasthan High Court in J. S. Bhati vs. ICAI had observed that mere obtaining a certificate of posting does not fulfill the requirement of clause 8 as the certificate of posting cannot be taken as a positive evidence of its delivery to the addressee.

32. Charging fees based on percentage or findings
(9) charges or offers to charge, accepts or offers to accept, in respect of any professional employment, fees which are based on a percentage of profits or which are contingent upon the findings, or result of such employment, except as permitted under any regulation made under this Act;

33. Engagement in other business or occupations
(10) engages in any business or occupation other than the profession of Company Secretary unless permitted by the Council so to engage:
Provided that nothing contained herein shall disentitle a Company Secretary from being a director of a company except as provided in the Companies Act, 1956;

34. Allows signing on his behalf by any other person
(11) allows a person not being a member of the Institute in practice, or a member not being his partner to sign on his behalf or on behalf of his firm, anything which he is required to certify as a Company Secretary, or any other statements relating thereto.

35. A Company Secretary in Service shall be deemed to be guilty of professional misconduct under Part II of the First Schedule, if he-
Sharing of Emoluments to any person (1) pays or allows or agrees to pay, directly or indirectly, to any person any share in the emoluments of the employment undertaken by him; Acceptance of part of fees etc. (2) accepts or agrees to accept any part of fees, profits or gains from a lawyer, a Company Secretary or broker engaged by such company, firm or person or agent or customer of such company, firm or person by way of commission or gratification.

36. A Company Secretary shall be deemed to be guilty of professional misconduct generally under Part III of the First Schedule, if he-
(1) not being a Fellow of the Institute, acts as a Fellow of the Institute;
(2) does not supply the information called for, or does not comply with the requirements asked for, by the Institute, Council or any of its Committees, Director (Discipline), Board of Discipline, Disciplinary Committee, Quality Review Board or the Appellate Authority;
(3) while inviting professional work from another Company Secretary or while responding to tenders or enquiries or while advertising through a write up, or anything as provided for in items (6) and (7) of Part I of this Schedule, gives information knowing it to be false.

37. A Company Secretary shall be deemed to be guilty of other misconduct generally under Part IV of the First Schedule, if he-
(1) he is held guilty by any civil or criminal court for an offence which is punishable with imprisonment for a term not exceeding six months; (2) in the opinion of the Council, he brings disrepute to the profession or the institute as a result of his action whether or not related to his professional work.

38. THE SECOND SCHEDULE
PART I Professional misconduct in relation to Company Secretaries in Practice (10 clauses )
PART II Professional misconduct in relation to members of the Institute generally (4 clauses )
PART III Other misconduct in relation to members of the Institute generally

39. Discloses information related to client to any other person
A Company Secretary in Practice shall be deemed to be guilty of professional misconduct under Part I of the Second Schedule, if he-
Discloses information related to client to any other person
(1) discloses information acquired in the course of his professional engagement to any person other than his client so engaging him, without the consent of his client, or otherwise than as required by any law for the time being in force;

40. Without examination
(2) certifies or submits in his name, or in the name of his firm, a report of an examination of the matters relating to company secretarial practice and related statements unless the examination of such statements has been made by him or by a partner or an employee in his firm or by another Company Secretary in practice;

41. Vouching for accuracy of forecast
(3) permits his name or the name of his firm to be used in connection with any report or statement contingent upon future transactions in a manner which may lead to the belief that he vouches for the accuracy of the forecast;

42. Opinion for business or enterprises in case of substantial interest
(4) expresses his opinion on any report or statement given to any business or enterprise in which he, his firm, or a partner in his firm has a substantial interest;

43. Fails to Disclose material fact known
(5) fails to disclose a material fact known to him in his report or statement but the disclosure of which is necessary in making such report or statement, where he is concerned with such report or statement in a professional capacity;

44. Fails to report a material mis-statement known
(6) fails to report a material mis-statement known to him and with which he is concerned in a professional capacity;

45. Fails to Exercise due diligence
(7) does not exercise due diligence, or is grossly negligent in the conduct of his professional duties;

46. Fails to obtain sufficient information
(8) fails to obtain sufficient information which is necessary for expression of an opinion or its exceptions are sufficiently material to negate the expression of an opinion;

47. Fails to invite attention to any material departure
(9) fails to invite attention to any material departure from the generally accepted procedure relating to the secretarial practice;

48. Money of Client to be kept in separate bank a/c
(10) fails to keep moneys of his client other than fees or remuneration or money meant to be expended in a separate banking account or to use such moneys for purposes for which they are intended within a reasonable time.

49. Contravention of Act/ Regulations/ Guidelines
A Company Secretary shall be deemed to be guilty of professional misconduct generally under Part II of the Second Schedule, if he-
Contravention of Act/ Regulations/ Guidelines
(1) contravenes any of the provisions of this Act or the regulations made thereunder or any guidelines issued by the Council;

50. Discloses confidential information acquired during employment
(2) being an employee of any company, firm or person, discloses confidential information acquired in the course of his employment, except as and when required by any law for the time being in force or except as permitted by the employer;

51. Submission of False Particulars to the Institute, Council etc.
(3) includes in any information, statement, return or form to be submitted to the Institute, Council or any of its Committees, Director (Discipline), Board of Discipline, Disciplinary Committee, Quality Review Board or the Appellate Authority any particulars knowing them to be false;

52. Defalcates/embezzles moneys
(4) defalcates or embezzles moneys received in his professional capacity.

53. OTHER MISCONDUCT IN RELATION TO MEMBERS OF THE INSTITUTE GENERALLY UNDER PART III OF THE SECOND SCHEDULE
A member of the Institute, whether in practice or not, shall be deemed to be guilty of other misconduct, if he is held guilty by any civil or criminal court for an offence which is punishable with imprisonment for a term exceeding six months.

54. Regulation 164 of CS Regulations, 1982
Branch Office - Every Company Secretary in practice or a firm or such Company Secretaries maintaining more than one office shall intimate the list of the offices and the persons in charge thereof.
Any change will also be intimated within one month of such change.
Regulation 164 of CS Regulations, 1982
Offices not in-charge of Members - Every office of the Company Secretary in Practice or a firm of such Company Secretaries will be in the separate charge of a member.

55. Regulation 165 of CS Regulations, 1982
Particulars of offices and firms - Every Company Secretary in practice and every firm of such Company Secretaries shall submit the particulars of the office and firms to the Institute within 30 days.
Any change in the particulars submitted should also be reported to the Institute within 30 days.

56. Regulation 168 of CS Regulations, 1982
Company Secretaries in practice not to engage in any other business or occupation - A Company Secretary in practice shall not engage in any business or occupation other than the profession of Company Secretary unless it is permitted by a general or specific resolution of the Council. Exception A Company Secretary in practice may act as a secretary, trustee, executor, administrator, arbitrator, receiver, appraiser, valuer, internal auditor, management auditor, management consultant or as a representative on financial matters including taxation and may take up an appointment that may be made by the Central of any State Government, Court of Law, Labour Tribunals, or any other statutory authority.

57. Regulation 169 of CS Regulations, 1982
Trade or firm name to require Council's approval - A company secretary or a firm of a company secretaries shall get the trade or firm name approved from the Council.
Regulation 170 of CS Regulations, 1982
Constitution or reconstitution of firms to require Council's approval - Constitution or reconstitution of a firm will also be done with the approval of the Council.

58. Maintenance of Branch Office
As per section 37 of the Act where a Company Secretary or a firm of PCS has more than one office in India, each one of such offices must be in the separate charge of a member of the Institute.
The Council may on the merit of each case exempt Company Secretary in Practice under section 37(1) to open branch office without being in the charge of an independent member.

59. Duty of Company Secretary in Practice
It is the duty of the Company Secretary in Practice to check thoroughly the correctness of the contents of the form before certifying that it is correct.
The members in Practice are accordingly expected to exercise due care, diligence and skill while performing the duty of pre-certification.
It is not a routine or a mechanical exercise, but is a serious and involved work calling for sound application of mind keeping in view due consideration of the provisions of the Companies Act, 2013 and Rules framed thereunder.

60. Majority of cases of Professional Misconduct
The complaints are generally relating to instances attracting clauses (6), (7) & (8) of Part I of the First Schedule and clauses (5), (6), (7), (8) & (9) of Part I of the Second Schedule to the Company Secretaries Act, 1980.

61. Nature of complaints and quantum of punishment awarded generally by the Board of Discipline and the Disciplinary Committee
Sl. No.
Nature of complaint
Punishment
Board of Discipline 1
Accepting a position as PCS without first communicating in writing with the previous incumbent. (Clause 8)
‘Reprimand’ coupled with Fine ranging from Rs. 2000/- to Rs 5000/-. 2
Solicitation of clients or professional work. (Clause 6)

62. Disciplinary Committee
Sl. No.
Nature of complaint
Punishment
Disciplinary Committee 1
Certification of Form 32 for removal of director, change in designation of director, without exercising due diligence.
Non-compliance of Section 283 1(g) of the Companies Act, 1956.
Removal of name for a period ranging from 30 days to 180 days and also Fine ranging from Rs.2000/- to Rs /-. 2
Issuance of the Compliance Certificate without exercising due diligence.
Removal of name for a period ranging from 30 days to 180 days. 3
Certification of other Forms viz. Form 2, 5, 18,23AC without exercising due diligence.
Without verifying necessary documents.
Without verifying as to whether the company has received the share allotment money.
Form 23AC without verifying the Balance Sheet / P&L A/c.

63. Sl. No. Nature of Complaint Punishment 4
Contravention of Guidelines issued by the Council.
Fine ranging from Rs 2000/- to Rs. 5000/- and removal of name for a period ranging from 30 days to 90 days. 5
Failure to supply the information called for by the Institute, Council or any of its committees, Director (Discipline), Board of Discipline, Disciplinary Committee, QRB or the Appellate Authority.
‘Reprimand’ coupled with Fine ranging from Rs. 2000/- to Rs. 5000/-. 6
While holding COP accepted any employment.
Removal of name for a period ranging from 30 days to 180 days.

64. NOTHING in Life Comes without STRUGGLE
Don't QUIT

65. We should not get discouraged in Short Run Opportunities are UNLIMITED TO GROW