Appointment of Designated Person: Companies (Management and Administration) Second Amendment Rules, 2023

INTRODUCTION

In exercise of the powers under section 469(1) and (2) of the Companies Act, 2013, the Ministry of Corporate Affairs (“MCA”) issued certain rules to amend the Companies (Management and Administration) Rules, 2014 (“Management and Administration Rules”)ⁱ vide notification no. G.S.R. 801(E), and released the Companies (Management and Administration) Second Amendment Rules, 2023 (“Second Amendment Rules”) dated October 27, 2023, in order to ease the process of providing information to the registrar of companies ,(“RoC”) with regard to beneficial interest in the shares of the company, thereby increasing transparency and accountability of companies and improving the framework for corporate governance.

The following are the key highlights of the Second Amendment Rules:

1. Appointment of Designated Person
   
   Sub-rule 4 of Rule 9 has been inserted vide the Second Amendment Rules, providing that every company shall designate a person (the “Designated Person”), responsible for furnishing, and extending co-operation for providing information to the RoC or any other authorised officer with respect to beneficial interest in shares of the company.


2. Qualifications of the Designated Person
   
   Sub-rule 5 of Rule 9 has been inserted vide the Second Amendment Rules, providing for the qualification of persons who may act as a Designated Person, as follows:
   
   
   1. A company secretary, if the company is required to appoint a company secretary under the provisions of the Companies Act, 2013 and the rules made thereunder; or
   
   
   2. A key managerial personnel, other than the company secretary; or
   
   
   3. Every director, in the absence of company secretary or key managerial personnel.
   
   Further, as per Sub-rule 7 of Rule 9 inserted vide the Second Amendment Rules, the details of such Designated Person shall be provided by the company in its annual return.


3. Deemed Designated Person
   
   Until the designation of a Designated Person in the manner discussed above, Sub-rule 6 of Rule 9 inserted vide the Second Amendment Rules provides that the following persons shall be the deemed Designated Persons:
   
   
   1. company secretary, if the company is required to appoint a company secretary under the provisions of the Companies Act, 2013 and the rules made thereunder; or
   
   
   2. every managing director or manager, in case a company secretary has not been appointed; or
   
   
   3. every director, in the absence of company secretary or managing director or manager.


4. Change in Designated Person
   
   As per Sub-rule 8 of Rule 9 inserted vide the Second Amendment Rules, in case the company changes the Designated Person at any time, such information of change in Designated Person shall be intimated to the RoC in e-form GNL-2 of the Companies (Registration Offices and Fees) Rules, 2014.

The above amendments have been introduced to ensure greater transparency and ease the process of providing information to the RoC. Further, mandating every company to designate a person would ensure accountability in respect of information to be provided to the RoC or any other authorised officer in respect of beneficial interest in the shares of the company.