Company secretaries have a lot going for them in India. The local institute of company secretaries is a statutory body and has some 25,000 members and over 230,000 students. Moreover, by law all companies with a paid up capital over approximately US$500,000 must employ a full-time company secretary. This second article in our ‘Peer to Peer’ series, interviews Mahendra Shah, Group Director, Corporate Secretarial, IDFC, India, about the way company secretaries in India have become increasingly specialised in their core areas – board support and corporate governance.

Thank you very much for talking to us today, can we start with some background about yourself and your current work?

‘Currently I am working as the Group Director, Corporate Secretarial, of the IDFC group of companies. IDFC is a financial institution set up for financing Private-sector infrastructure projects in India. Regarding my personal background, I am a Chartered Accountant, a management accountant, and a company secretary.

I have around 25 years’ plus of experience. I started my career in 1985, working for various companies including the Xerox Corporation and Pfizer Pharmaceuticals of the US. I started in the finance departments and my job was purely on the accounting side. I got my degree in company secretaryship in 1983 and over the years I have built up my experience in this field. My work became increasingly focused on this role, though I have earlier worked in the fields of taxation and accounts.

For the last 11 years, I have been working as the group company secretary for IDFC.’

What are the major challenges you face as a company secretary in India?

‘We started to liberalise and reform our regulatory system in India in 1991 and it is still evolving. Before 1991, we had a controlled economy and our regulations were only for domestic entities, but after we opened up the economy a lot of foreign capital came in. So our regulatory system has been trying to adapt to the new conditions.

For example, IDFC is in the financial services sector and we have three regulators we need to work with – the Securities and Exchange Board of India (which is the capital markets regulator), the Ministry of Corporate Affairs (which regulates all companies registered in India) and the Reserve Bank of India (the money market regulator). So the first challenge is the need to deal with many regulators, each with its distinct views on what is required.

The second challenge is applying corporate governance best practice standards. As I mentioned, we started our reform drive in 1991, so awareness of corporate governance issues, including the company secretarial and the compliance functions, has been picking up over the last two decades. I am not saying companies in India were not complying with legislation before 1991, but certainly the importance of the compliance and company secretarial functions has really become critical in the last two decades since liberalisation/ globalisation.

So, I think applying corporate governance best practice standards is a challenge for all entities in India. Of course there are differences depending on the size and type of the organisation – multinationals are usually following the best practices available across the globe while many small and medium-sized entities are more focused on business than on compliance.’

What is the attitude to corporate governance and the company secretarial role in the companies you have worked for?

‘I don’t want to boast about it, but IDFC is one of the top companies in India in terms of corporate governance standards. We are a professionally-run company with a high-profile board. In fact we have become something of a governance role model both within and beyond the company secretarial community in India.

The function of the company secretary is very well recognised. I am the secretary for the board so I attend all the board meetings and I am the gatekeeper for best practices and corporate governance for the entire group. We have prominent directors on the board, experts in their respective fields, so we have lawyers, accountants, tax experts and so on. In terms of governance practices to be followed, I provide them with all the data they need. We have also prepared a compendium of corporate governance rules for the entire group which we follow religiously.’

How do you keep your skills and knowledge up to date?

‘I have been in this field for the last 11 years and I have been keeping a close eye on regulatory amendments and enactments, particularly in the field of corporate law. There are changes almost every week. There are two main ways to keep up to date. The first is your own personal professional development activities, such as regular visits to relevant websites including those of the professional accounting firms, regulators, ministries, etc.

The second is to attend professional training seminars and events. The Institute of Company Secretaries of India has training seminars on a quarterly basis for company secretaries. I attend these seminars and conferences to stay up to date.

We also have an internal training programme at IDFC. I have a team of around eight company secretaries working with me and we have a bi-weekly meeting where we discuss relevant matters such as new regulations, proposed changes and we do an impact analysis for each change. One person from the team makes a presentation for about an hour on a new concept or a new change in regulation – anything affecting the organisation and our role as company secretaries.’

Would you say that the company secretarial profession is well respected in India?

‘Yes, it is a very well respected profession. As per the Indian Companies Act, all companies with a paid up capital over about US$500,000 must have a full-time company secretary. We have about 26 entities in the IDFC group and about 10 entities require separate qualified company secretaries.

Also, within organisations, the role of the company secretary is much better understood now. Company secretaries used to have to take on dual roles, such as a combination of company secretarial and accountancy work, but we have now become increasingly specialised in our core areas. My own career is an example of that. When I started my career I combined accounting and company secretarial duties, but now I am concentrating solely on company secretarial duties. In large companies like mine, there has also been a trend towards specialisation in different areas of the company secretarial function. Accordingly, four years ago, for example, I handed over the responsibility for compliance to a colleague of mine.

Currently there are two aspects to my work. Firstly, the core corporate secretarial functions – attending board meetings; keeping minutes; preparing the board agenda; assisting directors; talking to shareholders; filing with regulatory authorities, and so on – and secondly, looking after the corporate governance framework of the group.

This second aspect involves looking at how the subsidiaries are governed, how their boards are reporting to the board of the main company; how the audit committees of subsidiaries are reporting to the audit committee of the main company; how the linkages are mapped; how proposals are approved; and monitoring who is responsible for doing what in terms of the delegation of authority/ responsibility.

The governance framework of companies is becoming very critical in India. There has been a lot of research which has proved that there is a direct correlation between a company’s corporate governance quotient and the value the company creates for stakeholders. Everyone is focused on that now. It is widely accepted that corporate governance is the way to proceed and will improve the value of the business in the long run. I think India is ahead now in terms of its corporate governance awareness.’

It was interesting to hear you say that you have split the compliance function from the board support and corporate governance functions; do you think that is a widespread practice in India?

‘In the financial services sector, yes. Manufacturing companies don’t have to comply with such complex regulations and there you might have someone taking care of both the company secretarial and the compliance functions, but in financial services companies the compliance requirements are very complex and you have to deal with a number of different regulators such as the Securities and Exchange Board of India and the Reserve Bank of India

Now most top end companies are appointing separate people to take care of the company secretarial and compliance functions and the company secretarial side has become specialised on core company secretarial and governance duties – that’s what my role is here. So if you take any bank in India, they will have a team for compliance and a team for the company secretarial function. Of course there is some overlap. There are two regulators I have to deal with – the Ministry of Corporate Affairs and the stock exchanges. I have to monitor compliance with the stock exchange’s guidelines for corporate governance since our stock is listed on the local exchange here in Bombay. There is a clear line of demarcation within the company, however, and we manage the split roles quite well.’

Do you think it makes sense for the company secretary to take on a lead role in corporate governance?

‘Yes. Company secretaries are aware of the regulations, the board members and the shareholders. They are aware of how the shareholders, the board and the management are linked; how the delegation works; the company’s reporting obligations; the need for shareholder approvals, and so on. This is elevating our role. Company secretaries can take care of the governance framework – I think people are now convinced of this point.’

It seems that the role of the company secretary is well understood in the business community in India, but how well understood is it by the general public?

‘I’m not very sure about that. I think over a period of time people have become more aware of what we do. Certainly, if they have some connection with companies, if they are investors for example, then I would imagine they would be broadly aware of what we do. But I doubt that other people, particularly people in rural or semi-rural areas, would have much awareness about our role. Many people still confuse the company secretary with a personal secretary.’

What do you think are the main corporate governance challenges and the main corporate governance successes in India?

‘Well, as I mentioned, we only started developing and re-aligning our regulations in 1991, so our corporate governance regime is still evolving. That is the main challenge. I think the main success is that many companies now recognise that good corporate governance creates value. Companies with a reputation for good governance are valued differently by the market.

Admittedly, investors may simply not be aware of the level of the company’s governance. I am not trying to say that ‘A’ is good and ‘B’ is not good, but there is value creation over a period of time with the right framework of governance. Indian companies are now known worldwide and a lot of investment has poured into India – foreign direct investment has gone up dramatically in the last two decades. Also, Indian companies are now able to make major acquisitions outside India, for example Tata Motors recently took over Jaguar.

Those kinds of acquisitions would not be possible if Indian companies did not match global corporate governance standards, but now they can go across borders and feel that they are following the same rules of the game as other companies across the world.’

The current president of the Corporate Secretaries International Association (CSIA) is a former president of the Institute of Company Secretaries of India, do you think India will play a more active part in the global profession of corporate secretaries?

‘Yes, we are planning to become a more active member of the CSIA. Actually, we have many groups of company secretaries in India, for example I am a member of the group of 15 company secretaries of the top 15 companies of India. We meet every month to exchange ideas and keep ourselves updated on areas of common concern. If a new law or regulation is coming up, we look at the practical implications and we might make a representation to the Ministry of Corporate Affairs and help them with the redrafting if there are practical difficulties. We are very aware of the need to do this at the international level.’

Are your submissions to the Ministry of Corporate Affairs effective – do they listen to your views?

‘They do listen. This doesn’t mean of course that our suggestions are always accepted. They publish draft legislation for public comments and they listen to our views, as well as the views of other stakeholders, purely on a merit basis.’

One last question – do you enjoy your job?

‘Very much so. For the first 15 years of my life I worked as an accountant and tax expert so I was already 40 when I became a full-time company secretary, but I think I joined the profession at the right time and in the right place. It is a challenging area to be working in. The project to draft our compendium of corporate governance for example, was major and challenging task.’


Mahendra N Shah, Group Director, Corporate Secretarial, IDFC, India, was interviewed by CSj in May 2012. Our ‘Peer to Peer’ series introduces you to your peers in the global corporate governance profession. If you have any suggestions of interest to this column, please get in touch with the CSj editor by email:; by phone: + (852) 2982 0559; or by post: The Editor, CSj, PO Box 9963, General Post Office, Hong Kong.

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SIDEBAR: India: a governance profile

Legal system:

Hybrid, both civil and common law.

Key legislation/ regulation:

The Companies Act and the Securities and Exchange Board of India Act. In addition to legislation, corporate governance standards in India are the subject of the Ministry of Corporate Affairs’ Corporate Governance Voluntary Guidelines and the Listing Agreements of the two national stock exchanges. These Agreements include a number of governance requirements, for example ‘Clause 49’ in the Agreements enforced by both the Bombay and National stock exchanges includes requirements for boards to adopt a formal code of conduct and for CEO/ CFO certification of financial statements. There are also requirements concerning independent directors, audit committees, financial disclosures and regulatory compliance. While these governance standards are relatively high, non-compliance is widespread and the stock exchanges have been criticised for weak enforcement despite the fact that they have the authority to impose disciplinary measures up to and including delisting.

Financial reporting standards:

This year India will complete its transition to international financial reporting standards (IFRS).

Key statutory/ regulatory bodies:

The Ministry of Corporate Affairs is the primary body responsible for enforcing India’s company law. The Securities and Exchange Board of India and the Reserve Bank of India regulate financial institutions and the money markets. As noted above (see ‘key legislation/ regulation’) the two national stock exchanges also have a role enforcing corporate governance standards.

Predominant ownership structure:


Board structure:


Corporate secretary job title:

Company secretary.

Corporate secretary duties:

Typical. These include the core corporate secretarial functions – attending board meetings; keeping minutes; preparing the board agenda; advising directors; liaising with shareholders and regulators, etc – and acting as the gatekeeper of corporate governance.

Corporate secretarial community:

Formal. The Institute of Company Secretaries of India (ICSI) is a statutory body constituted under the Company Secretaries Act of 1980. ICSI is the official professional body for company secretaries in India and awards the certificate of Company Secretary (CS) to qualifying candidates. The ICSI has about 25,000 members and over 230,000 students. Pursuant to section 383A of the Companies Act, companies having a paid-up share capital of approximately US$500,000 are statutorily required to appoint a full-time company secretary.