THE SILENT THREAT TO THE CS PROFESSION: NAME LENDING MUST END

ABSTRACT

Name Lending has emerged as a silent yet dangerous practice within Company Secretary profession, eroding both credibility and accountability. In simple terms, name lending occurs when a CS professional allows their name, signature, or membership credentials to be used on official documents without personally supervising or contributing to the work. While it may appear harmless or convenient, this malpractice has far-reaching consequences. It compromises corporate governance, increases the risk of non-compliance, and severely damages the trust that stakeholders place in the profession.

This Article examines how lending undermines professional ethics, violates the Code of Conduct prescribed by the Institute of Company Secretaries of India (ICSI), and exposes both companies and professionals to legal liabilities. By analyzing real-life examples, the discussion highlights why immediate action is needed. The Article concludes with recommendations to strength enforcement, spread awareness, and encourage ethical accountability among members. Ultimately, eliminating name lending is not just about compliance- it is about protecting the dignity and future of the profession.  

Introduction

In the constantly developing field of corporate compliance, Company Secretaries (CS) occupy a position of trust and responsibility. They are expected to be ethical guardians of governance, and compliance professional in every corporate structure they serve. However, in recent years, name lending has emerged as a silent threat to this noble profession. This unethical practice, though often ignored or rationalized, has now become a serious concern to the credibility of Company Secretaries in India.

Name lending refers to situations where a CS permits their name, signature, or membership credentials to appear on statutory documents or filings without actually participating in or supervising the related work. It’s easy to take a small shortcut to help someone, but it can quickly grow into a serious professional and legal misstep. Such conduct undermines the ethical standards that define the profession and weakens the very foundation of corporate accountability.

The Institute of Company Secretaries of India (ICSI) has repeatedly expressed concern about this malpractice. In its Code of Conduct for Company Secretaries (2020), the Institute explicitly prohibits members from lending their name or authority for work they have not performed or verified. Disciplinary cases reported by ICSI in recent years reveal how such actions have led to suspensions, penalties, and reputational loss.[1]

This Article aims to clearly explain what name lending means, why it happens, and what its effects are. It also focuses on how important it is for Company Secretaries (CS) to maintain honesty and integrity in their work. Being ethical is not just about following rules- it’s a moral responsibility that shows who a true Company Secretary really is.

Meaning and Nature of Name Lending

Name Lending is a shameful arrangement where CS lends their name and signature to company in exchange for payment, without actually being involved in the company’s work or actively performing the duties of CS.

A Company Secretary in practice shall be deemed to be guilty of professional misconduct, if he- 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.[2]

Nature of Name Lending: –

1. Illegal/ Fraudulent: – The action facilitates illegal activities, deceive stakeholders, and circumvent professional obligation, making it serious breach of professional ethics and a form of professional misconduct.  
2. Professional Misconduct: – The action is considered as professional misconduct by the ICSI and can lead to disciplinary action against the CS.
3. Violation of Trust: – It’s like a respected doctor signing off on a health product they haven’t tested. For a CS, it means they are putting their professional integrity at risk by associating themselves with the company they don’t fully understand or trust, which can also damage entire the entire profession.

 Historical and Legal Background

• • Historical Background: –

Name lending practice became noticeable in post liberalization era i.e. 1990 onwards, when due to implementation of LPG (Liberalization, Privatization, Globalization) model corporate activities expanded and small or fraudulent businesses often sought professionals to lend their names for fee. Historically such agreements facilitated fraudulent schemes, tax evasion, and creation of shell companies. Many CS professionals, despite having no operational role, were later implicated in corporate frauds because their name appeared on official documents.[3]    

• Legal Background: –

Legally, name lending is considered professional misconduct, under Company Secretaries Act, 1980. The Director of Institute of Company Secretaries of India (ICSI) is empowered   to investigate and take action against members for misconduct, including lending names without performing duties.[4]

The Schedules of the Act specify acts such as signing certificates without due diligence or facilitating fraudulent activities. Furthermore, the Companies Act, 2013 mandates that CSs ensure compliance and be penalized if associate companies engage in illegal activity.[5]

Name lending may seem profitable in the short term, but it undermines professional integrity and exposes CSs to serious legal, financial, and reputational risks. Ethical participation and genuine compliance are essential to uphold accountability and maintain trust in the profession.

Causes of Name Lending

Name Lending doesn’t happen overnight- it is usually the result of pressure, ignorance, or temptation that makes professionals compromise on their ethics. Here, are some prominent causes of Name Lending: –

• Lack of awareness or ethical understanding among professionals: – Many professionals are not even aware that name lending is a serious offence, and some believe there’s nothing wrong in letting others use their name for professional work.
• Pressure from clients or companies to complete fillings quickly: – When filing deadline gets to close, Company Secretaries often face intense pressure from companies and clients. In that rush and stress, some CS professionals resort to name lending as a shortcut to make their work easier.
• Financial motivation and professional competition: – Name lending often brings in quick money, so some Company Secretaries engage in it out of the desire to earn more. Moreover, when they see other professionals completing filings faster and meeting deadlines with ease, the pressure of professional competition pushes many CS professionals towards the unethical practice.
• Peer influence and weak enforcement mechanisms: – When a Company Secretary sees other professionals involved in name lending, they often think, “What difference will it make if I do it too? Everyone else is doing it.” This mindset grows stronger because there is no strict law or effective implementation to stop or punish such misconduct.

Implications and Consequences

Name Lending is serious offence in India, but what are its actual implications and consequences on different elements of Company Laws? Here is the answer: –

• On the profession: – CS is the one of the Nobel profession in India, these name lending practice losses its creditability and clients trust, and raises disciplinary actions against the professional who is performing this practice.
• On Companies: – CS is the compliance expert in company and any other person doesn’t have enough knowledge of compliance filings, thus name lending to such person leads to non-compliance, government interventions and legal penalties on companies.
• On corporate Governance: –  ICSI mission is, to develop high caliber professionals facilitating good corporate governance”[6] this unethical practice will never lead to achievement of this mission.
• On Stakeholders: – Stakeholders has immense trust and faith on Company Secretaries but such name lending practice will reduce faith in professional services.

Real Life Examples

• • Recently a message popped up on a reputed CS WhatsApp group, where a fellow professional openly invited others for “name lending opportunities”. Shockingly the message was quickly deleted after backlash, followed by a formality apology to cover it up.

The normalization of this practice under the guise of “opportunities” in internal groups and forums meant to uphold professional values.[7]

• After Completing CS, In the end of 2015, CS Gurpreet Singh got job in a law firm at Delhi. Just after few days of his job his employer asked him to provide his PAN Card and Aadhaar Card as well as his CS membership information. When he asked him why does he need this information, employer revealed that he wants to appoint Gurpreet Singh as a Company Secretary for one of his clients. He will officially hold the position as Company Secretary in his client company but would not actually work at his office. Gurpreet Singh immediately recognized that it is a case of name lending, and refused to participate in that unethical practice.[8]
• If the Company is being actively managed and guided by the Practicing Company Secretary where you are working and you know the company inside and outside, then why not to lend your name? Sometimes, early-stage or small companies can’t afford a full-time CS in such cases, a practical arrangement of Name lending can help them stay complaint without stretching their budget.[9]

This Real-Life examples show this practice is becoming increasingly common. It is essential for CS professionals to uphold ethical and legal responsibilities. Strengthening integrity and awareness will protect the credibility of the profession.

Measures and Recommendations

To solve this serious concern of name lending, the following measures are suggested by the Author: –

• Institute of Company Secretaries of India should conduct awareness sessions on ethical pitfalls.
• Disciplinary actions shall be taken on professionals who practices such unethical act of name lending.
• All CS professionals should be given clear guidance on professional boundaries.
• ICSI should monitor CS engagements more strictly including periodic audits of companies where CSs are appointed.
• Introduction of clear penalties for CSs found guilty of name lending, including suspension or removal from the professional register.
• Encourage reporting of suspicious practices anonymously, so unethical name lending can be detected early.
• Educate investors and stakeholders to verify the actual involvement of CSs in Companies, reducing blind reliance on professional names.
• CSs should provide a declaration of active participation in company affairs, not just act as a name-holder.
• Maintain an online registry showing the actual responsibilities of CSs in each company, increasing transparency.
• Introduce a system of peer evaluation where CSs review each other’s evaluation and engagement to discourage unethical practices.

Role of Young Professionals

Young professionals are the new hope of the CS profession, and they can put an end to the practice of name lending once and for all. To achieve this, young professionals should follow the steps outlined below: –

• Always perform your duties actively and avoid lending name to companies where you are not genuinely involved.
• Keep yourself updated on the Companies Act,2013, and ICSI guidelines to understand your legal and ethical responsibilities.
• Before joining any company, thoroughly check its background, operations, and financials to ensure legitimacy.
• Attend board meetings, review company records, and be an active decision-maker, not just a name on paper.
• Share experiences and mentor other young professionals about the risks and consequences of name lending.
• Use proper channels to report suspicious activities or companies misusing CS names.
• Maintain clear documentation of your involvement in companies to show accountability.
• Develop the habit of making choices based on long-term professional credibility, not short-term gains.
• Attend workshops, webinars, and training on corporate governance and compliances to enhance knowledge and vigilance.
• Advice companies about the risk of misusing CS names and encourage ethical practices in all corporate dealings.

Let’s not wait for another scam or inquiry to remind everyone of the power and responsibility, that comes with Company Secretary’s signature and name.

CONCLUSION

The practice of name lending by Company secretaries is a serious issue that threatens the credibility and trustworthiness of the profession. Even if legal cases are limited, a real life examples show that this trend is growing and can harm companies, investors, and the CS Community itself. Young Professionals have the power to change this by staying ethical, doing proper checks before associating with the company, actively participating in its affairs, and guiding peers and clients towards responsible practices. By acting with integrity and awareness, the CS profession can maintain its reputation and continue to be a pillar of strong corporate governance.

BIBLIOGRAPHY

1. Statutes
2. Company Secretaries Act, 1980
3. Companies Act, 2013
4. Reports
5. Disciplinary Action Report, ICSI (2022-2023)
6. Guidance note on professional misconduct, ICSI (2022)
7. Websites and Application
8. https://www.icsi.edu
9. LinkedIn

[1] Institute of Company Secretaries of India, Disciplinary Action Report 2022-2023 (2023) 

[2]Company Secretaries Act, 1980 Sch I Pt I cl 1

[3] ICSI, Guidance Note on Professional Misconduct (ICSI, 2022)

4 Company Secretaries Act, 1980, ss 21-22

5 Companies Act, 2013, ss 204, 447, 448

[6] Institute of Company Secretaries of India, ‘Mission and View’ https://www.icsi.edu accessed 7 October 2025

[7] Madhura Salunkhe, ‘’Name Lending by CS Professionals: An Alarming Trend That Needs Urgent Attention.” (LinkedIn, posted in July,2025)

[8] Gurpreet Singh, “Name Lending: – A curse for Company Secretary Profession”. (LinkedIn, Posted in 2023)

[9]  Diviya Patel, “ Why I support name lending in certain circumstances?” (LinkedIn, Posted in August, 2025)