11/5/2013

GOVERNING PROVISIONS

COMPLIANCE
CERTIFICATE

Section 383A(1) of Companies Act 1956

Companies (Compliance Certificate) Rules
2001
Guidelines issued by ICSI

Proviso to Section 383A(1) of Companies Act

1956

Companies (Compliance Certificate )

Rules 2001

IntroducedbyCompanies(Amendment)Act2000which

cameintoforcew.e.fDecember13,2000
Companynotrequiredtoemployawholetimesecretary

andhavingapaid
upsharecapitalofTenLacsrupeesor
andhavingapaidupsharecapitalofTenLacsrupeesor
more shall
filewiththeRegistraracertificatefromasecretaryin
wholetimepractice
attachacopyofsuchcertificatewithBoardsreport

The Companies (Compliance Certificate ) Rules 2001

came into force w.e.f 1St Feb 2001

The Compliance Certificate to be filed to ROC within 30

days from date on which AGM is held. Where AGM is not

held then within 30 days from day on which AGM should
have been held
Compliance Certificate to be laid in its Annual General

Meeting

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GUIDELINES FOR ISSUING

COMPLIANCE CERTIFICATE

ATTESTATION SERVICES MEAN

Effective from 1st January 2008

Ceiling on issuing Compliance Certificate and annual

return - 80 Companies in aggregate in a calendar year.

year
In case of partnership firm ceiling apply to each partner.
Every Practicing Company Secretary (PCS)/Firm of PCS

shall maintain a register regarding attestation services

provided by him/her/it, which shall be open for inspection
by such person as may be authorised

FORMANDCONTENTS
y CCshouldbeinformappendedtorules
y Itshouldbeaddressedtothemembersofthe
Company
y 33pointsprescribed
i
ib d
y Qualificationshouldbestatedwithreasonable
prominence
y FlexibilityhavebeengiventoPCStomakenecessary
modifications
y CCshallrelateperiodpertainingtothefinancialyear
oftheCompany

Signing of
Annual
Return

Issue of
Compliance
Certificate

Issue of
certificate of
Securities
Transfers in
Compliance
with the
Listing
Agreement

Certificate of
reconciliation
of capital,
updation of
register of
members etc

PENALTYFORFALSESTATEMENTS
(SECTION628ANDSECTION448)
If in any return, report, certificate, balance sheet, prospectus,
statement or other document required by or for the purposes of
any of the provisions of this Act, any person makes a statement
(a)whichisfalseinanymaterialparticular,knowingittobefalse;
or
(b) whichomitsanymaterialfactknowingittobematerial;
heshallbepunish ablewithimprisonmentforaterm
whichmayextendtotwoyears,andshallalsobeliableto
fine
Section448ofCompaniesAct,2013
Imprisonment Minimumthreeyearswhichmayextendto
sevenyearsAND
uptoRs.10lacs
Fine

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AN INTRODUCTION

SECRETARIAL
AUDIT

VoluntarySecretarialAudit
y EarlierMCAhasreleasedCorporateGovernance
VoluntaryGuidelines2009onDecember21,2009,
accordingtowhichvoluntarysecretarialauditwas
introducedtoensuretheeffectivecompliancesystem
isinplace.
y

y Secretarial Audit is a health check up process of an

organization
y Multiplicity of laws, rules, regulations, etc. has necessitated

introduction of a compliance management system to

ensure compliances of laws applicable to a company
y It is a compliance audit. it is a part of total compliance
management in an organization. The Secretarial Audit is an
effective tool for corporate compliance management.
y It helps ensure timely corrective measures when non
compliance is detected.

Section204ofCompaniesAct2013
Applicability
EveryListedCompany
Companybelongingtootherclassofcompaniesas
maybeprescribed
shallannexwithitsBoardsreportasecretarialaudit
reportgivenbyaCompanySecretaryinPractice

Boardtorespondtoqualifications,made

bytheSecretary,intheBoardsreport.

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y As per Rule 13.7. of draft Rules : Every public company

having a paidup share capital of one hundred crore
rupees or more shall require the Secretarial Audit
Report

y A practicing company secretary being Secretarial

Auditor has all the same powers to verify the books
and statutory records as any Financial Auditors do
have.
have

y Format of the Secretarial Audit Report shall be in

Form No. .13.3

y Section 143 (14) of the Companies Act 2013 has

specifically empowered Secretarial Auditors to
demand and scrutinize the documents and company is
obliged to assist the Secretarial Auditors.

CONTENTSOFSAREPORT
y Secretarial Auditors comments and observations on

compliance or noncompliance during the defined audit

period
y Significant litigation(s) within the Scope of Audit
y Board Processes followed by the Company
y A statement on the existence of adequate internal control
systems, procedures and safeguards for ensuring
compliance with
laws applicable to the company,
commensurate with the size of the company and the nature
of its business.

y Such other matters that may be required to be

audited/ reviewed from a compliance and governance
perspective
y Any material event(s) happening after the financial
year but before the date of the report having
substantial impact on any of the above reported items
y Report shall be signed by the PCS, who acts as the
Secretarial Auditor in his individual capacity (and not
as a partner or sole proprietor of a firm) by mentioning
his CP Number

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CERTIFICATIONOFEFORMS

PRECERTIFICATION

y BeforethelaunchofMCA21alltheformswere
physicallysubmittedattheROCoffices.

y Itmeanscertificationofcorrectnessofanydocument
byaprofessionalbeforethesameisfiledwiththe
Registrar.

TheCentralGovernmenthasamendedtheCompanies
(CentralGovernments)GeneralRulesandForms
(CentralGovernment
s)GeneralRulesandForms,1956
1956
videNotificationNo.GSR56(E)datedFebruary10,2006
Andnotifiedtheeformstoenabletheelectronicfilingof
documents
y Theeformsrequirestheprecertificationbyprofessional

(CS/CA/CWA).

y Objective:
y Reductionoferrors
y Accuracy

DUTIESOFPRACTISING
COMPANYSECRETARY

LIABILITIESOFPRACTISING
COMPANYSECRETARY

y Tocheckthoroughlythecorrectnessofthecontentsof
theformsbeforecertifyingitascorrect.
y Themembersinpracticeare,accordingly,expectedto
p
g
y
exerciseduecareandskillwhileperformingtheduty
ofcertification.
y Certification of eform is, therefore, not a routine or
mechanical exercise but is a serious and involved work
calling for sound application of mind in verifying the
averments made in the eform after due consideration
of the provisions of the Companies Act read with the
relevant rules.

y Withaviewtoensurethatthesecretaryinwholetime
practicecarriesouthisworkwithduediligence,the
RegistrarmaycarryoutscrutinyofFormsonrandom
basis.
basis
y IfanySecretaryinwholetimepracticeisfoundguilty
ofderelictionofduties,hewillbeliablefor
disciplinaryactionbytheInstitute/HighCourtunder
theCompanySecretariesAct,1980aswellaspenalty
undertheCompaniesAct,1956.
y PenalProvisionsapplicableasperSection628ofthe
CompaniesAct,1956/Section448ofCompaniesAct
2013

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LIABILITYFORPROFESSIONALMISCONDUCT
UNDERTHECOMPANYSECRETARIESACT,1980
y Incasethereisanyfalsestatementinanymaterial
particularoromissionofanymaterialfactintheform
certifiedascorrectbyaPractisingCompanySecretary,
hewouldbeliablefordisciplinaryactionfor
professionalorothermisconductundertheprovision
oftheCompanySecretariesAct,1980

DILIGENCEREPORT
FORBANKS

ScopeofDiligenceReport

Objective
y In order to avoid the frauds mainly due to lack of
effective sharing of information about the credit
history and the conduct of account of the borrower
among the various banks the new concept of
diligence report for banks was introduced in 2008.

y ThePCSisrequiredtocertifycomplianceinrespectof
mattersspecifiedintheRBIcircularno.DBODNo.
BP.BC.46/08.12.001/200809datedSeptember19,
2008.
2008
y DiligenceReportshallbeintheformatgivenin
AnnexureIIIaspertheRBIcircular.
y TheRBIadvisedallthescheduledcommercialBanks
toobtainregularcertificationmeansDiligenceReport
byprofessional,preferablyaPCS.

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GuidanceonDiligenceReporting
y PeriodofReporting DiligenceReportshallbe
madeonahalfyearbasis.
y RighttoAccessRecordsofthecompanyand
otherrelateddocumentssuchasborrowing,
investmentdetailsofthecompanywithregard
toDiligence
y ProfessionalResponsibility&PenaltyforFalse
diligenceReport
y Communicationtheappointmenttoissuethe
diligenceReporttooldPCSinwritingby
registeredpost

continue

ComplianceInput&checklistfor
issuetheDiligenceReport
y ListofpresentDirectors withdetailsregardingchangestookplace

duringtheperiodandRetiredbyrotationDirectorsyear
y TheShareholdingPatternoftheCompanyasonwithchangestook

placeduringtheperiod
y DetailsofalterationofMOA/AOAduringtheperiod
y Detailsoftransactionsenteredwiththebusinessentitiesinwhich

Directorsareinterested
y Detailsofadvancedloans,givenguarantee,providedsecuritiesto

itsDirectorsand/orpersonsorfirmsinwhichdirectorsare
interested
y Detailsofloanandinvestment,givenguaranteesorprovided
securitiestootherbusinessentities
y DetailsofallBorrowingsfromDirectors/members/FI's/Banks

continue

y Detailsofcreation,modificationandsatisfactionofcharges

y Details/clarificationofpendingstatutorydues,ifany

y Detailsofdefaultinrepaymentofpublicdeposits,usecuredloan,

y DeclarationfromtheCompany/Managementthatnameofthe

y
y
y
y

y
y

debentures,facilitiesgrantedbybanks/Fis
Principalvalueofforexexposureandoverseasborrowings
Detailsofissueandallotmentofsecuritiesduringthe
Detailsofinsurancepolicy
Complianceoftermsandconditionssetforthbythelending
institutionsattheifavailinganyfacilitiesandalsoduringthe
currencyofthefacilities
DetailsofDeclarationandPaymentofDividends
DeclarationfromtheCompany/Managementthatanyofits
directorsdoesnotappearinthedefaulterslistofRBI

company/anyofitsdirectorsdoesnotappearintheSpecific
ApprovalofECGC
y Declarationfromthemanagementthattheborrowedfundshave
beenusedforthepurposesforwhichtheywereborrowed.
y ComplianceoftheprovisionsofSection372AoftheCompanies
Act Detailsrequired
y Declarationfromthemanagementthatapplicableaccounting
standardshavebeenfollowedduringtheperiod.

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continue
y DetailsofamountcreditedtotheInvestorEducationand

ProtectionFunds Amountshowarrived
y Detailsofprosecutioninitiated,showcausenotices

receivedbythecompanyundervariousstatutory
provisionsandalsofines/penaltiesimposedonthe
CompanyandanyotheractionagainsttheCompany
and/oritsDirectors
y ComplianceofListingAgreement
y Confirmationwithregardtotimelydepositofboth
Employee'sandEmployersContributionofProvident
FundswiththeprescribedAuthorities

Depository
y ThetwoDepositoryserviceprovidersinIndia

1.NationalSecuritiesDepositoryLtd.(NSDL)and
2.CentralDepositoryServices(India)Limited(CDSL)
y National Securities Depository Ltd. (NSDL) and Central

Depository Services (India) Limited (CDSL) have allowed

Company Secretaries in Wholetime Practice to undertake
internal / concurrent audit of the operations of Depository
Participants (DPs)

RoleofCompanySecretary
NSDLhasvideitscircularNo.NSDL/SG/II/010/99dated
26thMarch1999notifiedamendmentofitsByeLaw10.3.1
ofChapter10asfollows:
10.3.1EveryParticipantshallensurethataninternalaudit
inrespectoftheoperationsoftheDepositoryisconducted
atintervalsofnotmorethanthree*monthsbyaqualified
CompanySecretaryoraCharteredAccountant**holdinga
CertificateofPracticeandacopyoftheinternalaudit
reportshallbefurnishedtotheDepository.
CDSLhasalsomadethesimilarprovisionsvideitscircular
datedSeptember28,1999notifiedamendmentofitsBye
Laws16.3.1

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BUSINESS
RESPONSIBILITY
REPORTING

BusinessResponsibilityReporting
y BRRispartofNationalVoluntaryGuidelinesissuedonSocial,

EnvironmentandEconomicResponsibilitiesofBusinessissuedby
MCAinJuly,2011

y SEBIvideitscircularnumberCIR/CFD/DIL/8/2012datedAugust

13,2012,amendedListingAgreementtoinsertClause55bywhichit

d dLi ti A
tt i
tCl
b hi hit
ismandatoryforalllistedcompaniestosubmit,aspartoftheir
AnnualReports,BusinessResponsibilityReports(BRR),describing
theinitiativetakenfromanenvironment,socialandgovernance
perspective,intheprescribedformat.

y Inthefirstphase,top100listedcompanies,basedonmarket

capitalisationatBSEandNSEasonMarch31,2012,todisclosethe
BRReportsfromfinancialyearendingonorafterDecember31,
2012.OtherlistedcompaniescanvoluntarilydiscloseBRReportsas
partoftheirAnnualReports.

Whyreport?
y Enhancedbusinessvalue
y Improvedoperations

Reporting
y TheNVG(NationalVoluntaryGuidelines)formhave
beenatarticulatedintheformofNinePrinciples

y Strengthenedrelationships
y Enhancedtrustandcredibility

y Andafewmore
y Meetgrowingexpectationsofbroadrangeofstakeholders
y Improvedreputationwithsociallyresponsibleinvestors
y Employeerecruitmentandretention
y Brandprotectionandcustomerloyalty

y ThereareFiveSectionsasperdraftreport
y SectionA GeneralInformationabouttheCompany
y SectionB FinancialDetailsoftheCompany
PaidupCapital
TotalTurnover
Profitaftertax
TotalspendingonCSRas%ofprofitaftertax

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SectionE Principle wise

performance
y SectionC OtherDetailslike
WhetherthecompanyishavinganySubsidiaryCompany(ies)
TheirparticipationinBRinitiativeoftheparentcompany

y Principle1 Businessshouldconductandgovern
themselveswithEthics,Transparencyand
Accountability

Otherentity(ies)likesuppliers,distributorsetc.alsoparticipate

inBRinitiative,ifyesthenindicatethe%ofsuchentity.

y SectionD BRInformation

y Principle2 Businessshouldprovidegoodsand
servicesthataresafe&contributetosustainability
throughouttheirlifecycle

DetailsofDirectorsresponsibleforBR
BRPolicyreportingofthecompanyonprescribed(nine)

principles inyes/no

y Principle3 Businessshouldpromotethewellbeings
ofalltheemployees

Continue

Continue
y Principle4 Businessshouldrespecttheinterestof,
andberesponsivetowardsallstakeholders,especially
thosewhoaredisadvantaged,vulnerableand
marginalised.
marginalised
y Principle5 Businessshouldrespectandpromote
humanrights
y Principle6 Businessshouldrespect,protectand
makeeffortstorestoretheenvironment

y Principle7 Businesswhenengagedininfluencing
publicandregulatorypolicyshoulddosoina
responsiblemanner
y Principle8 Businessshouldsupportinclusivegrowth
andequitabledevelopment
y Principle9 Businessshouldengagewithandprovide
valuetotheircustomersandconsumersina
responsiblemanner

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THANKYOU
RoleofCompanySecretary BRR
y RoleofCompanySecretary:PCScanactasconsultant
/advisersinfinalizingtheBRRwhichispartofAnnual
Report.

MONIKAKOHLI
FCS,LL.B
DMKAssociates
CompanySecretaries
31/36,OldRajinderNagar,
NewDelhi110060
Mobile:9810480983

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