Secretarial Audit - Compliance of all Laws

How to Begin
(Corporate Compliance Management)

By:- Mr. Pavan Kumar Vijay

July 30th 2014

Time has come.. The compliance

is not merely a legal compliance
but it is a NECESSITY Now

Begin the New Era of

Corporate Compliance
Management

(which starts with Clause

49)

Corporate Compliance in System

Clause 49 of Listing Agreement:
in the year 2003

The Board shall periodically review

compliance reports of all laws
applicable to the company, prepared
by the company as well as steps taken
by the company to rectify instances of
non-compliances.

Now New

Companies Act 2013

All Applicable Laws in Act

Sec 204 of New Companies Act:
Secretarial Audit for Bigger
Companies
..............................................................
(Mention the other laws as may be
applicable specifically to the company)

Applicability Present Rules

Applicable to
9Listed Companies and
9Public Companies
Paid up Capital of Rs. 50 Cr or more
Turnover of Rs. 250 Cr or more

Applicability Expected Rules

Applicable to
9Listed Companies and
9Public Companies
Paid up Capital of Rs. 50 Cr or more
Turnover of Rs. 250 Cr or more
Loan of Rs. 100 Cr or more

All Applicable Laws Legal Part

Form MR - 3

All Applicable Laws System Part

Adequate System and Procedure

All Applicable Laws Audit Part

Non Compliance
Observation
Audit Qualification
Reservation
Adverse Remarks

Do you usually confront with these??

How to identify
the laws and
implement them
How to make
compliances
on time?

How to do
Audit and
till what
extent

IMPLEMENTINGEFFECTIVE
COMPLIANCEMANAGEMENTSYSTEM

What is Compliance of all laws?

Compliance of all laws
Not just any other compliance

Compliance of ALL LAWS

Compliance of ALL LAWS

Company Law
Economic and Commercial Law
Tax Laws
Capital Markets and Securities Laws
Industrial, Labour and General Laws
Secretarial Audit, Compliance Management and Due Diligence
Corporate Restructuring, Valuation and Insolvency
Banking Law and Practice
Capital, Commodity and Money Market
Insurance Law and Practice
Intellectual Property Rights - Law
International Business-Laws

How CCM Works???

General Laws (Applicable to all

companies)
Corporate
laws

Taxation
Laws

Industrial &
Labour Laws

Property
laws

(Based on Number of employees)

10 or more

20 or more

25 or more

100 or more

1000 or more

Event Based Laws

Intellectual
Property Laws

Custom Tax
laws

Foreign
Exchange Laws

Structure Based Laws

Different Corporate Structures
Listed Public
Companies
Unlisted Public
Companies
Private Limited
Companies
Public Sector
Undertakings

Sector Specific Laws

Manufacturing

Trading

Service

Segment Wise Laws

State Wise Laws

Labour
Welfare Act

Shops and
Commercial
Establishment
Act

National
Festival
Holiday Act

Different Geographical Laws

Global
Operations
Indian Operations

Preparation for Implementing

Compliance Management System

About CCM

CCM First Five Steps

STEP I Corporate Dossier

STEP II Questionnaire

STEP III Identification

Process

STEP IV Evaluation Process

[Event based Laws]

Step V : Compliance Organisation

Structure
For Rights
Assignment

Case Study

Corporate Compliance
Management Cement
Industry

Case Study Cement Industry

Understanding The Company

CEMENT INDUSTRY
Public Limited Company
Listed Company BSE, NSE
Manufacturing & Trading
Exporting Company
10,000 No. of Employees (Approx.)
Units Located at Bhubaneswar, Rajnagpur

Case Study Cement Industry

Identification of Applicable Laws
OnthebasisofGeneralCorporateInformation PublicCompany,ListedatBSE,
NSE
Companies Act, 2013

Income Tax Act, 1961

SEBI (Insider Trading) Regulations, 2009

SEBI (Substantial Acquisition of Shares & Takeovers) Regulations,

2011

Listing Agreement

Case Study Cement Industry

Identification of Applicable Laws
OnthebasisofSector ManufacturingandTrading
National Environment Policy
Environment (Prevention of pollution control) Act, 1986
Central Excise Act, 1944

Case Study Cement Industry

Identification of Applicable Laws
OnthebasisofTypeofIndustry Cement
Cement (Quality Control) Order, 2003
Limestone and Dolomite Mines Labour Welfare Fund Act, 1972
Mines and Minerals (Development and Regulation) Act, 1957
Mineral Conservation and Development Rules, 1988
Metalliferous Mine Regulations, 2012.
Explosives Act, 2008

Case Study Cement Industry

Identification of Applicable Laws
OnthebasisofNo.ofEmployees
Employees Provident Funds & Miscellaneous Provisions Act, 1952
Factories Act, 1948
Payment of Gratuity Act, 1972
Industrial Dispute Act, 1947
Employees State Insurance Act, 1948
Payment of Wages Act, 1936
Minimum Wages Act, 1948 & Minimum Wages (Central) Rules, 1950

Advantages of Corporate Compliance

EasyQuantificationofrisk
EstablishingRiskappetite
Identifyandprioritizecontrols
MultitudeofComplianceobligations
BuildingStrongFoundations
ExtendedConfidenceto
Investors
IndependentDirectors
Management

GainingCompetitiveEdge
GoodComplianceSystemleadsto
ExcellenceinOperations

Can we do all this

MANUALLY
with thousands of Law ??

Let IT work for you.

Go for IT
Reduce time consumption in repetitive tasks.
Devote more time on Strategic analysis, value additions and
planning.
Use online regulatory services.
Make use of exhaustive databases, checklists, research papers
available online.
Manage multiple tasks through IT.
Use IT to shorten procedure and shift to STRATEGIES and PLANNING.

Go for IT
Adopt technology to defeat technology
is the latest survival mantra .

Effect of Technology

EasyCompliance
ImpossibleNon Compliance

Compliance Scheduler
Today

This Week This Month Select Period

Factories
Act

Income
Tax

Listing
Agreement

Companies
Act

Title

Return of
Income

Title

Notice by
Occupier

Title

Form
No

ITR-6

Form
No

------

Form
No

Due
Date

On or
before
31st
October
of the
assessme
nt year

Due
Date

At least
15 days
before he
begins to
occupy or
use

Due
Date

Appointment
of Director
Form 29 & 32
Within 30 days
of
appointment

Title

Shareholding
Pattern

Form
No

Fixed Format

Due
Date

Within 21
days from the
end of each
Quarter

Simplification: The Next Move

Developing Compliance Management Tools

Law wise
Period wise

Effective Usability

Triggering date & time

Triggering information input
Organisation type, Capital deployed, Business type
Product profile

Elements of Effective
Compliance Program
Customization of ..

At One Place

ROLE OF
Company Secretary in
Corporate Compliance
Management??

DIR A DIR B

DIR C

DIR D

DIR E

BOARD OF
DIRECTORS

COMPANY POLICIES

INVESTORS
INVESTORS

SUPPLIERS
SUPPLIERS

CUSTOMERS
CUSTOMERS

Company Secretary

EXTERNAL STAKEHOLDERS

LENDERS
LENDERS

GOVERNMENT
GOVERNMENTAND
AND
REGULATORS
REGULATORS
SOCIETY
SOCIETY

DEPARTMENTS IN A COMPANY
CORPORATE
PLANNING

LEGAL

FINANCE AND HUMAN

CORPORATEPRODUCTION
INFORMATION
MARKETING
ACCOUNTS RESOURCES
COMMUNICATION
AND OPERATIONS
TECHNOLOGY

OPERATIONAL PLANNING AND EXECUTION

CompanySecretaryisprimarilyresponsible
tocoordinatewith
COMPLIANCEOFALLLAWS

Therefore,WEAREANSWERABLE

Learn
The 80:20 Theory

Present Focus of Services

20%
Strategy
Management
Research

80%

All Applicable Laws

Filing forms & Applications
Registers & Returns
Checklists

Focus of services in emerging

Scenario
80%
Strategy
Management
Research

20%

All Applicable Laws

Filing forms & Applications
Registers & Returns
Checklists

See the Horizon Beyond Company

Law
Its time to go beyond the pre-defined framework.

Always say YES, its my area of work

Move with a Direction

Services Provided by an Ordinary CS

No
Direction

Piecemeal
services

Move with a new Direction

We have to move towards

That is

ega Firm

Single Window interface calls for Synergy of

Brand
Knowledge
Capital
Infrastructure
Collaboration is the buzz word

Economic
Brand
Synergy Taxation Laws

Corporate
Laws

Laws

Knowledge Commercial Law

Synergy International Trade Law
Capital Market Law

Infrastructure
Synergy

Labour Law

Capital
Synergy

Banking Law

Quality
of
Service
Single
Window
Interface
Global
Presence

Insurance Law
Securities LAw

Commerce
Collaborative Commerce

CS + CA +
CWA + MBA
+ LLB

Problems becomes opportunities,

when right people come together

Advantages of Collaborative
Commerce
Enhanced Capability to compete with giants
Broader Reach
Brand leverage
Wider Area of Expertise
Risk Minimization
Attraction of best talent

"We do not have to become heroes overnight

Just a step at a time, meeting each thing that comes
up, seeing it is not as dreadful as it appeared,
discovering we have the strength to stare it down."

Quality Brand Building

Thus, Opportunities are Unlimited

Its just a matter of

Creativity, Confidence and Communication

and also Perception and Positive Thinking

So now, we need to prepare ourselves to

create niche in the emerging scenario

But merely optimism will not do

optimism with Confidence & Right
Attitude will

The emerging scenario requires us to reinvent

everything - to think of ourselves as
compared to others

When Opportunity does not knock your

door.

build the door.

But now opportunities have knocked your door

But still

You have to get off from your seat and open

the door.

Thank You