Secretarial Audit a Governance measure that will have a positive effect on corporate entity. It is Compliance Audit system that used to carrying out auditing of compliances along with all Rules and Regulation made there under. It is a process to check compliances made by the Company under various Law, Rules, Regulation, and Procedure.
APPLICABILITY OF SECRETARIAL AUDIT
According to section 204 of Companies Act, 2013 and Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, company required to obtain Secretarial Audit Report from independent practicing company Secretary.
a). All Listed Company
b). every public Company having Paid up Share Capital of Rs 50 crore or more; or,
c). every public company having a Turnover of Rs. 250 crore or more.
SECRETARIAL AUDIT – THE PROCESS
CHECKLIST FOR SECRETARIAL AUDIT
Act Covered Under the Secretarial Audit
The following Regulations and Guidelines prescribed under the Securities and Exchange Board
Of India Act, 1992:
- The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
- The SEBI (Prohibition of Insider Trading) Regulations, 1992;
- The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009;
- The SEBI (ESOS and ESPS) Guidelines, 1999;
- The SEBI (Issue and Listing of Debt Securities) Regulations, 2009;
- The SEBI (Buyback of Securities) Regulations, 1998;
COMPLIANCES UNDER COMPANIES ACT, 2013;
General Compliances
- Whether company has kept and maintained all statutory registers, filed all forms, return and notices to respective authorities as per companies Act, 2013
- Whether company follow all requirements of the Act and provisions of MOA & AOA
Details of Documents to be Checked
Register and Record
- Register & Index of members
- Register & Index of debenture holders
- Foreign registers of members of debenture holders
- Registers and returns
- Minutes book of meetings
- Minutes book of class meeting/creditors meeting
- Register of investments
- Register of deposits
- Register of charges (creation)
- Books of accounts & cost records
- Register of contracts
- Register of directors, MD, manager & secretary
- Register of directors’ shareholding
- Register of investments, loans made, guarantee given or security provided
- Register of renewed & duplicate certificates
- Register of directors’ attendance
- Register of shareholders’ attendance
- Register of proxies
- Register of Transfer
- Register of fixed assets
- Register of debenture holders
Returns
- Annual Returns
- Annual Accounts (Balance Sheet and Profit and Loss Account)
- Return of Allotment
- Notice of change in situation of Registered office
- Court or CLB Order
- Return of Appointment of MD/WTD/Manager
- Return of Deposits
- Registration of Resolutions and Agreements
- Registration of Creation/ modification/ satisfaction of Charge
Meetings
- Board of Directors Meetings, as per section 173 of Companies Act, 2013
- Extraordinary General Meeting, as per section 100 of Companies Act, 2013
- Annual General Meeting, as per Section 96 of Companies Act, 2013
- Committee Meetings duly convene as per provisions of Companies Act, 2013
- Minutes of All Meetings maintained as per section 118 of Companies Act, 2013
- Proof of Dispatch of Notices to Members/ Directors as per respective provisions of Companies Act, 2013
e- Filing
Check whether company has filed the following Documents;
MGT- 14 within 30 Days of passing Special Resolutions/Board Resolutions as the case may be
MGT-14 in case of Board Resolutions (other than Private Company)
- To make political contributions
- To Diversify the Business of the Company
- To approve Merger, Amalgamation or Reconstruction
- To takeover of the Company
- To Appoint Secretarial Auditor (section 204 of Companies Act, 2013)
- To Appoint Internal Auditor (section 138 of Companies Act, 2013)
- To invest the fund of Company under section 186 of Companies Act, 2013
- To Approve Financial statement and Board’s Report
- To Appoint or Remove KMP (defined under section 2(51) of the Companies act,2013
- To issue securities including debenture, by letter of offer
- To Borrow Monies from any sources including Directors
- To authorize Buy Back of Securities under Section 68
MGT- 14 in case of Ordinary Resolutions
- For Appointment of Director under section 152 of companies Act, 2013
- Invitation given to member for Deposit as per section 73 of Companies Act, 2013
- Appointment of Small Shareholder Director (section 151 )
- Appointment of independent Director
- Issue of Bonus Share
- Change of the name of the Company
MGT-14 in case of Special Resolutions
- Conversion of Private Company into OPC
- Approve the any scheme for giving loan to MD/WTD under section 185
- Loan or Investment by Company exceeding the limit under section 186 of the Companies Act, 2013
- Special resolution for winding of the Company
- Appoint Managerial Personnel exceeding the age of 70 Years
- Remuneration to managerial personnel in case of inadequacy of profit a per Schedule V
- Resolutions under Section 180 (a), (b) and (c) of the companies Act, 2013
- Re- appointment of Independent Director
- For keeping of the register any other place in India
- For buyback of share as per section 68
- For reduction of share capital as per section 66
- Issue of Sweat equity share as per section 54
- Private Placement of Securities
- Conversion of Section 8 Company in any other kinds or alteration of its MOA
- Change of its registered office under section 12 and 13 of Companies Act, 2013
File return of allotment in form PAS-3 within 30 days of allotment of share with ROC
File SH -11 returns in respect of Buy back of Securities
File form DPT 3 for return of deposit
File CHG-1 in case of Application for registration of creation, modification of charge, within 30 days of its creation
Particular for Satisfaction of Charge in form no CHG-4 filed with ROC
For condonation of delay in filing of charges has been made to CG in form no CHG 8
Whether MGT 7 (Annual Return) filed with ROC within 60 days of its AGM
Whether company maintained AOC 2 for related party disclosure
Whether company file ADT 1 within 30 days of Appointment of Auditors
Whether application has been made to CG in ADT 2 for removal of Auditors
Whether company received DIR 2 (consent to act as a director)
Whether company Filed DIR 12 (particular for Appointment of Director, KMP and changes among them) with ROC within 30 days of appointment or changes
Whether DIR 11 filed with ROC within 30 days of its Resignation
Whether Company maintain Register of Loans and investment in MBP 2
Whether Company Receive MBP 1 (nature of Interest) from all director in its first BM of Financial Year
Whether company maintained register of Contract and arrangement in which director are interested in Form MBP 4
Whether company file MR 1 with Roc within 30 days of appointment of MD/WTD/Manager
Whether MR 2 filed with CG for approval of appointment or reappointment and remuneration or increase in remuneration or waiver for excess or over payment to managing director or whole time director or manager and commission or remuneration
Share Certificates, Transfer/Transmission of Shares, Dividend, Board’s Report
- Copies of Endorsed shares certificates and other securities
- Transfer Deeds and transmission request letters etc.
- Declaration, payment and transfer of dividend
- Board’s report
- Transfer of unpaid amounts to the IEPF
COMPLIANCES UNDER SECURITIES CONTRACTS (REGULATION) ACT, 1956
(1) Check whether the company’s securities are already listed on a Stock Exchange;
(2) Check whether the company has issued shares/debentures/bonds to the public. If yes, whether:
(a) An application for this purpose to the stock exchange has been made along with the documents and particulars mentioned in Rule 19(1) of the Securities Contracts (Regulation) Rules, 1957;
(b) Has the listing agreement been finalized and approved by the company’s Board and executed with the stock exchange concerned. In case any conditions have been imposed by the stock exchange, have those restrictions/conditions been incorporated in the agreement.
(c) Whether listing was done within the statutory time limit
(d) Where permission for listing has been refused by the Stock Exchange:
- Whether appeal was filed
- What is the outcome of the appeal?
(e) Whether all terms and conditions of the listing agreement have been complied with.
(Prepared by Sanoj Kumar (CS Trainee)- E-maid id-cssanoj.icsi@gmail.com)
Kindly check if MR-1 is to be filed within 60 days of Appointment as per Sec 196 of the Companies Act, 2013 and Company (Appointment and Remuneration of Managerial Personnel) Rules, 2014