THE INSTITUTE OF

Company Secretaries of India

IN PURSUIT OF PROFESSIONAL EXCELLENCE

Statutory body under an Act of Parliament

MCA/2019

22nd April, 2019

Shri Injeti Srinivas
Secretary
Ministry of Corporate Affairs
Government of India
5th Floor, Shastri Bhawan
Dr. Rajendra Prasad Road
New Delhi – 110 001′

Subject: Standardised format of reporting under Rule 9A of Companies (Prospectus and Allotment of Securities) Rules, 2014 – Reg.

Sir,

The Companies (Prospectus and Allotment of Securities) Rules, 2014 were amended by the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2018 inserting Rule 9A pertaining to Issue of securities in dematerialised form by unlisted public companies mandating that “Every unlisted public company shall issue the securities only in dematerialised form; and facilitate dematerialisation of all its existing securities in accordance with provisions of the Depositories Act, 1996 and regulations made there under”.

Furthermore, pursuant to sub-rule (8) of rule 9A of the above mentioned rules, “The audit report provided under regulation 55A of the Securities and Exchange Board of India (Depositories and participants) Regulations, 1996 shall be submitted by the unlisted public company on a half-yearly basis to the Registrar under whose jurisdiction the registered office of the company is situated”.

The Regulation 76 of LODR (erstwhile Regulation 55A(1) of the SEBI (Depositories and Participants) Regulations, 1996) states that “Every issuer shall submit audit report on a quarterly basis starting from September 30, 2003 to the concerned stock exchanges audited by a qualified chartered accountant or a practicing company secretary, for the purposes of reconciliation of the total issued capital, listed capital and capital held by depositories in dematerialized form , the details of changes in share capital during the quarter and the in-principle approval obtained by the issuer from all stock exchanges where it is listed in respect of such further issued capital”.

Sir, in light of the recent developments and the practical difficulties facing stakeholders, we would like to make the following submissions:

(A) Format of Audit Report:

Presently, the Audit Report is required to be submitted by the Corporates to the Stock Exchanges with which the company is listed. However, with the Rule 9A being enforced and the said reporting mandate being extended to unlisted public companies, it is imperative that a standardised format is www.taxguru.in provided amongst stakeholders for the ease and assistance of both the corporates and professionals alike and to support the existing governance structure.

In view of the same, the Institute has developed a draft format viz. Reconciliation of Securities Capital Audit Report for unlisted companies (placed at Annexure – A) on the same lines of the existing Format for Reconciliation of Share Capital Audit as prescribed in Regulation 76 of LODR {erstwhile Regulation 55A the SEBI (Depositories and Participants) Regulations, 1996} focusing on the specific features and characteristics of unlisted entities.

(B) Form to be used & Duration for filing the report:

In order to make necessary compliance, some of the Corporate have filed the Reconciliation of Securities Capital Audit Report in e-Form GNL-2, which has been rejected by the Registrar. We request you to advise the Registrar of Companies, not to reject the filings under Rule 9A made in E-Form GNL-2, till the time GNL-2 or an appropriate Form is notified by the Ministry.

Further, Rule 9A filing of the Report prescribes filing of the Report on half- yearly basis with the Registrar, however, the duration (time period after closure of 6 months) within which the same shall be filed has not been specified in the Rules.

In light of the same, it is suggested that the duration for filing the said Report may be specified and it may be mandated that “Every unlisted public company shall file with the Registrar a copy of the Reconciliation of Securities Capital Audit Report for unlisted companies, within thirty days from the date of closing of the each half year.”

As Rule 9A does not prescribe the Form for filing of Reconciliation of Securities Capital Audit Report with the concerned Registrar of Companies by the Corporates. Therefore, it is requested to notify either e-form GNL-2 or any other e- form with which the said Report can be submitted.

Furthermore, w.e.f October 3, 2018, the SEBI (Depositories and Participants) Regulations, 1996 have been repealed and replaced by SEBI (Depositories and Participants) Regulations, 2018, Rule 9A may be amended accordingly to replace Regulation 55A with Regulation 76.

Sir, the above submissions have been placed before your goodself with the intent of strengthening the existing legal structure pertaining to this area of corporate activity and easing the practical issues of stakeholders.

We shall be happy to provide any further information or clarification that may be desired in this regard.

Thanking You

Yours Faithfully

(CS Ashok Kumar Dixit)
Officiating Secretary

Encl : Annexure A- Format of Reconciliation of Securities Capital Audit Report for unlisted companies

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