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Disclaimer:

I am a Participant

Personal Views - Not of the ICSI

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Open House Discussion on

Quality of Attestation services by PCS and CS-in-Employment

 

CS. PREMNARAYAN TRIPATHI

May 16, 2015

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1. Who we are?

i. Expert [Sec. 2(38)]

“Expert” includes an engineer, a valuer, a chartered accountant, a company secretary, a cost accountant and any other person who has the power or authority to issue certificate in pursuance of any law for time being in force.(Proficiency over subject matters)

ii. Professional

Engaged in a specified activity as one’s main paid occupation rather than as an amateur.

- Sincerity, commitment, due diligence, efficiency…..- Operational/Procedural aspects- To say ‘No’ in case of scarcity of time- Not a BUSINESSMAN

Three basic Questions ???

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iii. Key Managerial Personnel [Sec. 2(51)]in relation to a company, means-i) CEO or MD or the Managerii) the Company Secretaryiii) the Whole-time Director

Due Recognition in the Act Not Personal/Director/MD’s Secretary

Three basic Questions ???

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To report to the Board about Compliance with the provisions of the Act, Rules made thereunder and other laws applicable to the Company

To ensure that the Company complies with the applicable Secretarial Standard

Facilitate convening of BM/GM/Committee Meeting Maintain Registers, Minutes Book and other records Take approval of Board, Members and Government

wherever required Assist the Board in Corporate Affairs Advise the Board in ensuring good corporate

governance Such other duties as may be assigned by the Board

Functions of CS in employment

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2. What we are doing? Certification

- Affixing DSC- DSC affixed by trainees- Affixing stamp

Attestation Signing Authentication (Sec.21) Signing on behalf of

Directors (extra care…)

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3. What is Expected by-

i. Regulatory authorities ii. The ICSIiii. Company / Promoters iv. Stakeholders

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Mode of Engagement (….Duly engaged..)

i. Engagement for Incorporation of Companyii. Certification:

◦ Board Resolution [Sec. 118(8)]◦ Engagement Letter ◦ Retainership/Consultancy Agreement

iii. Board Resolutions for CS in employment

Engagement for services

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Refer Section, Rule and Instruction kit of respective Form Whether ALL required documents are attached Whether attachments are legible Content of Letterhead (CIN, Regd. Office Add., Email etc.) Whether Name, Designation, DIN and Address of Signatory

are mentioned in the Certified true copy of the Resolution Content of attachments: e.g. Resolution u/s

179(3)(d)(e)(f)/180(1)(c)/186 Whether authority for affixing of DSC and Filing of Form is

given. STP Forms Keeping record of Originals Refer Companies (Registration Offices and Fees) Rules, 2014

Due Diligence

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8. Authentication of documents.- (3) The authorised signatory and the professional, if any, who

certify e-form shall be responsible for the correctness of the contents of e-form and correctness of the enclosures attached with the electronic form.

(7) It shall be the sole responsibility of the person who is signing the form and professional who is certifying the form to ensure that all the required attachments relevant to the form have been attached completely and legibly as per provisions of the Act, and rules made thereunder to the forms or application or returns filed.

(9) Where any instance of filing document, application or return etc, containing a false or misleading information or omission of material fact, requiring action under section 448 or section 449 is observed, the person shall be liable under section 448 and 449 of the Act.

Companies (Registration Offices and Fees) Rules, 2014

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Frequently used Forms: [Certification required under Rule 8(12)(a) of Registration Offices and Fees, Rules]

i. MGT-14ii. PAS-3 iii. DIR-12iv. MR-1v. INC-22

MGT-15 (for listed company)

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MGT-14: [Section 94(1), 117(1)]

Reference of section 192 of The Companies Act, 1956 is given whereas this section is not in force (replaced by Section 117) (MCA Circular No. 7/2014)

One Form for different events within 30 days (Instruction kit)

Board resolutions u/s 179(3) Duly convened Board Meeting – adherence to SS 1 (Board

Meeting) Special resolutions Resolutions under Postal Ballot Ordinary resolutions [180(1)(a) & (c)] Agreement (MD related) resolution under section 94(1)

Failure to file: Penalty :- Rs.5 Lacs – Rs.25 Lacs

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Form PAS-3 [Sec.39(4) and 42(9) and Rule 12 and 14 Companies (Prospectus and Allotment of Securities) Rules, 2014]

Ref. of Sec. 62 and 63 ought to be given in the Form

Allotment for Cash/other than Cash List of Allottees (Name, Address, Occupation, No. of

securities) to be certified by the signatory of Form PAS 3

Certified true copy of Board Resolution/Shareholders’ Resolution

Latest Debt Structure of the company Valuation Report from the valuer Private Placement offer letter and acceptances in Form PAS-5

Penalty: Sec. 42(10) - Amount involved/Rs.2 Cr., whichever is Higher

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Form DIR-12 [section 7(1)(c), 168 & 170 and Rule 17 of the Companies (Incorporation) Rules, 2014 and 8, 15 & 18 of the Companies (Appointment and Qualification of Directors) Rules, 2014]

[Ref. of 7(1)(c) should be 7(1)(f)]

One Form for different events within 30 days Person being appointed should NOT be Director in >20

Cos. Consent in Form DIR-2 (Notarized, during incorporation of

Company) Self Attested copy of Identity and Residence Proof Declaration by the First Directors in Form INC-9 (Notarized) Letter of Appointment on the letterhead of the Company Notice of Resignation Evidence of Cessation Interest of Director in other entities Certified true copy of Board Resolution

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Form MR-1 [Sec. 196 read with Sec. 197 and Schedule V and Rule 3 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

Ref. of Sec. 203 ought to be given

Filing within 60 days Board Resolution including Designation of KMP,

proposed Remuneration, Tenure of Appointment etc. Consent Letter (format not prescribed for

CEO/CFO/CS) Copy of Remuneration Policy, if applicable Cert. by Auditor/CS/PCS (Sch. V – Part III).

Mandatory attachment. Not provided in Form.

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Form INC-22 [Section 12(2)&(4) and Rule 25 and 27 of the Companies (Incorporation) Rules, 2014 ]

Personal visit of the Regd. Office Proof of Regd. Office address - copy of Index issued by

sub-registrar/Municipal Tax Bill/Lease Agreement etc. Electricity Bill or Telephone Bill or Mobile Bill or Gas Bill

– Not older than 2 months. No Objection Letter for using premise as Regd. Office in

case such premise is owned by any other entity/person. List of all the companies (specifying their CIN)

having the same registered office address, if any; Name and Address of Police Station nearby Regd.

Office.

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Form MGT-15 [Section 121(1) (2) and Rule 31(2) of Companies (Management and Administration) Rules, 2014]

Listed Public Companies Report on AGM- in addition to the minutes Fair and correct summary of the proceedings - Mention

some key points related to the meeting held Attendance Register Ensure Quorum of Meeting Confirmation w.r.t. compliance of the Act and the

Rules, Secretarial Standards made thereunder – SS 2

No attachment - No Certification

Failure to file: Penalty – Rs.1 Lac to 5 Lac +

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Principal Business Activities of the Company: All business activities contributing >=10% of the total turnover of the company shall be stated

Particulars of Holding, Subsidiary and Associate Companies with applicable Section

Capital Structure (at the Beginning, changes during the year and at the end of the year)

Turnover and Net worth Category wise Shareholding – akin to Listed Co. cl. 35 Determining Promoters: Shareholding of Promoters and

Changes therein Shareholding pattern of top Ten Shareholders (other than

Directors, Promoters and holders of GDRs and ADRs) Shareholding of Directors and KMP Indebtedness (Secured Loan + Unsecured Loan + Deposits) Details of Members, Debenture holders and other securities

holders and transfer during the year

Annual Return (MGT 7)

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Details of Directors (Composition of Board, Details of Individual Directors, Details of Directorships in other companies and changes therein)

Details of KMP Meeting of Members/Class of Members/

Board/Committees of the Board of Directors Remuneration of Directors and KMP Penalty, Punishment and other Compounding of

Offences Matters related to Certification of

Compliances and Disclosures. CSR amount spent by the Company Limits u/s 180(1)(c) and 186(2)

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Signing Requirement: Except OPC and Small Company = Director +

CS/PCS For OPC and Small Co. = CS/Director

Certification Requirement: For Listed Company and a company having paid-

up capital => 10Cr. or Turnover => 50Cr. Certificate by PCS in Form MGT-8

Penalty: Section 92(6) If a PCS certifies the annual return otherwise than in conformity with the requirements of section 92 or the rules made thereunder – fine Rs. 50,000/- to Rs. 5,00,000/-.

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Query:

CS resigned in May, 15 – AGM held in June, 15 – CS vacancy not filled – 6 months period provided in Sec. 203(4)

Whether the PCS can Sign MGT-7 as well as can issue Certificate in MGT-8?

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the Annual Return states the facts as at the close of the aforesaid financial year correctly and adequately (50% Secretarial Audit)

the Company has complied with provisions of the Act & Rules made there under in respect of:

proper notices of BM/GM/Committee Meeting were given, properly recorded in the Minute Book/registers maintained for the purpose

advances/loans to its directors and/or persons or firms or companies referred in section 185 of the Act

contracts/arrangements with related parties as specified in section 188 of the Act;

acceptance/ renewal/ repayment of Deposits; Borrowings and creation of Charge loans and investments or guarantees given or providing of

securities to other bodies corporate or persons falling under the provisions of section 186 of the Act

MGT-8: key points

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Based on standalone financial statements Extract of Annual Return (Form MGT-9) No. of Board Meetings Statement given by independent director explanations or comments by the Board on every

qualification, reservation or adverse remark or disclaimer made—

(i) by the auditor in his report; and(ii) by the company secretary in practice in his

secretarial audit report; particulars of loans, guarantees or investments

under section 186; particulars of contracts or arrangements with related

parties AOC 2

Boards’ Report – key points[Section 134(3) and rule 8 and 9 of companies (account) rules, 2014]

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Composition of CSR Committee Disclosure of content of CSR Policy Financial summary/Highlights Details of Directors/KMP who were appointed or have

resigned Name of companies which have become or ceased

to be its subsidiaries, JV or associate co. during the year

Details relating to deposits including deposits which are not in compliance with the requirements of Chapter V of the Act

the details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future;

the details in respect of adequacy of internal financial controls with reference to the Financial Statements

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Thank you