CHECK LIST FOR SECRETARIAL AUDIT UNDER SECTION 204 OF THE COMPANIES ACT,20

CHECK LIST FOR SECRETARIAL AUDIT

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.

RECENT AMENDMENT”

Format for annual secretarial audit report and annual secretarial compliance report for listed entities and their material subsidiaries

a.    Secretarial audit to be made compulsory for all listed entities under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Regulations”) in line with the provisions of the Companies Act, 2013.

b.    Secretarial audit to be extended to all material unlisted Indian subsidiaries in line with the recommendations of the Committee on strengthening group oversight and improving compliance at a group level for listed entities.

2.    The aforesaid recommendations were accepted and in order to implement the same, the  SEBI (Listing  Obligations and Disclosure Requirements) Regulations, 2015 have been amended to include the following Regulation 24A:

“24A: Secretarial Audit

Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial audit and shall annex with its  annual report, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed with effect from the year ended March 31, 2019.”

3.    Accordingly, the following shall be complied with by a listed entity and its material unlisted subsidiaries as applicable:

a.    Annual secretarial audit report

(i)    Currently, Section 204 of the Companies Act, 2013 read with rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel)  Rules,  2014  requires  Secretarial  Audit  by  Practicing Company  Secretaries  (PCS)  for  listed  companies  and  certain unlisted companies above a certain threshold in Form No. MR-3.

(ii)    In order to avoid duplication, the listed entity and its unlisted material subsidiaries shall continue to use the same Form No. MR-3 as required under Companies Act, 2013 and the rules made thereunder for the purpose of compliance with Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as well.

b.ANNUAL SECRETARIAL COMPLIANCE REPORT

(i)    While the annual secretarial audit shall cover a broad check on compliance with all laws applicable to the entity, listed entities shall additionally, on an annual basis, require a check by the PCS on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder, consequent to which, the PCS shall submit a report to the listed entity in the manner specified in this circular.

(ii)    The format for the annual secretarial compliance report is placed at Annex-A

(iii)    The annual secretarial compliance report in the aforesaid format shall be submitted by the listed entity to the stock exchanges within 60 days of the end of the financial year.

c.    The listed entities and their material subsidiaries shall provide all such documents/information as may be sought by the PCS for the purpose of providing a certification under the Regulations and this circular.

4.    ICSI may consider issuing a guidance note to Practising Company Secretaries to enable them  to undertake certifications in accordance with the Regulations and this circular in letter and in spirit.

5.    The Stock Exchanges are advised to bring the provisions of this circular to notice of the listed entities and also to disseminate on their websites.

6.    This circular shall come into force as under:

a.    With respect to the annual secretarial audit report, in the annual reports of the listed entities and the material unlisted subsidiaries from the financial year ended March 31, 2019 onwards.

b.    With respect to the annual secretarial compliance report, applicable to listed entities, with effect from the financial year ended March 31, 2019 onwards.

7.    The circular is issued in exercise of the powers conferred under sections 11 and 11A of the Securities and Exchange Board of India Act, 1992 read with Regulations 24A and 101 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

8.    The circular is available on SEBI website.

For Annexure – A visit below link…

https://www.sebi.gov.in/legal/circulars/feb-2019/physical-settlement-of-stock-derivatives_42021.html

SECRETARIAL AUDIT – THE PROCESS

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

1	Whether company has kept and maintained all statutory registers, filed all forms, return and notices to respective authorities as per companies Act, 2013
2	Whether company follow all requirements of the Act and provisions of MOA & AOA

DETAILS OF DOCUMENTS TO BE CHECKED

REGISTER AND RECORDS

1	·        Register & Index of members
2	·        Register & Index of debenture holders
3	Foreign registers of members of debenture holders
4	·        Registers and returns
5	·        Minutes book of meetings
6	·  Minutes book of class meeting/creditors meeting
7	·        Register of investments
8	·        Register of deposits
9	·        Register of charges (creation)
10	·        Books of accounts & cost records
11	·        Register of contracts
12	· Register of directors, MD, manager & secretary
13	·        Register of directors’ shareholding
14	·   Register of investments, loans made, guarantee given or security provided
15	Register of renewed & duplicate certificates
16	·        Register of directors’ attendance
17	·        Register of shareholders’ attendance
18	·        Register of proxies
19	·        Register of Transfer
20	·        Register of fixed assets
21	·        Register of debenture holders

RETURNS TO BE CHECKED

·        1	·        Annual Returns
·        2	·   Annual Accounts (Balance Sheet and Profit and Loss Account)
·        3	·        Return of Allotment
·        4	·        Notice of change in situation of Registered office
·        5	·        Court or CLB Order
·        6	·        Return of Appointment of MD/WTD/Manager
·        7	·        Return of Deposits
·        8	·        Registration of Resolutions and Agreements
·        9	·        Registration of Creation/ modification/ satisfaction of Charge

MEETINGS TO BE CHECKED

1	·        Board of Directors Meetings, as per section 173 of Companies Act, 2013
2	·        Extraordinary General Meeting, as per section 100 of Companies Act, 2013
3	Annual General Meeting, as per Section 96 of Companies Act, 2013
4	· Committee Meetings duly convene as per provisions of Companies Act, 2013
5	·        Minutes of All Meetings maintained as per section 118 of Companies Act, 2013
6	·       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)

1	·        To make political contributions
2	·        To Diversify the Business of the Company
3	·       To approve Merger, Amalgamation or Reconstruction
4	·        To takeover of the Company
5	To Appoint Secretarial Auditor (section 204 of Companies Act, 2013)
6	To Appoint Internal Auditor (section 138 of Companies Act, 2013)
7	To invest the fund of Company under section 186 of Companies Act, 2013
8	·        To Approve Financial statement and Board’s Report
9	·   To Appoint or Remove KMP (defined under section 2(51) of the Companies act,2013
10	·   To issue securities including debenture, by letter of offer
11	· To Borrow Monies from any sources including Directors
12	·      To authorize Buy Back of Securities under Section 68

MGT- 14 IN CASE OF ORDINARY RESOLUTIONS

1	For Appointment of Director under section 152 of companies Act, 2013
2	·        Invitation given to member for Deposit as per section 73 of Companies Act, 2013
3	·        Appointment of Small Shareholder Director (section 151 )
4	·        Appointment of independent Director
5	·        Issue of Bonus Shares
6	·        Change of the name of the Company

MGT-14 IN CASE OF SPECIAL RESOLUTIONS

1	·        Conversion of Private Company into OPC
2	·        Approve the any scheme for giving loan to MD/WTD under section 185
3	·        Loan or Investment by Company exceeding the limit under section 186 of the Companies Act, 2013
4	·        Special resolution for winding of the Company
5	Appoint Managerial Personnel exceeding the age of 70 Years
6	·        Remuneration to managerial personnel in case of inadequacy of profit a per Schedule V
7	·        Resolutions under Section 180 (a), (b) and (c) of the companies Act, 2013
8	·        Re- appointment of Independent Director
9	·        For keeping of the register any other place in India ·
10	·        For reduction of share capital as per section 66
11	·        Issue of Sweat equity share as per section 54
12	·        Private Placement of Securities
13	·        Conversion of Section 8 Company in any other kinds or alteration of its MOA
14	·        Change of its registered office under section 12 and 13 of Companies Act, 2013
15	·        For buyback of share as per section 68

DETAILS OF ROC FORMS TO BE FILED WITH DUE DATE

PAS-3	File return of allotment in within 30 days of allotment of share with ROC
SH -11	File  returns in respect of Buy back of Securities
DPT 3	File form  for return of deposit
CHG-1	Filein case of Application for registration of creation, modification of charge, within 30 days of its creation
CHG-4	Particular for Satisfaction of Charge in form no  filed with ROC
CHG 8	For condonation of delay in filing of charges has been made to CG in form no
MGT 7	Whether (Annual Return) filed with ROC within 60 days of its AGM
AOC 2	Whether company maintained  for related party disclosure
ADT 1	Whether company file  within 30 days of Appointment of Auditors
ADT 2	Whether application has been made to CG in  for removal of Auditors
DIR 2	Whether company received  (consent to act as a director)
DIR 12	Whether company Filed  (particular for Appointment of Director, KMP and changes among them) with ROC within 30 days of appointment or changes
DIR 11	Whether filed with ROC within 30 days of its R  esignation
MBP 2	Whether Company maintain Register of Loans and investment in
MBP 1	Whether Company Receive  (nature of Interest) from all director in its first BM of Financial Year
MBP 4	Whether company maintained register of Contract and arrangement in which director are interested in Form
MR 1	Whether company file  with Roc within 30 days of appointment of MD/WTD/Manager

SHARE CERTIFICATES, TRANSFER/TRANSMISSION OF SHARES, DIVIDEND, BOARD’S REPORT

1	·   Copies of Endorsed shares certificates and other securities
2	·   Transfer Deeds and transmission request letters etc.
3	Declaration, payment and transfer of dividend
4	·        Board’s report
5	·        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.

Courtesy:CS Sanoj Kumar