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PRESENTATION ON
SECRETARIAL AUDIT -
COMPANIES ACT, 2013
K. SETHURAMAN
June 28, 2014
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VOLUTION OF S CR TARIAL AUDIT
Until 2000 – Securities related Audit (Clause 47C)
February 2000 – Corporate Governance (Clause 49) Copanies (Copliance Certi!icate) "ules# 200$ (Section %&%A)
' Unlisted copanies it paid*up capital o! "s $0 la+ or ore
' "e,uired even i! copany ad a Copany Secretary in eployent
(applicable !ro -eceber %$# 2002)' Secretarial Audit "eport !or reconciliation o! total aditted capital it
depositories and total issued and listed capital (CA or CS)
Annual "eturn Certi!ication
-ue -ili.ence certi!icates / reports !or 1# open o!!er# bonus issue#G-" issue# etc3
CA 5oluntary Guidelines# 2009
Secretarial Audit and Annual "eturn certi!ication (Copanies Act 20$%)
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B N FICIARI S OF S CR TARIAL AUDIT
Assurance o! Copliances to6
Copanies-irectors
ana.eent
Sareolders
Creditors / rustees
Credit "atin. A.encies
"e.ulatory Autorities
ter Sta+eolders
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S CR TARIAL AUDIT FOR BIGG R
COMPANI S (S C 204)
Companies covered:
(a)Every Listed Company (includes Copanies ose debentures#arrants are listed)
(b)Other class of companies6
(i) 8very 1ublic Copany avin. a paid up share capital of fifty crore
rupees or more(ii) 8very public copany avin. a turnover of two hundred fifty crore
rupees or more
Secretarial Audit "eport sall be anneed to :oard;s "eport
:oard in teir "eport to eplain in !ull any ,uali!ication or observationor oter rear+s ade by 1CS in is report
Forat o! Secretarial Audit "eport sall be in For "*%
For contravention – copany# every o!!icer o is in de!ault and 1CS
punisable it !ine – "s $ la+ to "s < la+
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APPOINTM NT OF S CR TARIAL AUDITOR
:oard to appoint at its eetin. te Secretarial Auditor (on
yearly basis) and !i is reuneration =Section $79(%)>
Copany to !ile te resolution it "oC =Section $$7>
Period of Office: e Act is silent – su..ested to be
siilar to statutory Auditor appointed under Section $%9($0 years eter Secretarial Auditor is a 1roprietor or a
!ir)
btain consent o! te Secretarial Auditor
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LIGIBILITY, QUALIFICATIONS AND
DISQUALIFICATIONS OF S CR TARIAL AUDITOR
?o le.al provisions in te Act
Su..ested siilar re,uireents as are set out in te Act
!or Statutory Auditors and applicable to Cost Auditors3
(Self Code)
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R MOVAL & R SIGNATION OF S CR TARIAL
AUDITOR
"eoval o! Secretarial Auditor – no provisions in te Act
"esi.nation o! Secretarial Auditor – :oard to note and !ile
!or it "oC (not obli.atory)
Secretarial Auditor also to !ile !or it "oC (notobli.atory)
Appointent o! Secretarial Auditor on casual vacancy
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DOCUM NTS R QUIR D FOR AUDIT
?otice# a.enda# notes on a.enda inutes o! eetin.s#
attendance re.isters
-ra!t Financial Stateents# Auditor;s "eport# -irector;s "eport
Stateents !or borroin.s and investents
All Statutory "e.isters -isclosures / consents / declarations
Filin.s it "oC / re.ulatory autorities / ":
Filin.s / subissions to Stoc+ 8can.es
"elevant approvals / correspondence
Copliance certi!icates o! !unctional eads !or copliance o!
applicable las
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AUDIT M THODOLOGY
-eterine scope o! Audit
"e,uest !or details o! various corporate actions / eventssub@ect to audit
-evelop te audit !raeor+
Ascertain applicable las
1repare cec+*lists and tie scedule
Call !or docuents / in!oration
btain ana.eent "epresentation etter
-iscuss and see+ clari!ication# i! re,uired
-iscuss dra!t report it ana.eent
FinaliBe and subit dra!t addressed to sareolders
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S CR TARIAL AUDIT R PORT – FORM NO. MR
!
"eport is !or te !inancial year ended
"eport is to be addressed to te ebers siilar to
independent Auditors; "eport
Parts of Secretarial Audit eport:
(a)Para !: 1reable
(b)Para ": eport in #eneral (based on veri!ication o! te
copany;s boo+s# papers# inute boo+# !ors and returns
!iled and in!oration provided) tat te copany as
coplied it te statutory provisions listed in te reportthat the company has proper $oard processes and
Compliance mechanism
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S CR TARIAL AUDIT R PORT – FORM NO. MR
!
(a) Para %: "eport cites eaination o! te boo+s# papers#
inute boo+s# !ors and returns !iled and oter records
aintained by te copany accordin. to te 1rovisions
o!6
(i) e Copanies Act# 20$% (te Act) and te rules ade tereunder
(ii) e Securities Contracts ("e.ulation) Act# $9
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S CR TARIAL AUDIT R PORT – FORM NO. MR
!
(v) e !olloin. "e.ulations and Guidelines prescribed under te
Securities and 8can.e :oard o! ndia Act# $992 (ES8: Act;)6*(a) e Securities and 8can.e :oard o! ndia (Substantial Ac,uisition
o! Sares and a+eovers) "e.ulations# 20$$
(b) e Securities and 8can.e :oard o! ndia (1roibition o! nsider
radin.) "e.ulations# $992
(c) e Securities and 8can.e :oard o! ndia (ssue o! Capital and
-isclosure "e,uireents) "e.ulations# 2009
(d) e Securities and 8can.e :oard o! ndia (8ployee Stoc+ ption
Scee and 8ployee Stoc+ 1urcase Scee) Guidelines# $999
(e) e Securities and 8can.e :oard o! ndia (ssue and istin. o!
-ebt Securities) "e.ulations# 200&
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S CR TARIAL AUDIT R PORT – FORM NO. MR
!
(!) e Securities and 8can.e :oard o! ndia ("e.istrars to an
ssue and Sare rans!er A.ents) "e.ulations# $99% re.ardin.te Copanies Act and dealin. it client
(.) e Securities and 8can.e :oard o! ndia (-elistin. o! 8,uity
Sares) "e.ulations# 2009 and
() e Securities and 8can.e :oard o! ndia (:uybac+ o!Securities) "e.ulations# $99&
(vi) 33333333333333333333333333333333333333333333333333333333333333 (&ention the other laws
as may be applicable specifically to the company)
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S CR TARIAL AUDIT R PORT – FORM NO. MR
!
(d) Para ': "eport deals it eaination o! copliance it applicable
clauses o! te !olloin.6
(i) Secretarial Standards issued by te nstitute o! Copany
Secretaries o! ndia
(ii) e istin. A.reeents entered into by te Copany it 3 Stoc+
8can.e(s)# i! applicable(iii) "eport deals it copliance or oterise it te provisions o! te
Acts# "ules# "e.ulations# Guidelines# Standards# etc3 entioned
above# sub@ect to !olloin. observations# i! any
(e) Para 6 "eport deals it6
(i) Constitution o! :oard o! -irectors – 8ecutive / ?on*8ecutive#
ndependent -irector / oen -irector# etc3
(ii) Ade,uate ?otice to directors !or :oard eetin.s
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.
!
(.) Para 6 "eport deals it Con!iration o! ade,uate systes and
processes in te copany coensurate it te siBe and operations
o! te copany to monitor and ensure compliance with applicable
laws* rules* re#ulations and #uidelines (List of laws circulated)
+ote: Huali!ications# i! any# observed to be cited3
() Para ,6 "eport deals it speci!ic events / actions avin. a a@or
bearin. on te copany;s a!!airs in pursuance o! te above re!erred
las# rules# re.ulations# .uidelines# standards# etc3 re!erred to above3
For eaple6
(i) 1ublic / "i.t / 1re!erential ssue o! sares / -ebentures / seat e,uity#
etc3
(ii) "edeption / buy*bac+ o! securities
(iii) a@or decisions ta+en by te ebers in pursuance to Section $&0 o!te Copanies Act# 20$%
(iv) er.er / Aal.aation / reconstruction# etc3
(v) Forei.n tecnical collaboration
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DUTI S OF S CR TARIAL AUDITOR – FRAUD R PORTING
"S C #4!(#2)(#4)$
! Copany Secretary in 1ractice# durin. conduct o!
Secretarial Audit# as su!!icient reason to believe tat ano!!ence involvin. fraud is bein# committed or has been
committed a.ainst te copany by officers or employees
of the company# e sall report te sae to te Central
Governent iediately but not later tan D0 days o! is
+noled.e it a copy to te :oard / Audit Coittee see+in.teir reply within ' days
:oard / Audit Coittee to reply in ritin. te steps ta+en to
address te !raud
e Auditor to !orard is report and reply o! te :oard / Audit
Coittee it is Coents to te Central Governent
itin $< days o! reply by :oard / Audit Coittee
-he eport shall be in .orm A/- 0 '
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S CR TARIAL AUDIT
VS
C RTIFICATION OF ANNUAL R TURN
Certi!ication o! Annual "eturn by 1CS
' Annual "eturn !iled by listed copany
' Annual "eturn !iled by a copany avin.6(a) 1aid*up sare capital o! s !1 crore or more or
(b) urnover o! s 1 crore or more
Certi!icate sall be in For G * &
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FORM MGT %
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.orm +o2 &3-04
[Pursuant to section 92(2) of the Companies Act, 2013 and rule $$(2) o!Copanies (ana.eent and Adinistration) "ules# 20$4 ]
CE-5.5CA-E $6 A CO&PA+6 SECE-A6 5+ PAC-5CE
/ e ave eained te re.isters# records and boo+s and papers o!
************ Limited7Private Limited (te Copany) as re,uired to be
aintained under te Copanies Act# 20$% (te Act) and te rules
ade tereunder !or te !inancial year ended on ***************** #
20****3 n y/ our opinion and to te best o! y in!oration and
accordin. to te eainations carried out by e/ us and
eplanations !urnised to e/ us by te copany# its o!!icers and
a.ents# / e certi!y tat6
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FORM MGT %
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A3 te Annual "eturn states te !acts as at te close o! te a!oresaid !inancial
year correctly and ade,uately3
:3 durin. te a!oresaid !inancial year te Copany as coplied itprovisions o! te Act I "ules ade tere under in respect o!6
$3 its status under te Act
23 aintenance o! re.isters/records I a+in. entries terein itin te tie
prescribed tere!or
%3 !ilin. o! !ors and returns as stated in te annual return# it te "e.istrar
o! Copanies# "e.ional -irector# Central Governent# te ribunal# Court
or oter autorities itin/beyond te prescribed tie
43 callin./ convenin./ oldin. eetin.s o! :oard o! -irectors or its
coittees# i! any# and te eetin.s o! te ebers o! te copany on
due dates as stated in te annual return in respect o! ic eetin.s#
proper notices ere .iven and te proceedin.s includin. te circular
resolutions and resolutions passed by postal ballot# i! any# ave been
properly recorded in te inute :oo+/re.isters aintained !or te purpose
and te sae ave been si.ned
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FORM MGT %
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FORM MGT %
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FORM MGT %
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$$3si.nin. o! audited !inancial stateent as per te provisions o! section
$%4 o! te Act and report o! directors is as per sub * sections (%)# (4)
and (
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FORM MGT %
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$D3borroin.s !ro its directors# ebers# public !inancial institutions#
ban+s and oters and creation/ odi!ication/ satis!action o! car.es
in tat respect# erever applicable
$73loans and investents or .uarantees .iven or providin. o! securities
to oter bodies corporate or persons !allin. under te provisions o!
section $&D o! te Act
$&3alteration o! te provisions o! te eorandu and/ or Articles o! Association o! te Copany
1lace6 Si.nature6
-ate6 ?ae o! Copany Secretary in practice6
C313 ?o3 6
?ote6 e ,uali!ication# reservation or adverse rear+s i! any# ay be
stated at te relevant place(s)3
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Comments:
($)1CS to certi!y copliance it provisions o! te Act and
"ules in respect o! the ei#hteen items set out in the
.orm &3- 9 42
(2)e certi!ication by 1CS in te Annual "eturn is it
respect to correctness and ade,uacy o! te !acts as at
te close o! te !inancial year set out in te return3
(%)t does not etend to certi!ication to te e!!ect tat te
Copany as coplied it all te provisions o! te Act
as stated under Section "(") of the Act
S CR TARIAL AUDIT
VS
C RTIFICATION OF ANNUAL R TURN
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PUNISHM NT FOR FRAUD (S C 44)
Section 447 states tat itout pre@udice to any liability includin. !or
repayent o! any debt under te Act or any oter la !or te tie bein.
in !orce# any person who is found #uilty of fraud# sall bepunisable it iprisonent !or a ter ic sall not be less tan
si onts but ic ay etnd to ten years and sall also be liable to
!ine ic sall not be less tan te aount involved in te !raud but
ic ay etend to tree ties te aount involved in !raud
e Section !urter states tat ere te !raud in ,uestion involvespublic interest# te ter o! iprisonent sall not be less tan tree
years3
Fraud in relation to a!!airs o! a copany or any body corporate# includes
any act# oission# concealent o! any !act or abuse o! position
coitted by any person or any oter person it te connivance inany anner# it intent to deceive# to .ain undue advanta.e !ro# or to
in@ure te interests o!# te copany or its sareolders or its creditors
or any oter person# eter or not tere is any ron.!ul .ain or
ron.!ul loss
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PUNISHM NT FOR FALS STAT M NT (S C
44%)
Section 44& states tat# save as oterise provided in te Act# i!
in any return# certi!icate# !inancial stateent# prospectus#stateent or oter docuent re,uired by te Act or "ules ade
tereunder# any person a+es a stateent6
(a)ic is !alse in any aterial particulars# +noin. it to be
!alse or (b)ic oits any aterial !act# +noin. it to be aterial#
Ke sall be liable under Section 447
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PUNISHM NT IN CAS OF R P AT D D FAULT (S C
4'#)
Section 4
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-;A+< 6O=
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