Professional Documents
Culture Documents
Corporate Compliance
Management – Secretarial Audit :
Compliance Audit, Reporting
& Disclosures
Dr. K. R. Chandratre*, FCS, Company Secretary, Pune.
less than 25% or more of the total voting power is (b) for the sale, purchase or supply of any services;
exercised or controlled by any one or more directors (c) for underwriting the subscription of any shares in,
of the lending company; or debentures of, the company, with any of the
(l) any body corporate, the Board of Directors, managing following –
director or manager whereof is accustomed to act in any director of the company;
accordance with the directions or instructions of the
any relative of any director of the company;
Board, or of any director or directors, of the lending
company. any partnership firm in which any director of the
company is a partner;
No compliance with section 295 was necessary because such
loan was eligible for exemption under section 295(2) any partnership firm in which any relative of any
because- director of the company is a partner;
(a) The company which gave the loan was a private any partner of the partnership firm in which any
company not being a subsidiary of a public company; director of the company is a partner;
or any partner of the partnership firm in which any
(b) The loan was given by a holding company to its relative of any director of the company is a partner;
subsidiary. any private company in which any director of the
(c) The loan was given to a managing director or whole- company is a member;
time director of the company for housing purpose any private company in which any director of the
and it was in conformity with the guidelines issued company is a director.
by the DCA. The contract did not require compliance with section 297,
If the loan was not eligible for exemption, the Board had either because the contract did not attract the provisions
approved the giving of the loan and previous approval of of section 297 or it was eligible for exemption under any
the Central Government was obtained. of the clauses (a), (b) and (c) of sub-section (2) of section
The loan is being recovered in accordance with the terms 297.
and conditions stipulated and if there is default, the If the contract fell within the purview of section 297 and it
company took effective steps to recover the loan. was not one of the three exempted classes, a consent to the
If the loan is secured one, security was created immediately contract was given by the Board of Directors –
after the loan was disbursed and proper documentation in Either before entering into a contract; or
connection therewith was done create effective and after entering into of a contract in circumstances of
foolproof security. urgent necessity, and in the latter case, the consent
Documents to be verified : was given within three months of the date on which
(a) Minutes of the Board meeting at which the loan was the contract was entered into.
approved by the Board. The consent was given by the Board by a resolution passed
(b) Copy of the application which was made to the Department at its meeting and not otherwise (eg by a circular resolution
of Company Affairs for its approval for giving the loan. or in any other manner).
(c) Copy of the DCA’s letter giving approval for giving the There was requisite disinterested quorum at the Board
loan. meeting whereat the Board gave its consent to the contract
and the director who was interested in the contract had not
(d) Loan agreement or sanction letter.
been counted in quorum and had not participated in the
(e) If the loan is secured one, the documents creating the discussion and voted on the matter at the Board meeting in
security. view of section 300.
(f) Ledger (to verify recovery of the loan). Documents to be checked :
3. Contracts with directors and others attracting (a) Register of Contracts, Companies and Firms in which
Directors are interested [see next item].
section 297
(b) Notices of disclosure of directors’ interests in Form No.
Check whether –
24AA as well as specific notices received from time to time
During the relevant financial year, the company entered from the directors and recorded in the minutes of Board
into any contract, whether a formal or informal, written or meetings.
oral-
(c) Minutes of Board meetings.
(a) for the sale, purchase or supply of any goods or
(d) Copies of contracts made between the company and any of
materials;
the parties mentioned above.
Corporate Compliance Mgmt. Secretarial Audit : Compliance Audit, Reporting & Disclosures
Articles
ANNEX 2 : SAMPLE QUARTERLY SA REPORT 4. Renewal / exchange of a share certificate and issue of duplicate
The Board of Directors share certificates [section 84]
… Limited The R & T Auditors have confirmed that, the provisions of
section 84 of the Act, the Companies (Issue of Share
SECRETARIAL AUDIT REPORT
Certificates) Rules 1960, the articles of association of the
FOR THE QUARTER ENDED ON … Company, the guidelines/instructions issued by the SEBI
In this Report - and the Listing Agreement have been complied with in
“the Act” means the Companies Act 1956. respect of the renewal/exchange of the share certificates in
lieu of the defaced, mutilated or torn ones and issue of
“the Audit Period” means the period mentioned in the
duplicate share certificates in lieu of the certificates lost or
title of this report.
destroyed.
“the Board” means the Board of Directors of … Limited.
During the Audit Period, the Shareholders’/Investors’
“BSE” means Bombay Stock Exchange Limited. Grievance Committee has duly authorized issue of
“the Company” means ....Limited. duplicate share certificates.
“NSE” means The National Stock Exchange of India Limited. 5. Transfer of shares and debentures [section 108]
The R & T Auditors have confirmed that –
Foreword
The requirements of section 108 of the Act, the articles
In terms of my appointment for conducting Secretarial Audit of association of the Company, the guidelines/
and the instructions I received, I conducted the audit of the instructions issued by the SEBI and the Listing
records and documents maintained by the Company under Agreement have been complied with in respect of
the –
transfer of shares of the Company received by the Share
The Act; Transfer Agent/the Company during the Audit Period;
The Securities and Exchange Board of India (Substantial All transfer applications received, except those which
Acquisition of Shares and Takeovers) Regulations 1997 have been returned for rectification or they being
The Securities and Exchange Board of India (Prohibition of otherwise invalid, have been approved by the person
Insider Trading) Regulations 1992; and duly authorised by the Board of the Company;
The Listing Agreement with the Stock Exchanges. All the approved transfers have been entered in the
I submit my report on the Secretarial Audit relating to the three Register of Transfers & Transmissions and the Register
months from … … to … …. of Members; and
SECTION A : THE COMPANIES ACT AND RULES MADE The transferees concerned have been sent the share
THEREUNDER certificates within the stipulated time.
1. Status of the company as a public company [section 3(1)(iv)] The R&T Auditor has confirmed that the necessary Statutory
The Company has complied with the requirements of Registers and Records concerning the share transfer and
section 3(1)(iv) concerning the definition of a ‘public incidental activities, as required by the Act are being
company’ and the minimum paid-up share capital. maintained.
2. Common seal [sections 50, 147] 6. Transmission of shares
The Company has a Common Seal with its name engraved The R & T Auditors have confirmed that-
on it in legible characters, which is not affixed to any The requirements of the articles of association of the
document except in accordance with Article 173 of the Company, the guidelines/instructions issued by the
articles of association of the Company. SEBI and the Listing Agreement have been complied
M/s. … (the “R&T Auditors”) have confirmed that the with in respect of transmission of shares of the
Common Seal is affixed on every new share certificate Company received by them/the Company during the
issued in lieu of the defaced, mutilated or torn ones and Audit Period ;
issue of duplicate share certificates in lieu of the certificates All the applications for transmission of shares
lost or destroyed. received, except those which have been returned for
3. Service of documents by the company on the members rectification or they being otherwise invalid, have
[section 53] been approved by the person duly authorised by the
Board of the Company ;
The R&T Auditors have confirmed that every document
sent to any member of the Company is served on him by All the approved transmissions have been entered in
the Company or by its Share Transfer Agent in accordance the Register of Transmissions and the Register of
with the provisions of section 53 of the Act. Members ; and
Articles Corporate Compliance Mgmt. Secretarial Audit : Compliance Audit, Reporting & Disclosures
The persons concerned with them have been Listing Agreement with the Stock Exchanges;
intimated about it and sent the share certificates within Securities Contracts (Regulation) Act, Depositories Act;
the stipulated time. and
7. Issue and Delivery of share certificates [sections 83, 84, the Regulations of SEBI as applicable to the Company,
113, 53] including the Securities and Exchange Board of India
The R & T Auditors have confirmed that - (Substantial Acquisition of Shares and Takeovers)
The requirements of sections 83, 84 and the Regulations, 1997 and the Securities and Exchange Board
Companies (Issue of Share Certificates) Rules 1960, of India (Prohibition of Insider Trading) Regulations,
the articles of association of the company, the 1992.
guidelines/instructions issued by the SEBI and the ANNEX 4 : THE ANNUAL SA REPORT AS PUBLISHED
Listing Agreement have been complied with in respect IN THE ANNUAL REPORT
of the share certificates issued and/or delivered
SECRETARIAL AUDIT REPORT
during the Audit Period ;
The Board of Directors
The share certificates have been delivered within the
time stipulated in section 113 of the Act and the Listing ....Limited
Agreement; and I have examined the registers, records and documents of …
The share certificates have been delivered by Limited (“the Company”) for the financial year ended on …
registered post and in the manner stated in section 53 maintained under the provisions of –
of the Act. The Companies Act, 1956 and the Rules made under that
8. Register and Index of Members [sections 150, 151, 153, 163] Act ;
A copy of the Register of Members in electronic form made The Depositories Act, 1996 and the Regulations and the
available to the company by the Share Transfer Agent is Bye-laws framed under the Act ;
kept at its registered office at Mumbai. It has been informed The following Regulations and Guidelines prescribed
that, a hard (print) copy of the Register of Members is not under the Securities and Exchange Board of India Act, 1992
maintained in view of the large number of members of the (‘SEBI Act’) –
company holding equity shares in the Company. However, (a) The Securities and Exchange Board of India
the company maintains the Register of Members holding
(Substantial Acquisition of Shares and Takeovers)
equity shares in soft copy at its registered office.
Regulations, 1997 The Securities and Exchange Board
The R & T Auditors have confirmed that the Company has of India (Prohibition of Insider Trading) Regulations,
complied with the provisions of sections 150 and 151 of the 1992; and
Act regarding Register of Members and the Index of
(b) The Securities and Exchnage Board of India
Members respectively; and
(Disclosure and Investor Protection) Guidelines,
The Register of Members, statutory registers and records 2000
concerning the transfer and incidental activities are being
(c) The Securities and Exchnage Board of India (Employee
maintained as required by the Act and Regulation 15 of the
Stock Options Scheme and Employee Stock Purchase
Securities and Exchange Board of India (Registrar to an
Scheme) Guidelines, 1999
issue and Share Transfer Agent) Regulations, 1993.
(d) The Securities Contracts (Regulation) Act, 1956
9. Register and Index of Debenture Holders [section 152, 163]
(‘SCRA’) and the Rules made under that Act;
The company has maintained a register of debenture
(e) The Listing Agreement with Bombay Stock Exchange
holders.
Limited and National Stock Exchange of India
A copy of the Register of Debenture Holders in a print Limited and Luxembourg Stock Exchange.
form is kept by the company at its registered office at
1. I report, based on my examination and verification of the
Mumbai.
records produced to me and according to the information and
ANNEX 3: EXTRACT FROM BOARD’S ANNUAL REPORT explanations given to me by the Company, that the Company
SECRETARIAL AUDIT REPORT has, in my opinion, complied with the provisions of the
Dr. K.R. Chandratre, Practicing Company Secretary conducted Companies Act, 1956 (“the Act”) and the Rules made under the
Secretarial Audit of the Company for the financial year …. Act and Memorandum and Articles of Association of the
Company, inter alia with regard to :
The Secretarial Audit report confirms that the Company has
complied with all the applicable provisions of – (a) maintenance of various statutory registers and documents
and making necessary entries therein;
the Companies Act, 1956;
(b) closure of Register of Members/Debenture Holders;
Corporate Compliance Mgmt. Secretarial Audit : Compliance Audit, Reporting & Disclosures
Articles
(c) forms, returns, documents and resolutions required to be (v) generally, all other applicable provisions of the Act and
filed with the Registrar of Companies; the Rules made under that Act;
(d) service of documents by the company on its members, and 2. I further report that :
Registrar of Companies. (a) the Company’s Directors have complied with the
(e) notice of meetings of the board and meetings of committees requirements as to disclosure of interests and concerns in
of directors; contracts and arrangements, shareholdings/debenture
(f) the meetings of the board and of committees of the board holdings and directorships in other companies and interests
including passing of resolutions by circulation; in other entities.
(g) the … annual general meeting held on …; (b) Company has obtained all necessary approvals of the
(h) the consent of the members obtained by way of special Central Government or such other authorities, as the case
resolutions passed through postal ballot in terms of Section may be, under the various provisions of the Act.
192A of the Companies Act, 1956 read with the provisions (c) there was no prosecution initiated against or show cause
of the Companies (Passing of the Resolution by Postal notice received by the Company and no fines or penalties
Ballot) Rules, 2001; were imposed on the Company under the Companies
(i) approval of the shareholders, secured creditors (including Act, SEBI Act, SCRA, Depositories Act, Listing Agreement
debenture holders) and unsecured creditors in their and Rules, Regulations and Guidelines framed under
respective court convened meetings held on … in terms the said Acts against the Company, its Directors and
of the Hon’ble Bombay High Court Order under Sections Officers.
391-394 of the Companies Act, 1956 read with the 3. I further report that the Company has complied with the
Companies (Court) Rules, in relation to amalgamation of provisions of the Depositories Act, 1996 and the Bye-laws framed
Indian Petrochemicals Corporation Limited with the thereunder by the Depositories with regard to dematerialisation
Company; /rematerialisation of securities and reconciliation of records of
(j) minutes of proceedings of General Meetings and of Board dematerialized securities with all securities issued by the
and other meetings; Company.
(k) approvals of shareholders, the Board of Directors, the 4. I further report that :
Committee of Directors and government authorities, (a) the Company has complied with the requirements under
wherever required; the Listing Agreements entered into with Bombay Stock
(l) constitution of the Board of Directors and appointment, Exchange Limited, National Stock Exchange of India Limited
retirement and re-appointment of directors; and Luxembourg Stock Exchange.
(m) appointment and remuneration of Directors including the (b) the Company has complied with the provisions of the
Managing Director and Whole-time Directors; Securities and Exchange Board of India (Substantial
(n) appointment and remuneration of Auditors and Cost Acquisition of Shares and Takeovers) Regulations, 1997
Auditors; with regard to the disclosures and maintenance of records
required under the Regulations.
(o) transfers and transmissions of the Company’s shares and
debentures and issue and delivery of original and duplicate (c) the Company has complied with the provisions of the
certificates of shares and debentures; Securities and Exchange Board of India (Prohibition of
(p) declaration and payment of dividends including interim Insider Trading) Regulations, 1992 with regard to
dividend and redemption of debentures ; disclosures and maintenance of records required under the
Regulations.
(q) form of balance sheet as prescribed under Part I of Schedule
VI to the Act and requirements as to Profit & Loss Account (d) the Company has complied with the provisions of the
as per Part II of the said Schedule; Securities and Exchange Board of India (Employee Stock
Options Scheme and Employee Stock Purchase Scheme)
(r) transfer of certain amounts as required under the Act to the
Guidelines, 1999 with regard to implementation of
Investor Education and Protection Fund;
Employees Stock Option Scheme, Grant of Options and
(s) borrowings and registration, modification and satisfaction related disclosures and other aspects.
of charges;
(e) the Company has complied with the provisions of the
(t) Investment of Company’s funds including inter corporate Securities and Exchange Board of India (Disclosure and
loans and investments; Investor Protection) Guidelines, 2000 with regard to issue
(u) contracts, common seal, registered office and publication and allotment of convertible warrants on preferential basis
of name of the Company; and to entities in the Promoter Group.