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SECRETARIAL AUDIT AND ANNUAL RETURN CERTIFICATION UNDER COMPANIES ACT, 2013 1 ST AUGUST 2014 NEW DELHI.

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Presentation on theme: "SECRETARIAL AUDIT AND ANNUAL RETURN CERTIFICATION UNDER COMPANIES ACT, 2013 1 ST AUGUST 2014 NEW DELHI."— Presentation transcript:

1 SECRETARIAL AUDIT AND ANNUAL RETURN CERTIFICATION UNDER COMPANIES ACT, ST AUGUST 2014 NEW DELHI

2 NEW DEFINITIONS One Person Company ASSOCIATE COMPANY CONTROL FINANCIAL INSTITUTIONS INDEPENDENT DIRECTOR REMUNERATION TURNOVER PUBLIC COMPANY HOLDING SUBSIDIARY RELATED PARTY OFFICER IN DEFAULT AUDITING STANDARDS CEO AND CFO SMALL COMPANY SFIO

3 OTHER CHANGES PRIVATE COMPANIES- MAXIMUM MEMBER RAISED 50 TO 200 WITH CHANGE IN ACTIVITY CHANGE IN NAME COMPULSORY CONCEPT OF A PRIVATE COMPANY WHICH IS A SUBSIDIARY OF A PUBLIC COMPANY NO MORE RELEVANT

4 IMMEDIATE ACTIONS DO VALUE ADDITION BY TAKING QUICK ACTIONS SECTION 5MODIFICATION IN AOA SECTION 12LETTERHEAD TO INCLUDE + CIN, NAME, ADDRESS, + TELEPHONE NO, FAX + , WEBSITE SECTION 74REPORT ABOUT EXISTING DEPOSITS ( now extension given ) FORMER NAME TO BE DISPLAYED OUTSIDE THE OFFICE FOR 2 YEARS FROM CHANGE

5 SECTION 135CORPORATE SOCIAL RESPONSIBILTY CSR COMMITTEE SPEND 2% OF AVG. NET PROFIT OF 3 YRS SECTION 149COMPOSITION OF BOARD OF DIRECTOR RESIDENT DIRECTOR INDEPENDENT DIRECTOR WOMAN DIRECTOR (WITHIN 12 MNTHS) SECTION 180 POWER OF BOARD CERTAIN POWERS ONLY AT A MEETING

6 SECTION 184DISCLOSURE OF INTEREST BY DIRECTOR FORM MBP 1 NOTE THAT IN THE FIRST MEETING OF FY SECTION 188RELATED PARTY TRANSACTIONS PREPARE LIST OF RELATED PARTIES PRIOR APPROVAL BY SPECIAL RESOLUTION SECTION 2(41) CHANGE IN FINANCIAL YEAR 1 ST APRIL TO 31 ST MARCH BEFORE 31 ST MARCH 2016 FILING OF FORM MGT 14- RECEIVE FORM DIR 8 AND MBP.1

7 CRITICAL CHANGES INCORPORATION STRICTER PROCESS MORE RESPONSIBILITIES ON PROESSIONALS CERTIFICATE OF INCORPORATION NOT CONCLUSIVE SECTION 23, 42, 62PRIVATE PLACEMENT TIGHTENED SECTION 35LIABILITY OF MISSTATEMENT IN PRSOPECTUS ONLY TWO DEFENCES: A. WITHDRAWAL OF CONSENT BEFORE ISSUE B. ISSUE WITHOUT CONSENT

8 SECTION 77 TO 85CHARGES, CHG-1 & 300 DAYS SECTION 88REGISTER OF ALL SECURITIES PERMANENT MAINTENANCE SECTION 62FURTHER ISSUE APPLICABLE ALSO TO PRIVATE CO. SECTION 63BONUS SHARES DECISION OF BHAGWATI DEV. NULLIFIED SECTION 73 TO 76ACCEPTANCE OF DEPOSIT MADE DIFFICULT SECTION 92ANNUAL RETURN SECTION 93CHANGE IN PROMOTERS’ STAKE REPORTING BY LISTED COMPANIES SECTIION 10195% CONSENT FOR SHORTER NOTICE SECTION 103QUORUM ON BASIS OF NO. OF MEMBERS 5-30 SECTION 105PROXY FOR MAX 50 MEMBERS

9 SECTION 109POLL BY 1/10 TH MEMBERS OR SHARES VALUE > RS. 5 LAKHS SECTION 110 POSTAL BALLOT UNLISTED CO. SECTION 118SECRETARIAL STANDARDS FOR MINUTES SECTION 121REPORT OF AGM BY LISTED CO. 30 DAYS SECTION 123DIVIDEND WITHOUT TRANSFER TO RESEREVES SECTION 128MAINTENANCE OF BOOK OF ACCOUNTS DEPRECIATION AS PER SCH II – LIFE OF ASSET SECTION REOPENING OF FINANCIAL STATEMENTS SECTION 132 EMPOWERMENT TO NFRA SECTION 134DIRECTORS’ REPORT MORE DISCLOSURES

10 SECTION 137FINANCIALS NOT ADOPTED – PROVISIONAL P&L OF PVT CO. NOW OPEN FOR PUBLIC SECTION 138 BOD MAY APPOINT CS CWA AS INTERNAL AUDIT SECTION 140AUDITOR TO GIVE REASON FOR RESIGNATION SECTION 141AUDITOR’S ADDITIONAL DISQUALIFICATIONS SECTION 143FRAUD REPORTING TO AUDITOR SECTION 144AUDITOR NOT TO RENDER OTHER SERVICES SECTION 146 AUDITOR MUST ATTEND AGM SECTION 148WOMEN DIRECTOR FOR PUBLIC CO. PUC 100CR+ TURNOVER 300 CR+

11 SECTION 160PERSON OTHER THAN RETIRING DIRECTOR DEPOSIT RS. 1 LAKH REFUND ON 25% VOTE SECTION 161BAR ON APPOINTMENT AS ADD. DIRECTOR IF LOST ELECTION IN AGM ALTERNATE TO ONLY ONE DIRECTOR SECTION 164 DISQUALIFICATIONS SECTION 167 VACATION- DIRECTORS POSITION SECTION 168DETAILED PROVISION FOR RESIGNATION

12 SECTION 173 BOARD MEETINGS 7 DAYS NOTICE MAX GAP 120 DAYS DRAFT MINUTES IN 7 DAYS A/C APPROVAL AND DIRECTOR REPORT IN MEETING VIDEO CONFERENCING PERMITTED RECORDING TO BE KEPT TILL AUDIT IS OVER UNATHORISED PERSON BANNED NOT BY VIDEO CONFERENCING A/C APPROVAL DIRECTORS’ REPORT PROSPECTUS RECONSTRUCTION ETC

13 SECTION 175NO CIRCULAR RESOLUTION FOR DECISION ON NEW BUSINESS, JV CASUAL VACANCY BUY BACK, INTERNAL AUDITOR DISCLOSURE OF INTEREST ACCEPTANCE OF DEPOSITS SALE INVESTMENT SECTION 177 AUDIT COMMITTEE LISTED COMPANY & PUBLIC CO. WITH PUC RS. 10 CR + TO RS 100 CR + BORROWING RS 50 CR+ NO COMPLUSION ON CM TO ATTEND AGM

14 SECTION 178 MANDATORY COMMITTEES - NOMINATION AND REMUNERATION - STAKEHOLDER RELATIONSHIP LISTED CO. OR PUC RS 10 CR+ TURNOVER RS 100 CR + VIGIL MECHANISM MANDATORY FOR LISTED CO. OR DEPOSIT ACCEPTED OR BANK BORROWINGS RS 50 CR + DECLARE ON WEBSITE & BAORD REPORT IMMUNITY TO WHISTLE BLOWER FRIVOLOUS COMPLAINT TO BE PUNISHED

15 SECTION 179NUMBER OF DECISIONS ONLY THROUGH MEETING INCREASED SECTION 181CHARITY BY SPECIAL RESOLUTION IF > 5% OF AVG. NET PROFIT 3 YEARS SECTION 182 POLITICAL CONTRIBUTION UPTO 7.5% SECTION 185BAN ON LOANS TO DIRECTORS EXCEPT MD/ WTD (ALSO FOR PVT CO.) LOAN TO SUBSIDIARY FOR BUSINESS SECTION 186 INTERCORPORATE LOANS & INVESTMENT

16 SECTION 188RELATED PARTY TRANSACTIONS INCREASED DISCLOSURE REQUIREMENT IMMOVABLE PROPERTY RELATED TRANSACTION INCLUDED GOVT APPROVAL DONE AWAY RELATED PARTY NOT TO VOTE EVEN AT AGM BETWEEN TWO PUBLIC CO. IF DIRECTORS HOLD > 2% PUC EVEN PRESENCE OF DIRECTOR NOT PERMITTED SPECIFIC MENTION IN NOTICE SPECIAL RESOLUTION IF PUC > RS 10 CR TRANSACTION VALUE > 25 % TURNOVER TV > 10 % NET WORTH MONTHLY REMUNERATION > 2.5 LAKHS

17 SECTION 205 FUNCTIONS OF CS ARE SUBJECTIVE GUIDE DIRECTOR & BOARD CONVENE AND ATTEND BM OBTAIN APPROVALS REPRESENT BEFORE AUTHORITIES ASSIST BOARD IN CONDUCT OF BUSINESS ADVISE FOR GOOD GOVERNANCE OTHER DUTIES SPECIFIED BY BOARD

18 SECTION SERIOUS FRAUD INVESTGATON OFFICE SECTION 228INVESTIGATION OF FOREIGN CO. SECTION 233MERGER WITH FOREIGN CO. SECTION 236COMPULSORY PURCHASE OF MINORITY SHAREHOLDING POSSIBLE SECTION 245CLASS ACTION SUIT BY DEPOSITORS SECTION 247VALUATION BY REGD. VALUER SECTION NEW DEFINITION OF SICK COMPANY REHABILITATION BY NCLT SECTION 381ACCOUNT OF FOREIGN COMPANIES

19 SECTION 442 MEDIATION AND CONCILIATION (NEW) SECTION 435SPECIAL COURTS. SECTION 436POWER OF CG TO EXEMPT COMPANIES SCHEDULES SCHEDULE IIUSEFUL LIFE OF AN ASSET FOR DEPRECIATION SCHEDULE IVCODE FOR INDEPENDENT DIRECTORS

20 DEAD CONCEPTS STATEMENT IN LIEU OF PROSPECTUS OTHER OBJECTS IN MOA STATUTORY REPORT AND MEETING PAYMENT OF INTEREST OUT OF CAPITAL ATTACHING FINANCIAL STATEMENT OF SUBSIDIARY CO. GOVT. APPROVAL OR INCREASE IN NO. OF DIRECTORS GOVET APPROVAL FOR RELATED PARTY CONTRACTS APPROVAL FOR MANAGERIAL REMUNERATION (EXCEPTIONS) QUALIFICATION SHARES SOLE SELLING AGENTS

21 Chapter XIII Section 204 and 143(14) SECRETARIAL AUDIT

22 APPLICABILITY TO A COMPANY WHICH IS LISTED Or IS A PUBLIC COMPANY WITH T.O. OF 250 CRORES+ Or IS A PUBLIC COMPANY WITH P.U.C. OF 50 CRORES+ SECTION 134 QULAIFICATIONS TO BE ANSWERED BY DIRECTORS IN THE REPORT SECTION143( 14) ABOUT POWERS AND DUITES OF STATUTORY AUDITOR APPLY TO SECRETARIAL AUDITOR

23 Covers CA 2013 SCRA 1956 DEPOSITORIES ACT 1996 FEMA 1999 SEBI 1992 Board processes RULES AND REGULATIONS UNDER ABOVE LABOUR LAWS, COMPETITION LAWS, ENVIRONMENTAL LAWS INDIRECT TAXES ( Not Covered in GN )

24 FIRST CHECK MEMORANDUM OF ASSOCIATION ARTICLES OF ASSOCIATION

25 MEMORANDUM OF ASSOCIATION NAMECORRECT NAME & CHANGES IN COI COMPLIANCE U/S 187 NATURE (PVT, PUBLIC OR SECTION 8 CO.) REGISTERED OFFICEPLACE OF MAINTAINING BOOKS OBJECTBUSINESS ACTIVITIES AS PER OBJECTS CAPITALPUC WITHIN AUTHORISED CAPITAL LIABILITYLIMITED OR UNLIMITED

26 ARTICLES OF ASSOCIATION POWERS AND AUTHORITIES OF BOARD PROVISION RELATED TO GM AND SHAREHOLDERS BORROWING POWERS- LIMITS RESTRICTIONS ON ALLOTMENT & TRANSFER IN PRIVATE CO. SUPER MAJORITY CLAUSE

27 SPECIAL RESOLUTIONS MEANING AND REQUIREMENT VOTES IN FAVOUR SHOULD NOT BE LESS THAN 3 TIMES VOTES CAST AGAINST PROPOSED AS SPECIAL RESOLUTION NOTICE OF MEETING DULY GIVEN EXPLANATORY STATEMENT- DISCLOSURE OF INTERET

28 APPROVAL BY SPECIAL RESOLUTION ENTRENCHMENT PROVISION IN AOA SHIFT RO OUTSIDE LOCAL LIMITS ALTERATION OF MOA CHANGE OBJECT OF UTILIZATION OF MONEY RAISED FROM PUBLIC ALTERATION OF AOA, CONVERSION OF PUBLIC INTO PRIVATE AND VICE VERSA VARY TERMS AND OBJECT OF PRSPECTUS ISSUE OF GDR VARY RIGHTS OF CLASS OF SHARES

29 ISSUE SWEAT EQUITY SHARES TO ISSUE SHARES UNDER ESOP/ ESOS FURTHER ISSUE OF SHARES CONVERSION OF DEBENTURES/ LOAN INTO SHARES REDUCTION OF SHARE CAPITAL PURCHASE OF SECURITIES OF ITS OWN CO. ISSUE OF CONVERTIBLE DEBENTURES REMOVE AUDITOR BEFORE EXPIRY OF HIS TERM MAINTAIN REGISTERS AND COPIES OF ANNUAL RETURN PLACE OTHER THAN RO APPOINT MORE THAN 15 DIRECTORS

30 TO REAPPOINT INDEPENDENT DIRECTOR AFTER EXPIRY OF HIS TERM OF 5 YEARS TO REDUCE NO. OF DIRECTORSHIP FOR DIRECTOR EXERCISE POWER OF BOARD WITH CONSENT OF COMPANY LOAN TO MD AND/ OR WTD LOAN / GUARANTEE EXCEEDING 60% (PUC+FR+SECURITIES PREMIUM) OR 100% (FR+SP) TO ENTER INTO CONTRACT WITH RELATED PARTY APPOINT A PERSON > 70 YEARS AS MD/ WTD/ MGR DETERMINE REMUNERATION TO DIRECTORS INVESTIGATE AFFAIRS OF CO. INVESTIGATION OF AFFAIRS BY SFIO STRIKING OFF NAME

31 APPROVE SCHEME OF AMALGAMATION WINDING UP BY TRIBUNAL VOLUNTARY WINDING UP GRANT AUTHORITY TO LIQUIDATOR FOR WINDING UP ENTER INTO ARRANGEMENT WITH CREDITORS GRANT POWER TO CO. LIQUIDATOR DISPOSING BOOKS & PAPERS AT TIME OF DISSOLUTION ADOPT TABLE F IN SCH I

32 CENTRAL GOVERNMENT APPROVAL SEC 4(3)REGISTRING A COMPANY WITH A NAME RESTRICTED SEC 8(4) (I)ALTERATION OF MOA / AOA OF SECTION 8 COMPANY U/S SHIFTING OF RO FROM ONE STATE TO ANOTHER SEC 140 (1)REMOVAL OF AN AUDITOR BEFORE EXPIRY OF TERM SEC 196(4)APPOINTMENT OF MD/ WTC/ MANAGER NOT AS PER SCH V

33 SEC 197(1)MANAGERIAL REMUNERATION > 11 % IN CERTAIN CASES SEC INVESTIGATION BY INSPECTOR SEC 239DISPOSAL OF BOOKS & PAPERS BY AMALGAMATED CO. SEC 272(4) WINDING UP PETITION BY REGISTRAR

34 SHARE CAPITAL

35 SEC 52- ISSUE AT PREMIUM TRANSFER OF AMOUNT TO SECURITIES PREMIUM A/C UTILIZATION FOR THE PURPOSE MENTIONED IN THE SECTION SEC 62- FUTHER ISSUE NOTICE FOR OFFER OF RIGHT SHARES WHETHER DULY SENT EXERCISE WITHIN 30 DAYS

36 SEC 68- BUY BACK SOURCEFREE RESERVES SECURITIES PREMIUM A/C PROCEED OF SHARES/ SECURITIES OTHER COMPLIANCESVALUATION OF SHARES LIMITS- 10% OR 25% PROPER AUTHORITY DEBT EQUITY RATIO NOT > 2:1 NO BUY BACK U/S 70 CHANGE IN AUTHORISED, SUBSCRIBED & PAID UP CAPITAL CERTIFICATE FROM AUDITOR ABOUT SOLVENCY

37 SEC 66- REDUCTION IN CAPITAL CHECK WHETHER ANY ARREARS IN REPAYMENT OF DEPOSITS OR INTEREST THEREON VARIOUS WAYS OF REDUCTION EFFECT OF REDUCTION ON LIABILITY OF MEMBERS/ CREDITORS AUTHORITY FOR REDUCTION – MEMBERS AND CONFIRMATION OF TRIBUNAL

38 SEC 63- BONUS SHARES ELIGIBILTY OF COMPANY WITHIN LIMITS OF AUTHORISED CAPITAL EFFECT OF BONUS SHARES ON PAID UP CAPITAL RELEVANT ACCOUNTING ENTRY FOR REDUCING THE RESERVE AND INCREASING THE PUC NO BONUS ISSUE BY CAPITALIZING RESERVE CREATED OUT OF REVALUATION OF ASSETS

39 FORFEITURE OF SHARES CREATION OF CAPITAL REDEMPTION RESERVE VALUATION OF SHARES FOR RE-ISSUE CRITICAL ISSUES: WHETHER CRR NECESSARY IF FORFEITED SHARES NOT REISSUED? AFFECT ON PAID UP CAPITAL AFTER RE-ISSUE?

40 SEC 39- ALLOTMENT OF SECURITIES WHETHER SHARE APPLICATION MONEY RECEIVED AMOUNT PAYABLE ON SUBSCRIPTION NOT LESS THAN 5% NOMINAL VALUE RETURN OF APPLICATION MONEY IF MIN SUBSCRIPTION NOT RECEIVED WITHIN 30 DAYS FROM ISSUE OF PROSPECTUS

41 LOANS AND INVESTMENTS

42 No Company shall directly/ indirectly MAKE LOAN TO ANY OTHER BODY COPORATE GIVE GUARANTEE/ PROVIDE SECURITY IN CONNECTION WITH LOAN MADE BY ANY OTHER PERSON TO OR TO ANY OTHER PERSON BY ANY BODY COPORATE ACQUIRE BY SUSCRIPTION/ PURCHASE OR OTHERWISE SECURITIES OF ANY OTHER BODY CORPORATE.

43 COMPLIANCE OF REQUIREMENT UNDER SETION 186 COMPLIANCE OF SECTION 185 LIMITS OF SECTION 186 : 60% (PUC+FR+ SECURITIES PREMIUM A/C) OR 100% (FR+SECURITIES PREMIUM A/C)

44 SECTION 123 DIVIDEND DIVIDEND ONLY OUT OF FREE RESERVES TIME LIMIT FOR TRANSFER TO SEPARATE BANK ACCOUNT AND PAYMENT ONLY AFTER PROVIDING FOR DEPRECIATION DIVIDEND NOT OUT OF ANY OTHER RESERVES OR PROFIT PRIOR TO INCORPORATION OR SECURITIES PREMIUM A/C

45 INTERIM DIVIDEND, IF DECLARED IS PAYABLE OUT OF PROFIT FOR THE PERIOD DIVIDEND ON EQUITY SHARES WITH DIFFERENTIAL RIGHTS DISCLOSURE OF UNPAID DIVIDEND ACCOUNT BALANCE SHEET ANNUAL REPORT CLAIM TO DIVIDEND TRANSFERRED TO INVESTOR EDUCATION AND PROTECTION FUND.

46 DEPOSITS

47 SECTION 73 AND 74 WITHIN LIMITS PRESCRIBED REPAYMENT WITHIN 1 YEAR FROM COMMENCEMENT OF ACT RULE 10 FILING OF RETURN AUDITOR CERTIFCATION OF NON COMPLIANCE IS PRIMA FACIE EVIDENCE FOR FRAMING A CHARGE CREDIT RATING, INSURANCE, DEPOSIT TRUSTEES

48 MANAGERIAL REMUNERATION

49 APPLICABILITY TO PRIVATE COMPANY WHETHER REMUNERATION IS WITHIN LIMITS MAXIMUM LIMIT 11% EXCLUSIVE OF SITTING FEES LIMIT ON REMUNERATION TO NON EXECUTIVE DIRECTOR INADEQUATE/ NO PROFIT- PART II OF SCHEDULE V

50 SIGNING OF BALANCE SHEET DATE OF SIGNING? WHO CAN SIGN? NUMBER OF DIRECTORS WHO CAN SIGN? WHEN DO THEY SIGN?

51 CONSTITUTION OF BOARD OF DIRECTORS DULY APPOINTED IN BOARD/ GENERAL MEETING HAS OBTAINED DIN PRIOR TO APPOINTMENT NOT DISQUALIFIED UNDER SEC 164- VACATION U/S 167 NOT DISQUALIFIED UNDER ADDITIONAL CONDITION OF AOA DECLARATION ABOUT NO DISQUALIFICATION AND DIN

52 ADDITIONAL DIRECTORS, ALTERNATE DIRECTORS AND NOMINEE DIRECTORS ARE APPOINTED IN ACCORDANCE WITH SEC 161 REGULARIZATION OF ADDITIONAL DIRECTOR IN AGM MAXIMUM DIRECTORSHIP 20 COMPANIES OUT OF WHICH MAXIMUM 10 PUBLIC COMPANIES

53 INTEREST OF DIRECTORS AS-18 DISCLOSURES SECTION 184 AND 189 TRANSACTIONSPURCHASE / SALE OF GOODS PURCHASE/ SALE OF FIXED ASSETS SERVICES AGENCY ARRANGEMENT LEASE/ HIRE TRANSFER OF R&D LICENSE AGREEMENT FOR FINANCE GUARANTEE/ COLLATERALS MANAGEMENT CONTRACTS

54 RELATED PARTY AND RELATIONSHIP HOLDING COMPANY SUBSIDIARIES ASSOCIATES KEY MANAGERIAL PERSONNEL RELATIVES OF KMP

55 RELATED PARTY COMPLIANCE TRANSACTIONS UNSECURED LOANS CONTRACTS ALLOTMENT OF SHARES /CONVERTIBLE SECURITIES AMOUNT INVOLVED IN TRANSACTION MAINTENANCE OF REGISTER NEW CONTRACTS DURING THE YEAR

56 TERMS OF CONTRACT RATE OF INTEREST REGULAR PAYMENT OF PRINCIPAL AND INTEREST VALUATION IN CASE OF ALLOTMENT REGISTER OPEN DURING AGM WHETHER ANY T&C PREJUDICIAL TO INTEREST OF THE COMPANY

57 SECURITY OR CHARGE COMPLIANCE UNDER SECTION 2(16), SEC CERTIFICATE OF CHARGE BY ROC ENTRY IN REGISTER OF CHARGES

58 COMPOUNDING OF OFFENCES OFFENCES PUNISHABLE WITH FINE ONLY COMPOUNDABLE WITH PERMISSION OF SPECIAL COURT IMPRISONMENT OR FINE IMPRISONMENT OR FINE OR BOTH COMPOUNDING AUTHORITY DEPENDS ON QUANTUM OF PENALTY- REGIONAL DIRECTOR OR TRIBUNAL COOLING PERIOD 3 YEARS

59 CERTIFYING THE ANNUAL RETURN COMPANIES ACT, 2013 SECTION 92 RULE 11 OF COMPANIES (MANAGEMENT AND ADMINISTRATION ) RULES, 2014

60 REQUIREMENTS OF THE ANNUAL RETURN Form MGT-7 NEW FORMAT  The company's Registered Office, principle business activities, particulars of its holding, subsidiary and associate companies;  Its shares, debentures and other securities and shareholding pattern;  Its indebtedness  Its members and debenture holders along with changes therein since the close of the previous financial year;  Its promoters, directors, key managerial personnel along with changes therein since the close of the previous financial year;

61 Continued..  Meetings of members or a class thereof, Board and its various committees along with attendance details;  Remuneration of directors and key managerial personnel;  Penalty or punishment imposed and details of compounding of offences and appeals made against such penalty or punishment;  Matters relating to certification of compliances, disclosures as may be prescribed;  Details, as may be prescribed, in respect of shares held by or on behalf of the Foreign Institutional Investors  Such other matters as may be prescribed.

62 When is the return required to be made ?  Rule 11 of Companies (Management and Administration) Rules, 2014 says, the Annual Return should be made at the close of every Financial Year.  To be filed : Within 60 days from the date of AGM or Within 60 days from the date on which the AGM should have been held

63 CERTIFICATION A Company Secretary is to certify the correctness and accuracy of the information stated in the Annual Return. This certificate in Form no. MGT- 8.

64 EXTRACT OF ANNUAL RETURN  An extract of the Annual Return, in Form MGT- 9 is to be attached to and forms a part of the Board's Report

65 CRITICAL ISSUES WHILE CERTIFYING THE ANNUAL RETURN  Going about the critical issues while making Form no. MGT-7, one might come across the following issues: The sub-category of a company has to be identified in the annual return. The sub-categories are: Small company One Person Company Subsidiary of Foreign Company NBFC Guarantee Company Unlimited Company, etc.

66 More issues.. Indebtedness of the company has been systematically categorized into Secured Loans, Unsecured Loans and Deposits in the new Form and hence the information has to be written likewise. Details about and Changes in the designations of Directors, Promoters, Key Managerial Personnel are to be given in the annual return. Details of Directorships of a Director in other companies and changes therein have to be given.

67 The details of meetings such as AGM, EOGM, Class Meetings, NCLT/Court ordered meetings, Requisitioned Meetings have to be disclosed in the return. Directors and Key Managerial Personnel may be reluctant to disclose the details, which the Annual Return, i.e. Form MGT-7 requires to be filled in.

68 EXCEPTIONS TO CERTIFICATION For all companies, the Annual Return shall be signed by a Director and the company secretary or where there is no company secretary, by a PCS. EXCEPTIONS: One Person Companies and Small companies. If an OPC or a Small Company does not have a company secretary, a director of such company shall sign the Annual Return.

69 THRESHOLDS FOR LISTED COMPANIES Paid Up Capital : Rs. 10 Crores or more Turnover: Rs. 50 Crores or more Certification by : Practicing CS.

70 MOST CRITICAL ISSUES Non- filing of any event based forms, if not filed, needs to be reported in the Annual Return. Form MGT - 8 – Point no. B lists out certain specific provisions of the Companies Act 2013 & Rules there under about which PCS has to report. This is not in tune with the corresponding section 92(2) of the Act which requires certification by PCS certifying inter alia, whether the Company has complied with “all the provisions of the Act”.

71 Form MGT-7 – Point XV (3) states “Disclosure of Directors: All directors have furnished Notices in “Form 12.1” but there is no such Form Form MGT-7 – signing of AR by PCS as contemplated by section 92(1) is at the end of various certificates as listed (a) to (i). Does it not mean Certification & not merely signing of AR?

72 SIGNING VS. CERTIFICATION  MAJOR DIFFERENCE: Mere signing doesn’t impose a liability on the person who signs, as was decided in Kashinath vs New Akoy Ginning and pressing Co. Ltd. WHEREAS Certification shows that the person has authenticated the document, verified it and is therefore taking the responsibility and liability upon himself.

73 SMALL COMPANY Small Company  PAID UP CAPITAL : Should not exceed Rs. 50 Lakhs  TURNOVER : Should not be more than Rs. 2 Crores Exceptions:  a holding and a subsidiary company  a company registered under section 8  a company or body corporate governed by any special Act.

74 ISSUE: SIGNING THE ANNUAL RETURN OF A SMALL COMPANY While signing the Annual Return it is important to decide whether the company is a small company or not. If the paid up capital of a company is less than Rs. 50 Lakhs but the turnover is more than Rs. 2 Crores, it shall be called as a Small Company.

75 PENALTIES Non-compliance of the provisions of Section 92 of this Act shall imply the following Penal actions: ENTITYPENALTY COMPANY Fine (Rs. 50,000/- to Rs. 5,00,000/-) OFFICER Imprisonment (6 months) or Fine (Rs. 25,000/- to Rs. 5,00,000) or both PCSFine (Rs. 50,000/- to Rs. 5,00,000/-)

76 CONCLUSION To conclude: Penalty has been substantially increased by the new Act. Scope of verification by practicing Secretary is enlarged as he has to confirm compliance of provisions of the companies Act besides the correctness of contents of Annual Return.

77 AND HENCE.. The professional certifying the annual return must do the same, with utmost caution lest the penal provisions as mentioned below should be attracted.

78 ANY QUERIES?

79 DHANYAWAAD!


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