Secretarial Audit

Secretarial Audit provides an effective mechanism to ensure that compliances of various legislations and regulations including the Companies Act, Securities laws, FEMA, Industry Specific laws and General laws like Labour Laws, Competition Law and Environmental and Pollution Related laws. Secretarial Audit also covers non-financial aspects of the business having impact on the performance of the Company and verifies compliances of applicable laws, regulations and guidelines. It gives the necessary comfort to the Management, Regulators and to the Stakeholders. It helps to detect the instances of non-compliances and facilitates taking corrective-measures.
The objective of Secretarial Audit is evaluation and form an opinion and to report to the shareholders as to whether the Company has complied with the laws comprising various statutes, rules, regulations, guidelines about the board processes and existence of Compliance Management System.
In today’s Scenario, the corporate sector is governed by a complex web of laws, rules and regulations. Under most of the laws, the persons who are responsible for compliance and liable for punishment for non-compliances are Directors, Company Secretary and officers who have been designated to ensure compliances of specific laws and regulations applicable to a Company.
Power to conduct the Secretarial Audit and provide the report thereon as per Section 204(1) of the Companies Act, 2013 read with rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and it shall be required to be annexed with the Board Report.
Our Audit services are designed to enhance the reliability, regulation & to meet the corporate governance responsibility of the client Company. Our experienced professionals play a constructive role in understanding the business, its need with a view to help clients improve performance and operating efficiency. Our teams serve clients in diverse industries such as Manufacturing, Retail, Real Estate, Power, Automobile, Information Technology and Media & Entertainment etc.
We as a firm strive for consistent results & performance by staying constantly vigilant through interactions and discussions between our team and the client.

Corporate Governance

Governance – A business mandate rather than a regulatory prescription.
Corporate governance involves a set of relationships between a Company’s Management, its board, its shareholders and other stakeholders. Strong Corporate Governance is indispensable to resilient and vibrant capital markets and investor protection rests on this foundation.
“GOVERNANCE” the word has changed due to globalization and resulting interdependencies in economies and supply chains, advances in technology, rapid population growth and increasing global consumption. This has had a significant impact on the quality, availability and price of resources, including water, food and energy. Businesses are being forced to react to these changes resulting in addressing social and environmental aspects in addition to profitability that is essential for overall wellbeing of stakeholders.
Practising Company Secretaries have been given a role to contribute towards improvement of standard of good corporate governance among the Listed Companies, under empowering regulation 15 (2) of SEBI (LODR), 2015. The said regulation read with schedule V of para E provides that the Company shall obtain a Certificate from either the auditors or Practicing Company Secretaries regarding the compliance of the conditions of Corporate Governance. Its mandate that’s the Corporate Governance compliance certificate shall be annexed to the Director’s Report, which is sent annually to all the shareholders and stock exchanges(s) along with the annual report filed by the Company.
Further the regulation provides that there shall be a separate section on Corporate Governance in the annual reports of listed entities, with a detailed compliance or non-compliance, if any, in the report on corporate governance.

BANK DUE DILIGENCE

RBI vide its Notification No. DBOD NO. BP. BC. 46/08.12.001/2008-09 dated 19.09.2008 advised all the scheduled commercial Banks (excluding RRBs and LABs) to obtain regular certification (DILIGENCE REPORT) by a professional, preferably a Company Secretary, regarding compliance of various statutory prescriptions that are in vogue, as per specimen given in the aforesaid notification.
The Diligence Report under its twenty-five paragraphs makes it obligatory for a Practicing Company Secretary to prepare the Report after critical examination of all relevant records and documents of the borrowing companies which demands a high degree of care, skill and knowledge.
Further RBI vide its notification dated 21.01.2009 also advised to all Primary Urban Cooperative Banks to obtain Diligence Report.
The RBI vide its Notification No. RBI/2008-2009-313/DBOD No. B.P. BC 94/08.12.001/2008-2009 dated 08.12.2008, advised the banks to strengthen their information back-up about the borrowers.

IMPORTANT POINTS

• At the time of granting fresh facilities, banks may obtain declaration as per Annexure 1.
• In case of existing lenders, all the banks may seek a declaration from their existing borrowers availing sanctioned limits of Rs 5 CR and above.
• Banks should exchange information about the conduct of the borrowers’ accounts with other banks as per Annexure 2.

The introduction of diligence reporting by Company Secretary in Practice is expected to lay down a strong foundation for good governance culture among borrowing corporates and correspondingly enhance the comfort level of the banks.

Legal Due Diligence

Due diligence is an art that requires expertise in asking gathering and reporting of sensitive information. Legal due diligence is a precautionary operation through which one can know the strengths and weaknesses of the Company through the maximum possible information available. This process reduces future problems and ensures safety.
A legal due diligence is scrutiny of all or specific parts of the legal affairs of the target Company depending on the purpose of legal due diligence which may be mergers, acquisition or any major investment decision with a view of uncovering any legal risks and provide the buyer with an extensive insight into the Company’s legal matters. It also improves the buyer’s bargaining position and ensures that necessary precautions are taken in relation to the transaction proposed.

Regulatory Compliance under the Companies Act, 2013

• Compliance with provision of Articles of Association
• Related parties transaction
• Appointment of and remuneration to Directors
• Loans to Directors
• Borrowings by the Company and securities covered
• Matters such as disclosure, prospectus, minimum subscription compliance with listing agreement etc. in case of listed Company
• Fixed deposits accepted and its repayments
• Distribution of Dividend
• Maintenance of Statutory Registers, Minutes Books etc
• Filing of necessary Returns.

Income Tax Act, 1961, Pollution Control Laws, Industry specific/area specific regulation, SEBI (LODR) Regulations, 2015.
Contractual Compliance.
Financial Aspects.
Non-Financial Aspects
Cultural Aspects.

Due Diligence Merger & Acquisition

Once a Company has decided to enter into a new business area, it has to explore various alternatives to achieve its aims. Basically, there can be three alternatives available to it:

• (i) To form a new Company
• (ii) To acquire an existing Company
• (iii) To get Merger with an existing Company

Further the decision as to which of these three options are to be accepted, will depend on the Company’s assessment of various factors including in particular:

• (i) The cost that it is required to incur
• (ii) The likelihood of success that is expected
• (iii) The degree of managerial control that it requires to retain.

For a firm desiring immediate growth and quick returns, mergers can offer an attractive opportunity as they obviate the need to start from ‘scratch’ and reduce the cost of entry into an existing business. Merger with an existing Company will, generally, have the same features as an acquisition of an existing Company.
However, identifying the right candidate for a merger or acquisition is an art, which requires sufficient care and calibre.

Search and Status Report

A Search report enables the Bank/Financial Institution to evaluate the extent up to which the Company has already borrowed moneys and created charges on the security of its movable and/or immovable properties. This information is very vital for considering the Company's request for grant of loans and other credit facilities. The Bank/Financial Institution, while assessing the Company's needs for funds, can take a conscious decision regarding the quantum of loan/credit facility to be sanctioned, sufficiency of security required and its nature, as also other terms and conditions to be stipulated. The Search Report acts as an important source of information enabling the lending Bank/Institution to take an informed and speedy decision, and also assures it about the credit-worthiness or otherwise of the borrowing Company.
Sections 77 to 87 made under chapter VI of the Companies Act, 2013 provide for the registration of charges in so far as any security on the Company's property or undertaking is conferred, modified or satisfied thereby. The Act envisages registration of charges with the Registrar of Companies so that any person acquiring the property of the Company has constructive notice of the charge prior to acquisition. Once a certificate of charge is issued by the Registrar of Companies, it is conclusive evidence that the document creating the charge is properly registered.

Share Capital Reconciliation Report

Every Listed Company is required to obtain the certificate with respect to tallying the total number of shares held in depositories and in the physical form with that of the admitted, issued / paid-up and listed capital.
Regulation 55A (1) of SEBI (Depositories and Participants) Regulations,1996, requires every issuer to submit to the stock exchanges, audit report by a Practicing Company Secretary or Qualified Chartered Accountant on a quarterly basis, within 30 days of the end of each quarter, for the purposes of reconciliation of the total issued capital, listed capital and capital held by depositories in dematerialized form , the details of changes in share capital during the quarter and in principle approval obtained by the issuer from all stock exchanges where it is listed in respect of such further issued capital.