CS Professional:Secretarial Audit Compliance Management and Due Diligence [Ch-2 Compliances]

Compliance Process includes: compliance program,compliance audit,compliance reporting etc. to avoid non-compliances and to effect controls.

it includes research & analysis+investigation to determine potential issues and getting a realistic view for a positive image as well as customer trust.

COMPLIANCE MANAGEMENT FRAMEWORK

1. identification: under various legislations applicable consulting with functional heads
2. ownership: described function/individual wise along with primary/secondary
3. awareness: meetings/trainings or with manuals containing compliance details
4. reporting: status communicated annually to concerned by compliance officer for appropriate corrective action
5. reported periodically in MIS

PROCESS OF CORPORATE COMPLIANCE REPORTING

COMPLIANCES

1. ACTIVITY-WISE 
2. ENTITY-WISE
3. SECTOR-WISE
4. INDUSTRY SPECIFIC
5. STATE/LOCAL LAWS

co. act,2013 provided specific exemptions  through notifications/amendments

 UNDER CO. ACT, 2013 

• PVT. CO.
1. (184) & rule 9 of co. (Board meetings and powers) rules,2014
• director discloses interest= MBP-1 
• at first meeting in every FY or subsequent to each modification
• kept at Regstd. office upto 8 years from FY end concerned
2. (164[2]) & rule 14[1] co. (director appointment/qualification) rules,2014
• director disqualification= DIR-8
• before appointment/re-appointment
3. (92[1,4]) & rule 11[1] of co. (mgmt. and administration) rules,2014
• annual return= MGT-7
• within 60 days of AGM
• (92[3]) & 134[3][a] & rule 12[1] placing on website
4. (137) & rule 12[1] co. (accounts) 2014
• financial statements= AOC-4/(CFS)
• within 30 days of AGM
5. (92[2]) & rule 11[2] co. (mgmt. and administration)
• MGT-8
• listed co's annual return certified by PCS
• or a co. with PUC=10 cr./more OR turnover=50 cr./more
6. (134) & rule 8 co. (accounts)
• board's report
• attached with statements and signed by "chair or 2 directors, one of whom is MD/CEO/CFO/CS, if appointed
7. (136) circulation of financial docs and other relevant docs
• at least 21 clear days before the AGM
8. (101) & rule 18 co. (mgmt. and admin.); SS-2
• AGM NOTICE 
• sent to all directors,members,auditors,legal representatives of any deceased member and insolvent's assignee
9. (173[3]) & SS-1 
• board meeting notice
• not less than 7 days in writing 
• less than 7 days with respect of presence/ratification of independent directors
10. (139[1]) & rule 4[2] co. (audit and auditors)
• auditor appointment= E-ADT-1
• notice within 15 days of appointment meeting
• specified IFSC pvt may file within 30 days
11. (203) & rule 8A co. (appointment/remuneration)
• CS appointment
• every listed and pvt. having PUC=10cr./more
12. (88) & rule 3 co. (mgmt. and admin.)
• MGT-1/2 
• registers of  members/debentureholders/other securityholders

• SMALL CO. -- 1,2,3,4,6,7,8,9,10 & 12 same as pvt. co.
• OPC -- 1,2,3,4,6,9(unless an only director) & 10 + no need to prepare a cash flow statement & exempt form auditors' rotation

 LLP COMPLIANCES UNDER LLP ACT,2008 

• change in partnership shall not affect existence,rights or liabilities
• partnership agreement
• registrar of co. manages LLPs
• one partner must be Indian
• (33) partner contri per subscription sheet
• in case of excess contri

• COMPLIANCE REQUIREMENT UNDER ACT/RULES
1. (32) & rule [23(1)]:contribution accounted for/disclosed in accounts
• [23(2)]: contri. brought by agreement/contract of services valued by practising CA
2. (34): maintain accounts @ RO for 8 years
• rule [24(2)]: containing finances,assets & liabilities,statement of goods purchased
• [24(3)]: 8 yrs.
• (34[3]) and rule [24(4)]: file statement of account and solvency {signed y designated partners} in Form 8 within 30 days from 6 months of FY end.
• (34[4]) and rule [24(8)]: audit for TURNOVER>40 lakhs OR CONTRI.>25 lakhs
• rule [34(4)]: foreign LLP statement of accounts
3. (35): annual return within 60 from FY end in Form 11
4. rule [25(2)]: additional certificates when Turnover<5 crore or CONTRIBUTION<50 lakhs; Otherwise a certificate from PCS
5. rule [27]: document preservation

 EXEMPTIONS OF SECTION 8 CO. 

• (2[24): appoint qualified CS
• (2[68,71]): minimum paid-up share cap inapplicable
• (96[2]): AGM not on national holiday
• (101/136[1]): "21 days" to "14 days"
• (118): minutes circulations except if mentioned in AoA
• (149,150,152[5],165[1],178)
• (160): except where AoA provides director election by ballot
• (173[1]): At least 1 board meeting within 6 calendar months
• (177[2]): no independent directors necessary
• (184[2],189): if exceeds 1 lakh
• (186[7]): inapplicable if 26%/more held by govt.

1. SEBI (LODR) COMPLIANCE: refer Ch-2 of ICSI study material