SECRETARIAL AUDIT 12 th National Conference of PCS

SECRETARIAL AUDIT 12 th National Conference of PCS 15 th July 2011 Ooty, Tamilnadu DR. K. S. Ravichandran KSR&Co. , Company Secretaries, Bangalore, Chennai and Coimbatore Monday, September 6, 2021 1

ARE THESE CONSTITUTE SECRETARIAL AUDIT? �Certification of Returns �Secretarial Compliance Certificate �Corporate Governance Certificate �Due Diligence Audit �Board Process Audit KSR&Co. , Company Secretaries, Bangalore, Chennai and Coimbatore Monday, September 6, 2021 2

SECRETARIAL AUDIT - OBJECTIVE Assuring Owners, Creditors, Public, and Regulators that the affairs of the company are carried on in accordance with applicable laws, rules, regulations and memorandum and articles of association and agreements regulating the decision making process! KSR&Co. , Company Secretaries, Bangalore, Chennai and Coimbatore Monday, September 6, 2021 3

SECRETARIAL AUDIT – Scope varies from company to company; industry to industry; depends upon types of company; depends upon applicable laws, rules and regulations; depends upon client stipulated outer limits; depends upon scope defined by law. KSR&Co. , Company Secretaries, Bangalore, Chennai and Coimbatore Monday, September 6, 2021 4

SECRETARIAL AUDIT - PROCESS Secretarial Audit Master [SAM] � � � � Data Collection – About the Company; About Applicable Laws, Rules and Regulations Determining the Period and Scope of Secretarial Audit Preparing a List of Preliminary Documents Requirements Thorough Analysis of Inputs and Understanding Facts and Circumstances Compilation of Chronological Order of Events Analysis of Events, Applicable Provisions and Level of Compliance Generation of Questionnaire – General and Specific Administration of Questionnaire; Identifying Respondents and Collecting Responses Preparing a Record of Findings and Conclusion Identification of Grey Areas Ironing out Differences of Opinion and Ambiguities Management Representations, Legal Opinions, Judicial Pronoucnements and Articles Relied Upon Preparation and Submission of Secretarial Audit Report KSR&Co. , Company Secretaries, Bangalore, Chennai and Coimbatore Monday, September 6, 2021 5

Secretarial Audit – Ready Reckoner Supplementary to Secretarial Audit Master – (SAM) 1. Acceptance Letter; Confirmation of Period and Scope; Fees and other Terms & Conditions; 2. Issue of Letter containing Preliminary Document Requirements; 3. Check List for Analysis of Mo. A and Ao. A 4. Category wise List of Applicable Laws; Rules and Regulations; 5. Updated Master Guide to Case Laws and Articles 6. Updated Modules for General Matters 7. Updated Modules that are Event Based 8. Category wise - Model Secretarial Audit Report KSR&Co. , Company Secretaries, Bangalore, Chennai and Coimbatore Monday, September 6, 2021 6

Secretarial Audit – Impact of Judicial Pronouncements �V B Rangaraj – Restrictions not in AOA not binding! � M. S. Madhusoodhanan – Agreement on Transfer of Shares binds Parties even though Company not a Party! � Modi Rubber Ltd v Guardian International – Agreement not void though provisions not in Ao. A! � Smt. Pushpa Katoch v Manu Maharani Hotels Private Limited and Others � Western Maharashtra Development Corporation Ltd v Bajaj Auto Ltd � Messer Holdings Limited. � Premier Hockey Development P Ltd v Indian Hockey Federation KSR&Co. , Company Secretaries, Bangalore, Chennai and Coimbatore Monday, September 6, 2021 7

Secretarial Audit – Illustrative Grey Areas �Sub-section (5) of Section 293 �Ultra Vires �Donations to Charities �VCF and Negative List �Belated Allotment to Foreign Investors �Transfer of Shares – Contravention of Articles and Agreements KSR&Co. , Company Secretaries, Bangalore, Chennai and Coimbatore Monday, September 6, 2021 8

Secretarial Audit – The Three Golden Rules �Audit until Discovery �Prepare Report – Fee will be equal to Management Appreciation �Failure to Point Out – GC 08 th April and 18 th May and so on! KSR&Co. , Company Secretaries, Bangalore, Chennai and Coimbatore Monday, September 6, 2021 9

Secretarial Audit – Points to Ponder �Industry does not mind Cost of Compliance �Regulatory Recognition and Empowerment will follow what Industry follows �Global Visibility �Scope and Benefits Unlimited KSR&Co. , Company Secretaries, Bangalore, Chennai and Coimbatore Monday, September 6, 2021 10