Compliance certificate
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Guest
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27 October 2013
What is the meaning of CS compliance certificate ?
Kindly explain in detail
Kindly explain in detail
27 October 2013
Hi
Proviso to sub-section (1) of section 383A of the Companies Act, provides that every company not required to employ a whole-time secretary under sub-section (1) and having a paid-up share capital of ten lakh rupees or more shall file with the Registrar a certificate from a secretary in whole-time practice in such form and within such time and subject to such conditions as may be prescribed, as to whether the company has complied with all the provisions of this Act and a copy of such certificate shall be attached with Board's report referred to in section 217.
As per rule 2 of the Companies (Appointment and Qualifications of Secretary) Rules, 1988, every company having a paid-up share capital of rupees Two Crores or more [Limit increased from Rs. 50 Lacs to Rs. 500 Lacs by Notification No. GSR 419(E), dated 11-6-2002] is required to have a whole-time secretary. Accordingly, every company having a paid-up share capital of Rs. 10.00 lakhs or more but less than Rs. 500.00 lakhs is required to file with the Registrar of Companies (ROC) a Compliance Certificate obtained from a secretary in whole-time practice and also attach a copy of that certificate with the report of the Board of directors of the company.
Proviso to sub-section (1) of section 383A of the Companies Act, provides that every company not required to employ a whole-time secretary under sub-section (1) and having a paid-up share capital of ten lakh rupees or more shall file with the Registrar a certificate from a secretary in whole-time practice in such form and within such time and subject to such conditions as may be prescribed, as to whether the company has complied with all the provisions of this Act and a copy of such certificate shall be attached with Board's report referred to in section 217.
As per rule 2 of the Companies (Appointment and Qualifications of Secretary) Rules, 1988, every company having a paid-up share capital of rupees Two Crores or more [Limit increased from Rs. 50 Lacs to Rs. 500 Lacs by Notification No. GSR 419(E), dated 11-6-2002] is required to have a whole-time secretary. Accordingly, every company having a paid-up share capital of Rs. 10.00 lakhs or more but less than Rs. 500.00 lakhs is required to file with the Registrar of Companies (ROC) a Compliance Certificate obtained from a secretary in whole-time practice and also attach a copy of that certificate with the report of the Board of directors of the company.
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27 October 2013
SCOPE OF COMPLIANCE CERTIFICATE
Matters to be specified
The scope of compliance certificate would comprise of certification of compliance of various requirements under the Companies Act and the Rules there under. The CSP should certify compliance only in respect of matters specified in the Form prescribed under the Rules. If any matter is not applicable, it should also be specified accordingly.
Flexibility in the form of Compliance Certificate
As mentioned in sub-rule (2) of rule 3 that the compliance certificate shall be in the Form appended to the Rules or as near thereto as circumstances admit. It provides certain flexibility in the prescribed form, which means that if any information required to be given in the certificate does not fit into the format, necessary modifications may be made accordingly in the format of compliance certificate by the CSP.
Verification of records and documents
For issuance of the first compliance certificate, CSP should verify the various statutory registers, forms and other relevant records and documents maintained by the company from the first day of the financial year as well as for the previous period for his satisfaction. In case of any doubt on compliance specially for filing of various forms and returns the CSP should also check the proof for filing and receipts obtained from the Registrar and other authorities.
SCOPE OF COMPLIANCE CERTIFICATE
Matters to be specified
The scope of compliance certificate would comprise of certification of compliance of various requirements under the Companies Act and the Rules there under. The CSP should certify compliance only in respect of matters specified in the Form prescribed under the Rules. If any matter is not applicable, it should also be specified accordingly.
Flexibility in the form of Compliance Certificate
As mentioned in sub-rule (2) of rule 3 that the compliance certificate shall be in the Form appended to the Rules or as near thereto as circumstances admit. It provides certain flexibility in the prescribed form, which means that if any information required to be given in the certificate does not fit into the format, necessary modifications may be made accordingly in the format of compliance certificate by the CSP.
Verification of records and documents
For issuance of the first compliance certificate, CSP should verify the various statutory registers, forms and other relevant records and documents maintained by the company from the first day of the financial year as well as for the previous period for his satisfaction. In case of any doubt on compliance specially for filing of various forms and returns the CSP should also check the proof for filing and receipts obtained from the Registrar and other authorities.
27 October 2013
Period of the Certification
Sub-rule (2) of rule 3 provides that the Compliance Certificate shall relate to the period pertaining to the financial year of the company.
Certification should be on the basis of the financial year/accounting year of the company, it may be for a period of less than or more than one year, depending upon the period of balance sheet.
Ceiling on number of Compliance Certificate which may be issued by a Company Secretary in Practice
The Council of the Institute has specified that a member of the ICSI in whole-time practice can issue compliance certificate to 50 companies in a calendar year from 1st January, 2003. However, in the case of a firm of company secretaries, the ceiling of 50 companies would apply to each partner therein who is entitled to sign the compliance certificate in terms of the proviso to sub-section (1) of section 383A of the Companies Act, 1956.
Period of the Certification
Sub-rule (2) of rule 3 provides that the Compliance Certificate shall relate to the period pertaining to the financial year of the company.
Certification should be on the basis of the financial year/accounting year of the company, it may be for a period of less than or more than one year, depending upon the period of balance sheet.
Ceiling on number of Compliance Certificate which may be issued by a Company Secretary in Practice
The Council of the Institute has specified that a member of the ICSI in whole-time practice can issue compliance certificate to 50 companies in a calendar year from 1st January, 2003. However, in the case of a firm of company secretaries, the ceiling of 50 companies would apply to each partner therein who is entitled to sign the compliance certificate in terms of the proviso to sub-section (1) of section 383A of the Companies Act, 1956.
27 October 2013
Filing of the Compliance Certificate with the Registrar
Every company, on which these Rules apply, shall be required to file with the Registrar of Companies, the Compliance Certificate attached with e-Form 66, electronically within thirty days from the date/last date on which its annual general meeting is held. Provided that where, even if the annual general meeting of such company for any year has not been held, irrespective of that such certificate has to be filed with the Registrar within thirty days from the latest day on or before which that meeting should have been held in accordance with the provisions of the Companies Act, 1956. (Appendix 2)
In case, if the annual general meeting is held and adjourned for a later date, the Compliance Certificate shall be filed with the Registrar within thirty days, from the date on which such adjourned meeting was held provided such adjourned meeting is held within the statutory limit.
13. Payment of filing fee on the Compliance Certificate
The Compliance Certificate is required to be filed as an attachment with e-Form 66 with the prescribed filing fees as per provisions of Schedule X of the Companies Act, 1956.
Filing of the Compliance Certificate with the Registrar
Every company, on which these Rules apply, shall be required to file with the Registrar of Companies, the Compliance Certificate attached with e-Form 66, electronically within thirty days from the date/last date on which its annual general meeting is held. Provided that where, even if the annual general meeting of such company for any year has not been held, irrespective of that such certificate has to be filed with the Registrar within thirty days from the latest day on or before which that meeting should have been held in accordance with the provisions of the Companies Act, 1956. (Appendix 2)
In case, if the annual general meeting is held and adjourned for a later date, the Compliance Certificate shall be filed with the Registrar within thirty days, from the date on which such adjourned meeting was held provided such adjourned meeting is held within the statutory limit.
13. Payment of filing fee on the Compliance Certificate
The Compliance Certificate is required to be filed as an attachment with e-Form 66 with the prescribed filing fees as per provisions of Schedule X of the Companies Act, 1956.
27 October 2013
Right to access records
Sub-rule (3) of rule 3 provides that the CSP for the purpose of issuance of Compliance Certificate shall have the right to access at all times to the registers, books, papers, documents and records of the company whether, kept in pursuance of the Act or any other Act or otherwise, and whether, kept at the Registered office of the company or elsewhere, and shall also be entitled to require from the officers or agents of the company, such information and explanations as the CSP may think necessary for the purpose of such certificate.
Attachment of the Compliance Certificate with the Directors' Report
Proviso to section 383A(1) of the Act provides that the Compliance Certificate shall be attached with the Directors' Report referred to in section 217. It is also necessary for the company to attach a copy of the Compliance Certificate with the Directors' Report while forwarding the same to members and others under section 219 of the Act. Necessary comments on the Directors' Report regarding appointment of CSP should also be given (See Appendix 3).
It is desirable for the Board to give full information and explanations in its report to the members under section 217 of the Act on every reservation, qualification or adverse remarks contained in the Compliance Certificate.
Laying of the Compliance Certificate at the annual general meeting
Sub-rule (4) of rule 3 requires that the Compliance Certificate shall be laid by the company in its annual general meeting and shall be read at the meeting and also be made available to the members of the company for their inspection.
Penalty
If any company fails to comply with the requirement of filing the Compliance Certificate with the Registrar or to attach a copy of such certificate with the Directors' Report, in terms of sub-section (1A) to section 383A(1), the company and every officer of the company who is in default shall
Right to access records
Sub-rule (3) of rule 3 provides that the CSP for the purpose of issuance of Compliance Certificate shall have the right to access at all times to the registers, books, papers, documents and records of the company whether, kept in pursuance of the Act or any other Act or otherwise, and whether, kept at the Registered office of the company or elsewhere, and shall also be entitled to require from the officers or agents of the company, such information and explanations as the CSP may think necessary for the purpose of such certificate.
Attachment of the Compliance Certificate with the Directors' Report
Proviso to section 383A(1) of the Act provides that the Compliance Certificate shall be attached with the Directors' Report referred to in section 217. It is also necessary for the company to attach a copy of the Compliance Certificate with the Directors' Report while forwarding the same to members and others under section 219 of the Act. Necessary comments on the Directors' Report regarding appointment of CSP should also be given (See Appendix 3).
It is desirable for the Board to give full information and explanations in its report to the members under section 217 of the Act on every reservation, qualification or adverse remarks contained in the Compliance Certificate.
Laying of the Compliance Certificate at the annual general meeting
Sub-rule (4) of rule 3 requires that the Compliance Certificate shall be laid by the company in its annual general meeting and shall be read at the meeting and also be made available to the members of the company for their inspection.
Penalty
If any company fails to comply with the requirement of filing the Compliance Certificate with the Registrar or to attach a copy of such certificate with the Directors' Report, in terms of sub-section (1A) to section 383A(1), the company and every officer of the company who is in default shall
27 October 2013
Appointment and tenure of CSP
The Compliance Certificate is required to be addressed to the members of the company, therefore, it would be appropriate that the appointing authority should be members to whom this certificate is addressed. It is advisable that the CSP is appointed by the members in the annual general meeting of the company by way of a special business as an ordinary resolution. Such appointment should be made from the conclusion of that annual general meeting until the conclusion of the next annual general meeting. The first appointment of the CSP may be made by the Board of directors to hold office until the conclusion of the annual general meeting held after such appointment.
The Board may fill any casual vacancy in the office of CSP to hold office until the conclusion of the next annual general meeting. However, if such a vacancy is caused due to resignation of CSP, it should be filled up by the company in general meeting as in the case of the auditors of the company.
Appointment and tenure of CSP
The Compliance Certificate is required to be addressed to the members of the company, therefore, it would be appropriate that the appointing authority should be members to whom this certificate is addressed. It is advisable that the CSP is appointed by the members in the annual general meeting of the company by way of a special business as an ordinary resolution. Such appointment should be made from the conclusion of that annual general meeting until the conclusion of the next annual general meeting. The first appointment of the CSP may be made by the Board of directors to hold office until the conclusion of the annual general meeting held after such appointment.
The Board may fill any casual vacancy in the office of CSP to hold office until the conclusion of the next annual general meeting. However, if such a vacancy is caused due to resignation of CSP, it should be filled up by the company in general meeting as in the case of the auditors of the company.
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