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Master Class on SEBI LODR-IV

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This webinar discusses the corporate governance requirements for subsidiary companies of listed entities, focusing on secretarial audit reports and secretarial compliance reports, and the practical challenges faced by company secretaries and auditors.

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okay good morning

morning and uh welcome to to the fourth

webinar in the master class series on C listing

listing

regulations and today we are going to

discuss one of the very important topics

on relating to corporate governance

requirements of sub

companies secretarial audit and

secretarial compliance

report so today we have one eminent

panelist Miss maner Roy with us who will

be giving the her expert views during

the progress of the

presentation and one of our partners

Miss Aditi patnik is going to make the

presentation Aditi is our secretary

audit in charge and she takes care of

about 60 to 70 secretarial audits as

well as secretarial compliance reports

and she is having an expert knowledge as

far as the secretarial Audits and

compliance reports are

concerned and she is going to discuss

not only the legal Provisions as far as

the listing regulations are concerned

but at the same point of time she's also

going to discuss certain practical

issues what she was facing or she is

facing apart from other practicing

company secretaries during the course of the

the

audits at the same point of time on the

other side of the table Miss maner Roy

is going to also discuss about certain

issues preping to secet Audits and secet compliance

compliance

reports to briefly introduce today's panelist

panelist

Miss Roy is the company secretary and

Global head legal and compliance of TGA Industries

Industries

limited for the benefit of the

participants TGA Industries is a listed

company and is a global leader in

designing and manufacturing of critical

to operate consumables for

the mining mineral processing and

material handling

Industries so she holds a bachelor

degree in Commerce from usmania

University and is a member of The

Institute of company secures of India

she was previously associated with lafar

holim Bangladesh and lafar omim Mining

private limited for over two

decades and as the same point of time uh

I was privileged to to meet mjeri a few

months before at the Goa Convention of

the corporate Secret's

conference and in fact my luck would

have it I attended that conference

otherwise I would have missed the

opportunity to meet such a professional

you know which I'm privileged to thanks

very much M for oiling us to join

today's uh

webinar thank you sir it's my pleasure

and myself as well as B thank you very

much M myself and Bala are going to be

the pelist from I mean the in-house

panelists and uh Bala you know that very

well Professor balakrishnan is a company

secretary having almost four Decades of

experience in secretarial complains and

he has worked with FCO India limited and

is's a regular speaker at icsc

ccgt and he regularly contributes in

various magazines including chartered

Secretary of

icsi and selflessly he is disseminating

his knowledge across the fraternity as

well as the other professionals also and

by uploading his articles on the

whatsapps and several me the

professionals are getting benefited

especially the buding company

secretaries as far as my I'm concerned I

don't need any introduction as such

because most of you might be knowing me

from time to time so we thank uh all our

panelists today and webinar and joining

us in our knowled sharing Journey on

behalf of the entire team of MAA and MAA

as we all know that National Convention

is in progress and

both b as well as dpti are attending

that apart from our some of our partners

also and I'm sure that uh several of our

participants too might be what's called

as no participating in today's uh

National Convention that's why

attendance I was expecting initially

maybe a bit thin but already I could see

about almost 78 participants are there

which is quite

encouraging now I request miss m to give

her introductory remarks on today's

topic thereafter I will add and before

inviting Aditi I will also request

therea Professor Bak to give his

comments M your please thank you Zak it

is in indeed a pleasure and honor to be

among you all today this uh I as I met

you a few months back and I mentioned

that it is the series which meta and MAA

is doing and what you are doing is a

very encouraging uh for all the company

secretaries Whatever Whenever we have

any doubts whenever we have any any

guidance is required we feel that with

these series you are guiding us

personally so with this I would say that

it's really an honor and privilege to be

here today and being associated with

this seminar on the topic I would say um

when you we discussed this topic uh of

governance requirements related to

subsidaries of listed companies

uh normally when we are working the our

attention is mainly to the listed

companies but as lodr is becoming uh so

I would say it is becoming one of the

most critical things of a company

secretary subsidary companies also need

equal attention so with this topic today

we will come to know and when we are

preparing our for the seminar also we

came to know so many new things which we

thought we knew but when we have to

revisit them we have learned a lot so I

think this will be a very interesting

and a very educative uh seminar for all of

us thank

you and friends as far as my views are

concerned in today's topic as we all

know that when a listed entity is having

subsidaries the financials of the

subsidiary companies are to be

Consolidated with the listed entity in

view of that say we felt that uh it is

the responsibility of the listed entity

to also ensure the corporate governance

Norms whatever it is comping with to get

the same percolated down to its subsidaries

subsidaries

also it is

the one of the reason that why under

regulation 24 the listed entity is

obligated to ensure certain corporate

governance Norms whatever

prescribed in respect to its subsidary

companies apart from the compan es the

secretarial audit report and secretarial

compliance reports are also made

mandatory in fact uh as we all know that

secretary audit reports are applicable

to all the listed entities under 204 but

it may not be applicable to all the

subsidiaries of

the listed entity so V committee

observed that secretarial functions are

very critical to efficient board

functioning and has recommended that

secr auditor may also be extended to the

at least material unlisted subsidiaries

of the listed entity that means all the

subsidiaries secretary audit may not be

mandatory under the listing regulations

as far as the material unlisted

subsidiaries of the listed entity is

concerned though the secret auditor

audit is not mandatory under 204 of the

companies act but still to get secret

audit conducted and submit its report to

the listed entity which has to attach

the same together with its report in the annual

annual

reports now as far as the secretarial

complaint report is

conern several of us have the view that

when the secretarial audit is there why

again another report that is secretarial compliance

compliance

report in fact you know if you go to to

I mean I'm sure that everyone of you

know the r rational for this but just to

give a recap and only for the benefit of

the participants were not aware of this

what is the rational for introducing

this secal compliance

report NSC has verified the data of 595

companies for the financial year 2015

and 2016 and this uh what's called as

you know you can say a survey was

conducted at that point of time or a

study was conducted in the year 2017

second half of 2017 and it has picked up

certain companies listed entities

primarily based on the market cap as

well as the type of non-compliances what

they're observed by the both the stock

exchanges so it has picked up about 595

companies in

20156 financial year and approximately

another thousand companies in the year

201617 and it has observed that the

secret is not very transparent it

doesn't tell anything about what was

examined and what is the extent of

compliance and non-compliance under

different regulations ible to the

company as we all know that as

secretarial Auditors we have to give the

report in the MR3 and in the MR3 in the

same format we have to give the report

and very few Auditors have taken the

liberty of reporting more than what MR3

is asking you to do that but several

Auditors were confined that themselves

and because the audities companies were

also asking that why you have to go

beyond3 so it was felt

that by NS it was conducting the study

that MR3 as such is not revealing

anything so they face that secretary

audit is not focusing on the very

critical requirements of the listing

regulations and most of the secretary

Auditors as I was mentioning that they

prefer to adhere to the format suggested

by the companies Act only because even

in the listing regulations also as far

as the secretary audit is

concerned they said that let let there

be not too forms let it be the only

maybe I mean used for this purpose in

fact the then chairman Mr aagi in one of

the our own conferences PCS conference I

think golden

jubly conference if I am not wrong where

he has attended that he mentioned that

based on this analysis conducted by the

NSE in the year and submitted its report

in February

2018 it was found rather disappointed to

see that many secretary AUD s didn't

report the non-compliances penalties or

compliance of action taken events as

pointed out by the stock exchanges

because as again the same thing you know

in the MR3 there is no requirement to

mention all these things so many

secretary Auditors have confined

that their report only to

MR3 so S Felt and they said that

effective May 2021 they have introduced

the secret compliance report this report

need not be published in

the reports but it is to be submitted to

the stock exchanges within 60 days from

the end of each Financial year this

report talks more about the companes as

far as the listing regulations are

concerned so the orientation of this

report is different to that of the SEC

audit report so hence we don't need to

complaint that when there is a secret

audit why again there is a secret

compliance report because the

orientation of these two are entirely

different so as we know that uh in case

of secal compliance report you have to

also give that what are the non-c

compliances and in the next year's

report these non-compliances how they

have been addressed to that they have

been complied with subsequently or not

that is to be also reported to in

addition to that if SE has taken any

action against the listed entity or its

promoters or directors or the KMS that

is also to be reported in the

secretarial compliance report recently

uh this report was again further amended

and it has also now asking about the

complaints of sec

standards in fact right from 2016 when I

became a member of this SSB that point

of time onwards I used to say that SEC

standards are going to get its

prominence over a period of time I think

now apart from The Regulators we to have

realized the benefits of the uh the

secretary standards are concerned now

still there are some people that they

feel that secal standards are a kind of

a second class uh

I mean preference is given to

that I mean the first preference is to listing

listing

reg second preference is to company act

provisions and third is to secret

standards now the secretarial the PCS

has to give comment about the compliance

of Secretarial standards in the

secretarial compliance report so this

particular report may be taken as a

feeder for the secretary

audit and at the same point of time this

is applicable only to

the uh listed entities and it is not

required to be given as far as the

material subsidaries as concerned

material subsidaries only secet audits

are required they don't need to give the

secetary compliance report I think I

have given enough uh what's called

introductory remarks why I have given

almost I have taken about five to seven

minutes is this particular controversy

that why to reports are required is

there for since the time I think if I'm

not wrong SC was introduced in the year

2019 am I correct ad 2019 or 2020 this

was introduced right from the time for

the last four five years this

controversy is going that and at the

same point of time that the amount of

seriousness what is to be given to

secretary compliance report is not still

being given and the secr and the PCS are

facing some kind of a difficulty so

today both additi as well as are going

to discuss about this from the two sides

of the table and myself and Bala will in

where required to now I request

Professor balakrishna also to give his

introductory remarks and there after

will take over thank

to good morning to all of

you I as usual have a great pleasure in

welcoming you all on my own behalf and

also on behalf of Ma

and sudakar started with it the score

has now gone up to 125 people I can see

that definitely shows the importance of

this particular

topic and as sudhakar said clearly and

and this is and this is despite the and

this is despite the National Convention

going on yeah and several participants

might be attending that also that is

right and today we actually have really

a very eminent Center who who virtually

holding a practical experience of

conducting the secretarial audit for

many companies listed unlisted companies

material subsidy companies very vast

experience and we also have the other

side representing the company that we

have auditor and auditing generally it

is said two professional never agree on

anything except one thing they agree for the

the

disagreement so there are lot of issues

between the two people watch secal

audior is looking forward what the

company secretary would like to state in

the report or not otherwise to report

what he want to share what he doesn't

want to share all these issues are there

because the problem with the secret

auditor is how do I certify without

verifying the facts there are many

examples which can be actually given one

of the claric

example was actually regarding to the

meeting held by the independent

directors I think if you all recall many

of you would have been present in the

last two three seminars and this was one

of the matter which was very elaborately

discussed I think our sudagar is

actually taken clear very clearly has

given the company secretaries are not

party to the independent directors

meeting he is not acting as a company

secretary he is not pred to have the

minutes of the meeting very clearly so

minutes of the meeting of the

independent directors not going to be

available it cannot be demanded that is

one thing second thing is that how do

the PCS certify he very clearly said if

the atance register is signed by the

director who present in the meeting that

is the conclusive evidence of meeting

has been conducted in addition to agenda

item has been issued and minutes uh

sorry and the notice has been circulated

Etc other thing and all based on that

they allow to certify that he very

clearly is one of the thing even today

many people keep demanding no no no we

want to see the minut we want to see the

things and all the things which is

actually unwanted similarly the making

the entries in the register ETA and all

the things within the time and ETA

within 7 Days within 10 days ET on the

reement how do I check it see the thing

is mostly we are all being a

professional we to believe each other

trust and believe once the document is

presented to you if it is updated you

there is no doubt there is something

would have gone wrong back or something

to to go by that to the larger extent

and another thing is that as you said

very clearly the

secretarial audit and secretarial

complaints report report what regulator

now looking they are looking little more

beyond the secretarial audit report in

terms of the Assurance from the company

in the secretarial

complaint because what they are looking

forward in the secretarial compliance

report is what is the action arising out

of the non- compliances which has

happened in the past what is the action

taken by the company on this issue what

is the complaint status today and again

what is happening is on that what is the

management view or what is the

observation view remarked by the people

these are all the things which you are

looking for so Frankly Speaking the

secretarial audit report pertain only

for the proceeding year what is issued

by the PCS but where the secretarial

complaints report goes much beyond the

proceeding years the past non

compliances which is specifically

required to be addressed that is one

thing which is there between the report

so in which case it cannot be a

duplicated there is a separate exercise

has to be undertaken for certifying the

second complaints certificate and

another thing is there if you actually

seen the format which is issued by the

sebi very clearly the first point itself

is complaints relating to secretarial

standard one and two which is actually

mandatory so they have to actually State

what is the secret standard compliances

they to stay any non- compliances they

to say first thing they to say compl

they comp or non- compl if there are any

contention any non- compliances Etc then

again that has to be actually stated and

arising out of that if there are any

violation which has taken place any fine

penalties are L that is to be indicated

so all these details which are actually

going through any action is pending what

is the action is taken what is the

action initiated by the company what is

the complaint stated all those things

which are Reed to be given and not only

that it has to you to address everything

that means you start with the secret

standard complaints you talk about it

you you talk about the various policies

circular guidelines issued by the CB

other thing and all then again you talk

about website the maintenance of the

website whatever the various disclosure

the updation because website normally

there are many policies which are

actually issued but the thing is which

are required to be updated from time to

time the regular maintenance regular

review which are actually required they

are also specifically you to address in

this particular report and again it also

talks about the disqualification of the

directors specifically you have to

comment on the disqualification of

director again going to related parties

and again it is talking about the

preservation of the documents so many

other things which are actually looking

into in the secr complain report it is

not the duplication of the secret report

SEC complaints report that is one thing

very clear but many time what happen

when I talk to the many practicing

professional also they also face the

same problem when they go to the

organization for the certificate the

employee secretary or the the management

they say what is there you already

issued the secret certificate secret

audit report So based on that you can

issue this report that is the standard

thing which they people seem to be

talking in many organization which is

one of the concern about the Practical

aspects and I think Aditi will address

definitely this how she is facing what

is that how she's actually informing the

importance what is re ex other thing and

all one thing on the other side we have

the MRI who also speak on that that is

one thing and second thing is now today

the way Regulators are looking forward

is more of the transparent and

disclosure there nothing which you can

actually disclose half or you can hide

or something that that is not the case

everything is reord to be disclosed that

is one thing and more or less very

recently in one of the seminar also we

did discuss that c has actually come out

in the similar line with the company s

for imposing the penalty for the

non-compliances more or less on the

continuing offense which is leved by the

company site that they also come

out there are lot of things which should

be looking after the non-compliances

very seriously and they have been taking

action and the company secretes are need

to be very very careful in fact company

secr both I say that for the employees

company security as well as the

practicing company security both they to

be very very careful that is number one

number two as on today if you look at it

as sudagar puts it audit report form the

same under the C regulation of the

company site because the C regulations

are actually adopted and accepted what

is prescribed on the company side there

is no change so naturally it goes under

the section 204 of the company side the

second audit

report but there have been lot of

uh non-compliances

either from the company side or from the

practicing company secretary side also

on these issues so the MCA Regulators

though they are not having a

jurisdiction or the sa regulation but

they are definitely having the

jurisdiction over the company law and

they have taken lot of issues and if you

look at the recent orders which are

actually coming out from the regulator

they are not only referring the

secretarial standards they are also

refer in the guidance issued by the

second standard one of the order which I

have seen very recently they

have actually referred the revised

guidance latest revised guidance note

issued by the company secretary that

they have category held the responsible

the secal auditor in one of the related

party transaction for the non-disclosure

he has been taken for the task he has

been actually penalized So to that

extent Regulators are very much

concerned about it we cannot take it

likely that saying you know as put it

SEC standard is the substandard

regulation and there is nothing like

that it is not like that because SEC

standard is a very very important thing

which actually talks about it so much

efforts have been put in by the SEC

standard board on that and they have

been reviewing it they have been

bringing the Rev guidance notes Etc

which is very helpful for our profession

we to Bound by that there is no doubt

about it I have the great great heads up

to the SEC standard board for their

doing the extraordinary job on this so

this is going to be very interesting

session for all of us and there are lot

things to learn lot things to know the

Practical aspects we will be having an

opportunity to hear both the sides from

the audity and auditor so I also eagerly

looking forward like all of you so let

us start with the presentation let us

move on and as usual you can put up your

doubts and queries Etc on the chat box

we will take it then and there if there

are anybody wants to talk they can raise

their hand we can actually talk also sud

adti very good morning to all the

participants uh thank you sudakar sir

thank you Bala sir for giving us a very

good introduction to the topic and uh I

on behalf of mean mea also thank mujuri

to be a part of this session so I

welcome all of you once again to the

master class on sebi lodr part four so

today's topic of uh deliberation is

Corporate governance requirements of

subsidiary companies secretarial audit

report so uh regulation 24 of the sebi

lodr subregulation one reads as follows

at least uh one independent director on

the board of director dors of the listed

company shall be a director on the board

of directors of an unlisted material

subsidiary whether Incorporated in India

or not so uh for uh for the purpose of

this regulation there are two things

that needs to be considered first is uh

as the word uh the term subsidiary has

been defined under the company's act so

whenever a company is holding more than

51% of the total voting rights or has

control over the composition of the

board it qualifies to be a subsidiary

and further to understand the term

material subsidary so sebbi uh

guidelines sebbi regulations have

actually uh used the term material under

two regulations so one is under 161c and

one is under regulation 24 so the

regulation 24 is very specific when it

comes to the definition of material

subsidiary so uh it is is like a

material subsidiary for the purpose of

this provision is when a subsidiary

whose net worth or the income exceeds

20% of the Consolidated income or net

worth respectively of the listed entity

and its subsidaries in the immediately

preceding accounting here so for the

purpose of this regulation it is

pertinent uh to understand that the uh

uh the trigger point here is crossing a

percentage of more than 20% of the

Consolidated income or net worth so if a

subsidiary is contributing to more than

20% of the income or net worth of the uh

listed company along with all its

subsidiaries then it qualifies to become

a material subsidiary and for the

purpose of this uh uh calculation we

will have to consider the financials or

the figures as on the immediately

preceding accounting

year so uh let us take a few examples

just to understand how does a entity

qualify to be a material uh subsidiary

supposedly XY Z is a subsidiary of ABC

limited and in the financial year 2022

23 the net worth of XYZ limited happens

to be 190 CR and the Consolidated net

worth of ABC limited is 18 uh 800 CR so

when we calculate the consolid ated in

net worth of ABC limited it is the net

worth of the subsidiary is contributing

to more than 20% of the Consolidated

netw worth therefore XYZ shall be

considered as a material subsidary of ABC

limited uh now moving on to a next

example where we have a negative network

uh we take the same example of the

figures supposedly XY Z is having a

negative net worth of 190 CR and ABC is

also having a negative net worth of 800

CR so uh what we need to understand here

in this regulation is irrespective of a

positive or A negative net worth if a

subsidiary is contributing to more than

20% of that Consolidated figure so it

happens to be or qualifies to be a

material uh unlisted subsidiary so

irrespective of the negative net worth

XYZ continues to be considered as a

material subsidiary of the listed

entity now further going to uh another

example where there is a positive as

well as a negative uh net worth so uh

here the net worth of XYZ limited is 120

CR and the Consolidated net worth of ABC

limited is uh running into negative

figures but it is negative 800 cross so

will the uh subsidiary be still

considered as has a material subsidiary

of ABC limited so even though it is a

positive contribution that it is making

so what what what we have to understand

here is uh even though the Consolidated

figure is running into a negative figure

but and the subsidary compan is making a

positive contribution but if it is not

Crossing that limit of 20% it will not

be considered as a material subsidiary

so even though the final figures are

negative and there is a positive contri

bution from the subsidiaries financials

still it is less than 20% and therefore

it shall not be considered as a material

limited now moving forward uh we go to

regulation 24 subregulation uh 2 uh

which is stating that the audit

Committee of the listed entity shall

also review the financials

and in in particular the Investments

which is being made by the unlisted

subsidiary so here the term material is

not used so it is only an unlisted

subsidiary so uh when uh the sub like

when a listed company's investing in a

subsidiary it becomes equally important

for the board of directors of the listed

company to have a overall idea about how

the operations of the listed uh of the

subsidary company is taking place

therefore audit committee the stress on

audit committee has been made because uh

in the last lodia classes also we have

kind of stressed upon the functions that

a audit committee uh performs therefore

audit committee constitutes of people

who have Financial background therefore

when they review the financial

statements it is like when they are

reviewing the financial statements uh it

is the audit committee is able to get a

entire background entire background of

of the uh operations of the subsidiary

company of the revenue generation of

maybe the investment policies or the

profitabilities uh profitability made by

the subsidiary the borrowings that has

been done so ultimately uh because

ultimately any changes which takes place

in the financials of the subsidiary is

going to have an direct impact on the

financials of the parent company which

is the listed entity because there is a consolidation

consolidation

therefore it becomes very important for

the audit committee to go through the

financials of the uh uh listed of the

unlisted subsidiary as

well uh now uh the next uh subregulation

that is subregulation three of

Regulation 24 it talks about uh the

minutes of the meeting of the board of

directors of unlisted subsidiary shall

be placed at the meeting of the board of

directors of the listed entity so uh

this is again a very important point

because as we all know minutes are kind

of the official recordings or the

proceedings that takes place uh uh that

takes place in a meeting so uh it is

like we in uh the board of directors of

the listed entity in order to understand

the board processes the decision making

uh flow in the unlisted subsidiary it

becomes very important for them to even

understand the kind of procedures which

is being followed in the unlisted

subsidiary so noting of the minutes can

be in a way uh it can be one of the ways

through which the board of the listed

company can have an idea of how the

unlisted subsidiary is

functioning so ADI if I may I would like

to add out here that it is not always

import uh the signed minutes which have

to be placed if before because what

happens normally if it's unlisted subsid

their meetings have to be held before

the listed companies meetings are held

so we there will be a time lack before

which the minutes can be finalized and

placed so we need to have a very firm

calendar when the unlisted subsidaries

are having their minutes by which days

in how many days we need to close those

minutes so that a right picture can be

placed for the listed company it is and

since the regulation is very open it has

not given a time limit which uh Which

comp uh which which periods minutes have

to be whether it's the last quarters or

the halfly results so there is no there

is no Clarity so we have to have a very

good schedule to ensure that when the

meeting is happening the latest minutes

are there with them the latest

information is placed before the board

so this is very important for governance

point of view and disclosures to the

directors that they have complete

information on what is happening in the

unlisted subsidaries and here I would

say whether it is material subsidary or

a non-material subsidary that is not

there is no differentiation so if you

have got 20 subsidaries you have to

ensure that all those subsidiaries and

even if they are step down subsidaries

you have to ensure that all those

minutes are always

available with us so that they can be

placed on a practical aspect I know it

becomes very challenging but if your

minutes are not signed off and

especially if you have board members who

are there who are not your main board

members then you can have the draft

minutes at least place so that if any

director wants to review and has any

queries we can uh we can do so this for

me this is one of the most critical

aspects which has to be looked at under this

this

regulation so

add I would like to ask one thing yeah

what you rightly said it is okay that

you can have a meticulous planning you

can have the board meeting of the suby

plan Etc all the thing can be done so

long as we are actually the subsidies

are situated in India but this also

covers the subsid which is situated outside

outside

India so that is not within your scope

actually sir

uh when the subsidaries which are not

situated in India their accounts are

also getting reviewed by us so those

accounts also have to be signed off to

be placed with the main company's board

so it's not that we lost your

voice am I AUD we yeah yeah you're

audible you're very clear so the thing

is if a subsidary is is from outside

India so when we are consolidating the

Indian listed companies accounts these

subsidaries also have to even if it's

the quarterly accounts they need to

present their we need to take up their

figures so if you're taking up any from

them you have to have it approved by

their board and then brought to the main

board so at any point of time any

figures which are going to come from the

subsidary have to be signed off by its

Bo and then we then only the audit

committee will take them assigned accounts

accounts

so even if there is no requirement in

their companies act which we Face also

in on very practical situations it might

not be the that country's regulation

which might require but since we require

it in India we will have to ask and this

is a situation which we have seen even

for when you when I when we are in the

Indian company which is a subsidary of a

foreign uh holding company if you are in

any other geography their accounts will

only get uh closed if we from the in

India are able to give them our audited

accounts or unaudited accounts so our

board has to review it and then give it

so the cycle is a continuous cycle

whether when we are a listed company in

India or we are a part of a company

which is listed outside India

also so on very practical aspects

minutes of the subsidary companies have

actually become even if we in India take

three to four days to finalize minutes

there sometimes it has to be taken that

their minutes have to be closed within

24 hours so that they can be reviewed

and then placed uh to the listed companies

board I think sudagar wants to add

something yeah I fully agree with what M

says that in fact though there is no

timelines prescribed to place which

period minutes are to be placed before

the listed entity but I I can always say

that as per the company's act within 30

days the minutes are to be finalized so

where though they are not signed as she

rightly has mentioned it the moment the

30 days period is over you are supposed

to finalize the minutes only thing is at

the next board meeting you may get it

signed so all those minutes are to be

placed before the listed entity as in

when the board meeting of the listed

entity is taking place because one of

the uh what's called as know the

responsibilities of the board of

director is to ensure that the subsidary

companies are complying with the

corporate governance Norms apart from

the performance of the subsidiaries are

concerned so while you are placing it

before the board normal practice every

one of us is following is that to attach

the the what's called a subsidary

minutes together with the agenda and one

of the normal agenda items is to review

the minutes of the subsidary companies

if you are not able to attach to the

agenda maybe we will circulate it

separately as a binder or whatever you

may concerned always it is a good

practice to summarize the minutes and to

bring the significant items in the

particular minutes of the meetings

because by merely dumping everything on

the board of directors is not a a good

company secretary's job you it is always

advisable to summarize the significant

decisions company wise apart from that

full minutes are also to be placed

before the

board yeah only problem as I said also

it will only you know

creates a problem with the sub situated

in the overse because many time what

happens is as she rightly says their law

does not govern that our law governs

there is a some difficulty which is

being experien which I also P sometime

so that anyway we have to actually

educate them what is the law requirement

what is the thing and all we have to do

that is the thing yeah so sometimes even

the subsidary minutes are in their local

language so the the profession profal

who is out there has to be has now got a

custom that when it is being made in the

local language at the site the English

is also done so that when we are placing

it we are actually placing both the

languages which are signed off and uh

and have to be there so there are

companies where we need to ensure that

even though local language is there it

is converted and sent to us so that is

one and uh if I may add to this uh there

are in certain uh countries the the

requirement is that even a presentation

has to be made on whatever are uh

whatever are the Affairs of the

subsidary companies so the certain

countries which are also following the

listing regulations like us we have had

a situation where we have had to ensure

that all the list uh subsidaries have

made presentations even though if it's

even if it might be a two-pager they

have made the presentations and

circulated it along with the minutes so

that the in the the listed company has

happening there is

one chat has

come uh it is actually addressed to

you the threshold of the material

subsidy is 10% contribution the

Consolidated income to network since the

last four years instead of the 20% as

the as explained in the example in your presentation

P so which one sir here they are saying

the threshold of the material subsid 10%

contribution to the Consolidated income

stock Networth the last four years

instead of

20% uh no sir So 20% is only for the

purpose of subregulation one that is 24

regulation 24 subregulation one that is

uh if I may go back to the yeah please

please go back sir just a minute sir

it uh so this one if we go through this

regulation once again it is regulation

24 subregulation 1 it is only for the

purpose of having the independent

director of the listed entity on the

board of the unlisted materal IAL

subsidiary for as as I previously also

told when we look at the sebi

regulations there are two regulations

which is defining the materiality

criteria one is 16 uh 161c which is

obviously saying the 10% the other one

is the material subsidiary only for the

purpose of having the independent

directors on the board of the understood

subsidary so that for that purpose

itself it is 20% only for rest of the uh

rest rest of the criteria remains a 10%

only okay probably I think yeah yeah

that is the correct view also yeah

so yeah I question on this which is

always this thing that this 20% once you

have appointed an independent director

and in the next uh Financial year it is

not having this 20% it goes down what do you

you

do you once you have appointed I think

you will have to continue with that

independent director on that board you

cannot say just because the 20% netw

worth has is not there in this year

because this is a group level which you

are looking at from the listed company

so if in the next are some subsidary has

not done well or somebody else has done

it and because of which your figures

have inflated or have gone up so what do

you do do you you you can't remove the

independent director so once you have

appointed somebody that person will

continue to be on that vot whether 20%

is met or

not so I would quote it in this way that

it is obviously a good corporate

governance because uh usually uh how it

happens is once this uh uh transa I mean

once this provision is getting triggered

then you continue to fall under that

only so like you said like appointing

someone on the board and asking them I

mean removing them just because we are

not reaching out to that criteria

doesn't obviously it is not solving the

purpose so it is kind of once we reach

that criteria it is obviously a good

corporate governance practice to

board and if that independent director

retires or so the new one who comes will

have to be there so these are very

practical things which we have to uh

start thinking about because once we

have those in our thought proc processes

then suppose it is not a person who gets

import it is that subsidiary will always

need to have an independent director

there so where if this Mr X goes out

when Mr Y is coming in as another one do

we still a point or not so these are

just thoughts which keep on coming to us

when we are looking at it on a

aspects

there one more question which has

actually come here is it necessary that

the subsidiaries AGM approving the IR

account should be held before the

parents AGM approving the Consolidated accounts

accounts

yes there is no doubt about that yeah it

there is a Consolidated financials which

is placed for adoption in the AGM of the

parent company until and unless we have

the financials of the subsidary it is

not possible for

yes it is not possible for the holding

company to consolidate it accounts so we

need to have the final figures

of for

that the only thing is they have to get

their accounts audited before

consolidation takes place the AGM of

subsidary companies need not be held

before the AGM of the listed

entty they need not be adopted for the

purpose of consolidation they need not

be adopted in the respective subsidiary

company AGM only thing is that the

auditor the accounts are to be audited

and then thereafter the consolidation

can takes place as far as the listed

companies AGM is concerned that can be

held before the subsidary company agms

are concerned there is no bar answer

that yeah correct audited accounts need

right one yes go ahead because we are

already losing time and know because

there are already 114 1150 it is okay we

move on we'll take the question later

yeah okay sir uh so now moving on to

regulation 24 subregulation 4 uh which

is saying that the management of the

unlisted subsidiary shall periodically

bring to the notice of the board of

directors of the listed entity a

statement of all the significant uh

transactions and Arrangements entered

into by the unlisted subsidiary so again

uh there are few questions to answer

here first is what should be the

periodicity how do we ident identify the

significant transactions and who can be

the management for the listed entity so

in the previous slide also as we

discussed there was no specific timeline

mentioned for noting of the minutes so

even for this particular regulation

there is no specific period that has

been mentioned but significant

transaction has been very clearly

defined under the regulation so

significant uh transactions if we see it

it it is like any individual transaction

or Arrangement which is exceeding or it

might exceed to more than 10% of the

total revenue or the total expenses or

total assets or total liabilities so the

transaction or Arrangement can be either

of it so either of it as the case may be

if it is exceeding the threshold limit

of 10% of that unlisted subsidiary in

the immediately preceding accounting

year then the same has to be uh then the

same has to be noted by the board of

now this is again a very important uh uh

relevant regulation sub regulation five

and here we we have to again Focus that

the word material subsidiary has been

used for the previous two regulation it

was only subsidiary and for this it is

again a material subsidiary and for the

purpose of this regulation it is 10% so

a listed entity shall not dis dispose of

shares in its material subsidary which

will result in the reduction of its

shareholding either on its own or

together with other subsidiaries to less

than 50% or seize the exercise of

control over the subsidiary without

passing a special resolution in the

general meeting so if only if the

shareholders of the parent listed entity

is giving uh the approval of going for a

reduction of the sh share holding then

only that can happen otherwise apart

from that the listed entity on its own

accord cannot reduce it uh reduce its

shareholding Beyond uh 50% or Sease to

have the

control so we have two exceptions to

this so under these two circumstances

only the shareholders approval does not

uh become mandatory so first is if the

listed company is going for a reduction

of its share sh holding under a scheme

of arrangement which is duly approved by

the court of law or the tribunal or in

case a resolution plan has been approved

under the section 31 of the IBC and a

subsequent intimation to the stock

exchange has been made within the

timelines so only under these two

circumstances the prior approval of

shareholders is not required otherwise

in order to reduce the shareholding we

shareholders now now subregulation 6

talks about uh when the listed entity is

wanting to dispose of or sell or lease

the assets of the material subsidiary

and those uh those are amounting in

aggregate to more than

20% during a financial year then also a

prior approval of the shareholders

becomes mandatory so uh Whenever there

is a decision in the listed company for

a disposal which is amounting to more

than 20 % then it is mandatory for the

listed company to first go to their

shareholders take the approval by way of

a special resolution and then only they

can dispose it uh dispose the assets of

the material subsidiary then there is

again the exception to this sub

regulation as well so the uh the

exception stands same as the previous

one if there is a scheme of arrangement

or which has been duly approved by the

court or the tribunal or or a resolution

plan has been approved by the IBC then

and intimation has been made so under

these two circumstances the prior

required now this is a very interesting

uh sub regulation that is uh it is

talking about where a listed entity has

a listed subsidary so uh which is itself

a holding company then the provisions of

this regul ation shall apply to the

listed subsidiary in so far as its

subsidiaries are concerned so what we

have to focus uh on this very provision

is that for all the previous sub

regulations we were talking about

unlisted subsidiaries so by virtue of it

being an unlisted subsidiary the listed

company was responsible but here uh

supposedly we take an example ABC

limited is the parent holding company

and it is having eight subsidiaries so

out of the E

subsidiary ABC limited is the listed

subsidiary of XYZ limited now further if

ABC limited is having subsidiaries then

the ABC limited is bound to take note of

the minutes of the uh unlisted

subsidiaries the audit Committee of ABC

limited has to review the financials so

all the provisions that we have

discussed so far of Regulation 24

becomes applicable to that listed subsidiary

uh so now just to uh give a some just to

sum of the regulation 24 so it is like

at least one independent director of

listed entity shall be a director on the

board of the unlisted material

subsidiary audit committee shall review

the financials especially the investment

made by the unlisted subsidiary minutes

of the board meeting of unlisted

subsidiary shall be placed at the

meeting of the board of the listed

entity all significant transaction which

is crossing the threshold of 10% has to

be intimated to the board of the listed

entity and disposal of shares below 50%

or the selling or disposing of assets

more than 20% will have to require the

prior approval of the shareholders or

else it can be done through the two

exceptions now uh a very a very common

doubt which usually

might rise in the minds of the audience

is that regulation 24 is uh talking

about material subsidary in certain

places and only subsidary in certain

places so if we refer to the FAQs in the

icsi also which has been uh given so

there it is very clear that whichever

regulation is reading as material it has

to be considered as material whichever

is only unlisted subsidiary then for

that for that purpose it will be read as

subsidiary uh now moving forward to

regulation 24a which is secretarial

audit and uh secretarial compliance

report so now uh secretarial audit uh as

per regulation 24a secretarial audit uh

shall be undertaken by every listed

company and its material unlisted

subsidiaries which are Incorporated in

India and a secretarial audit report is

given given by a PCS shall be annexed

with the annual report of the company so

uh let us understand one thing here when

we are discussing this regulation we we

can go back to uh section 204 of the

companies act so companies act also

mandates certain classes of companies

which has to mandatorily undergo a

secretarial audit so when we refer to

these material unlisted subsidiaries so

it is it is contributing to more than

10% of the Consolidated income or the

turnover of the listed entity not

necessarily that this material unlisted

Subs uh subsidiary will fall under the

criteria of section 204 but even if it

is not having a borrowing or it is not

having those Capital that is paid up

capital and turnover under 204 and it is

falling under 24a then that entity is

mandatorily required to undergo a secretarial

secretarial audit

audit

uh then uh it is like it is uh another

very important uh thing that we need to

understand here is that since the audit

is not getting triggered due to

company's act the company's act

Provisions does not get applicable to

the unlisted subsidiary company here for

example even if there is a secretarial

audit report issued to the material

unlisted subsidiary it need not

necessarily file with the ROC along with

the director's report because this is

something which is germinating purely

out of the sebi regulations hence the

ROC or the company's Act is not coming

into picture and similarly when this

audit report is given by a PCS it shall

company uh now coming to the secretarial

compliance report uh so what is uh it's

saying that every listed entity shall

submit a secretarial comp liance report

in the specified format to the stock

exchange within 60 days from the end of

each Financial year so I think a lot

have already been discussed about why uh

why is there a need of the secretarial

compliance report uh even when there is

a secretarial audit mandated and we have

deliberated quite for some time on that

so now we will move ahead so uh going

for the secretarial audit report

format uh when a PCS is conducting a

secretarial audit so let us understand a

few points here uh it is again there are

categories of companies for which the

audits are conducted so it can be a

listed company it can be a public

company it can be a private company so

according to the category in which the

compan is fall falling so we will have

to look at all the regulations which has

been pre pre predefined by the MCA or by

the companies Act and the specific

format so there is the companies Act

Securities contract act depositories act

for the listed companies all the SEI

regulations whichever becomes applicable

to them during the course of audit those

have to be kept open and the rest can be struck

struck

off uh now we come to the very important

part that is the point number six that

is we will have to mention all the other

laws that is specifically applicable to

the company so here we are trying to

focus on the sector specific or the

industry specific law so uh basically

here the responsibility is both on the

shoulders of the management or the

audity company as well as the PCS who is

conducting the audit because it uh every

company uh needs to undertake a thorough

analysis of the laws that is getting

applicable to it and then they have to

ensure a timely compliance of that so

during the course of audit uh what is uh

what is to be done is probably uh the

audity company and the auditor can get

into a meeting wherein the different

laws which is applicable can be figured out it can be uh investigated upon and

out it can be uh investigated upon and then the specific compliances of those

then the specific compliances of those laws can be checked upon but one very

laws can be checked upon but one very important thing again to uh Focus here

important thing again to uh Focus here is that as a PCS we should not take it

is that as a PCS we should not take it on the face value of what is being given

on the face value of what is being given to us from the audity side supposedly

to us from the audity side supposedly there is a list of 10 laws which is

there is a list of 10 laws which is given To Us by the auditing company as a

given To Us by the auditing company as a auditor we have a separate

auditor we have a separate responsibility attached to find out

responsibility attached to find out actually what are the laws which is

actually what are the laws which is applicable to the company so uh this as

applicable to the company so uh this as a PCS we we have certain documents on

a PCS we we have certain documents on which we can rely upon uh the most

which we can rely upon uh the most important of being uh of it being the

important of being uh of it being the memorandum of Association so uh when we

memorandum of Association so uh when we go through a memorandum of Association

go through a memorandum of Association of a company the object laws is very

of a company the object laws is very very particular as to what are the

very particular as to what are the objects that a company is trying to uh

objects that a company is trying to uh pursue during its course of business so

pursue during its course of business so when we go through that we are able to

when we go through that we are able to understand the basic sector or the

understand the basic sector or the industry into which the companies

industry into which the companies falling then uh again if we go see the

falling then uh again if we go see the kind of financial information that is

kind of financial information that is available probably the balance sheet or

available probably the balance sheet or the pnl account which we have of the uh

the pnl account which we have of the uh company so there also we can see from

company so there also we can see from where the revenue is getting generated

where the revenue is getting generated so as a PCS we can rely on these

so as a PCS we can rely on these documents to understand the nature of

documents to understand the nature of business so it might so happen that

business so it might so happen that companies might have a single line of

companies might have a single line of business so if they have a single line

business so if they have a single line of business then the sector specific

of business then the sector specific laws can be identified very easily if

laws can be identified very easily if there are multiple businesses which is

there are multiple businesses which is being done so we will have to first

being done so we will have to first understand or what is the kind of uh uh

understand or what is the kind of uh uh income contribution or the revenue

income contribution or the revenue contribution that each of the activities

contribution that each of the activities is doing and then accordingly those

is doing and then accordingly those activities have to be focused upon so

activities have to be focused upon so basically this is a joint joint kind of

basically this is a joint joint kind of activity between the audity company and

activity between the audity company and the auditor wherein the laws are

the auditor wherein the laws are actually uh identified and then the

actually uh identified and then the requisite compliances are checked

upon I would like to add only one thing here that if you see in this report the

here that if you see in this report the the MR3 secretarial auditor is giving a

the MR3 secretarial auditor is giving a report that I we have also examined the

report that I we have also examined the compliance with the applicable Clauses

compliance with the applicable Clauses of the following that is secretary

of the following that is secretary standards issued by icsi now off late if

standards issued by icsi now off late if You observe the register of companies is

You observe the register of companies is pointing out several companies that they

pointing out several companies that they are not complying with the ss1 as well

are not complying with the ss1 as well as

as SS2 now wherever the cases the secretary

SS2 now wherever the cases the secretary auditor has given a clean cheit that he

auditor has given a clean cheit that he has given a clean report in the MR3 and

has given a clean report in the MR3 and subsequently the regulator observed that

subsequently the regulator observed that secret standards are not complied with

secret standards are not complied with at the same point of time along with the

at the same point of time along with the secret audits secretary standard not

secret audits secretary standard not compliance he may take the company to

compliance he may take the company to toask as well as the secretarial auditor

toask as well as the secretarial auditor for giving a wrong reporting also so the

for giving a wrong reporting also so the company secretaries are to be very

company secretaries are to be very careful while they are certifying that

careful while they are certifying that about the compliances whether it is a

about the compliances whether it is a listing regulations or whether it is

listing regulations or whether it is secret standards

ahead so ad I will just like to add one what you said on uh Point number six is

what you said on uh Point number six is that yes every company has to also every

that yes every company has to also every listed company we need to place before

listed company we need to place before our audit committee and the board the

our audit committee and the board the list of compliances status of

list of compliances status of compliances and I feel that that is a

compliances and I feel that that is a very right document when we share it

very right document when we share it with our practicing company secretaries

with our practicing company secretaries or when they doing their audit so that

or when they doing their audit so that you know they have because everything

you know they have because everything you cannot they will be laws while we

you cannot they will be laws while we are doing the factories act there will

are doing the factories act there will be boilers there'll be rubber act

be boilers there'll be rubber act there'll be so many acts which are

there'll be so many acts which are becoming applicable which we might not

becoming applicable which we might not as um you might not have the details

as um you might not have the details about but when we have to report the

about but when we have to report the same compliances to the board and if we

same compliances to the board and if we share it with the company secretaries uh

share it with the company secretaries uh who are doing the the audit then it

who are doing the the audit then it becomes very easy but at the same time

becomes very easy but at the same time time you cannot always always depend

time you cannot always always depend always for everything on the company we

always for everything on the company we also look on the guidance so that

also look on the guidance so that everything it's a it's it's a

everything it's a it's it's a two-way communication here

to yeah in fact M I would like to say that especially the company secretaries

that especially the company secretaries who are in service because they amount

who are in service because they amount of responsibilities what what have been

of responsibilities what what have been interested upon them as key manager

interested upon them as key manager person these days it is always advisable

person these days it is always advisable that they have to have a strong

that they have to have a strong secretarial auditor with them so that

secretarial auditor with them so that the strong secretarial auditor is going

the strong secretarial auditor is going to insulate the company secretary who is

to insulate the company secretary who is the KMP from his responsibilities so one

the KMP from his responsibilities so one should not take audit as in a negative

should not take audit as in a negative way only and auditor is going to trouble

way only and auditor is going to trouble me so that let me have the soft auditor

me so that let me have the soft auditor so that he will not ask me anything and

so that he will not ask me anything and he will not trouble me anything and uh

he will not trouble me anything and uh at the same point of time in fact let me

at the same point of time in fact let me also say that several times it may so

also say that several times it may so happen when we are appointing the

happen when we are appointing the secretarial

secretarial auditor if I am in the company I should

auditor if I am in the company I should not think that I'm doing a kind of an

not think that I'm doing a kind of an what's called as I'm giving an

what's called as I'm giving an obligation and okay by appointing him it

obligation and okay by appointing him it is not so you need a secretarial auditor

is not so you need a secretarial auditor so you are appointing that is what the

so you are appointing that is what the company secretaries who are in service

company secretaries who are in service have to law at the same point of time

have to law at the same point of time they too have to realize that the

they too have to realize that the secretarial auditor equally having his

secretarial auditor equally having his own responsibilities and

own responsibilities and accountabilities towards the regulator

accountabilities towards the regulator as well as towards the Institute so

as well as towards the Institute so wherever they have to say that if it is

wherever they have to say that if it is if it is imperative for them to qualify

if it is imperative for them to qualify the report or to make adverse

the report or to make adverse observations and all those things

observations and all those things according to me the company secr in

according to me the company secr in service they should not put over

service they should not put over pressure on the secretary auditor to

pressure on the secretary auditor to compromise

compromise because if not today tomorrow if not

because if not today tomorrow if not tomorrow day after certainly if any

tomorrow day after certainly if any non-compliances especially major

non-compliances especially major non-compliances are there they will come

non-compliances are there they will come out not necessarily the regulator has to

out not necessarily the regulator has to take the action immediately he may take

take the action immediately he may take the action down the line two years after

the action down the line two years after also so better always to have as strong

also so better always to have as strong a sec auditor as possible and if that

a sec auditor as possible and if that secretary auditor is troubling your

secretary auditor is troubling your department so you should be happy that

department so you should be happy that yes he is doing his job properly though

yes he is doing his job properly though sometimes it may easy to say and it is

sometimes it may easy to say and it is difficult but at least till the time I

difficult but at least till the time I was working in Reliance we used to have

was working in Reliance we used to have the same now wherever and whenever we

the same now wherever and whenever we were appointing the people we used to

were appointing the people we used to always see that who are the people do

always see that who are the people do the appropriate and proper secretary

the appropriate and proper secretary loic without any kind of

loic without any kind of compromise in fact sud when we had

compromise in fact sud when we had actually gone for the all the applicable

actually gone for the all the applicable laws to the company for the first time

laws to the company for the first time the board has actually asked do you have

the board has actually asked do you have a list of all the applicable laws with

a list of all the applicable laws with you obviously I have actually generated

you obviously I have actually generated one at that particular Point time we

one at that particular Point time we were a medium siiz chemical manufactured

were a medium siiz chemical manufactured company situated around two locations I

company situated around two locations I have identified something about 85 laws

have identified something about 85 laws in one location and 87 laws in the other

in one location and 87 laws in the other locations and I played to them these are

locations and I played to them these are the identify laws which are applicable

the identify laws which are applicable to our company the next question asked

to our company the next question asked by the board of director is that the

by the board of director is that the 100% law which are applicable

100% law which are applicable to I said sir to the best of my

to I said sir to the best of my knowledge I have generated this I am not

knowledge I have generated this I am not very sure whether it is 100% or not

very sure whether it is 100% or not maybe something I think we need to take

maybe something I think we need to take some expert to run through the check

some expert to run through the check that is what I actually suggested

that is what I actually suggested ultimately we are actually engage a

ultimately we are actually engage a outside expert especially a practicing

outside expert especially a practicing company

company secretary and we have told them you

secretary and we have told them you visit this location you go through you

visit this location you go through you find out whatever the things are

find out whatever the things are V2 what has happened is the final

V2 what has happened is the final outcome of that

outcome of that is three more laws which we were not

is three more laws which we were not aware at all because due to the specific

aware at all because due to the specific because one of the unit was situated in

because one of the unit was situated in a village where some PCH related

a village where some PCH related compliances were applicable in that area

compliances were applicable in that area which we are not at all aware at all we

which we are not at all aware at all we never knew also that actually came out

never knew also that actually came out another requirement which came out was

another requirement which came out was in respect of the inside one power

in respect of the inside one power Generations there was a particular thing

Generations there was a particular thing which was required to be submitted

which was required to be submitted periodically what is the number of units

periodically what is the number of units of the power generation some s amount to

of the power generation some s amount to be paid Etc and other thing and all that

be paid Etc and other thing and all that also actually came out so really really

also actually came out so really really speaking as you rightly said that we are

speaking as you rightly said that we are all routinely carrying out the job ex

all routinely carrying out the job ex something we may tend to miss out so we

something we may tend to miss out so we cannot just look at lightly we know to

cannot just look at lightly we know to take the expert ansers wherever required

take the expert ansers wherever required because I have a great respect to the

because I have a great respect to the practicing people because they have the

practicing people because they have the wor experience they are dealing with the

wor experience they are dealing with the multiple different variety of the

multiple different variety of the industry Etc they are really really

industry Etc they are really really helpful in assist we should actually

helpful in assist we should actually look upon they complimenting to our job

look upon they complimenting to our job rather than you know they trying to

rather than you know they trying to finding the fault and trying the thing

finding the fault and trying the thing that should not be the

case fact we used to have a practice that whenever the complaints officer is

that whenever the complaints officer is placing the complaint certificate before

placing the complaint certificate before the board along with the complaint

the board along with the complaint certificate we also used to give the

certificate we also used to give the applicable law to the company how many

applicable law to the company how many laws are there and which are the laws

laws are there and which are the laws applicable to that so that the directors

applicable to that so that the directors have an idea that how many laws are

have an idea that how many laws are applicable to the listed entity as such

applicable to the listed entity as such you know and I'm sure that several uh

you know and I'm sure that several uh good companies might be following the

good companies might be following the same

same practice yeah that is true that is

yes yes sir uh so obviously as is there in the report we have to report the

in the report we have to report the specific non-compliances or observations

specific non-compliances or observations or or the audit qualifications so I

or or the audit qualifications so I think we have deliberated enough on that

think we have deliberated enough on that because since The Regulators what in one

because since The Regulators what in one line if I put it since The Regulators

line if I put it since The Regulators are putting the faith in us as Auditors

are putting the faith in us as Auditors and the uh company secretaries who are

and the uh company secretaries who are in employment as compliance officers so

in employment as compliance officers so it is a joint venture kind of we can say

it is a joint venture kind of we can say to March towards uh governance

to March towards uh governance practices well said well

screen yes sir uh so uh towards the end of the report we will have to uh report

of the report we will have to uh report about any specific activities which is

about any specific activities which is had a kind of effect on the company's

had a kind of effect on the company's Affairs so something which during the

Affairs so something which during the course of audit if we feel has had a

course of audit if we feel has had a impact on the financials or the

impact on the financials or the company's Affairs for example it might

company's Affairs for example it might be a rights issue or a preferential

be a rights issue or a preferential issue or major decisions which are taken

issue or major decisions which are taken by the members so anything that we come

by the members so anything that we come across during the course of audit that

across during the course of audit that has to be uh kind of it forms a part of

has to be uh kind of it forms a part of the

MR3 uh uh so now moving on to the annual a

a before one minute before you go for this

before one minute before you go for this compl certificate also please well upon

compl certificate also please well upon this management representation letter

this management representation letter which the PCS always asks the company's

which the PCS always asks the company's secretaries okay so what sort of a

secretaries okay so what sort of a management representation you require

management representation you require sometimes the company secretary in

sometimes the company secretary in service always feel that uh they're

service always feel that uh they're asking more than what they require so

asking more than what they require so both you as auditor and M as audit both

both you as auditor and M as audit both are there why can't we discuss about

are there why can't we discuss about that for about 3 to four minutes on that

that for about 3 to four minutes on that aspect also right sir very right sir so

aspect also right sir very right sir so uh so basically management

uh so basically management representation letter is kind of a

representation letter is kind of a representation that we as Auditors seek

representation that we as Auditors seek from the management uh that is very

from the management uh that is very right that often we do come across

right that often we do come across situations wherein you know the Audi

situations wherein you know the Audi company is like uh uh why do you need to

company is like uh uh why do you need to take all those representations because

take all those representations because you've already audited the entire set of

you've already audited the entire set of documents or uh like whatever has been

documents or uh like whatever has been uh given given to you as per the

uh given given to you as per the checklist uh but as an auditor being on

checklist uh but as an auditor being on other side of the table I would just say

other side of the table I would just say there are certain things to which we do

there are certain things to which we do not have an access for example I can

not have an access for example I can tell you if we look at the books of

tell you if we look at the books of accounts so books of accounts are

accounts so books of accounts are prepared in good faith by the statutory

prepared in good faith by the statutory Auditors so that is that is a area

Auditors so that is that is a area wherein we do not have an access or we

wherein we do not have an access or we are maybe I can put it in this way that

are maybe I can put it in this way that we do not have that entire Financial

we do not have that entire Financial knowledge to understand each and every

knowledge to understand each and every step or each and everything that they

step or each and everything that they have done in the financials so that has

have done in the financials so that has to be as per the accounting standards

to be as per the accounting standards and all of all the regulations

and all of all the regulations applicable has to be followed so in

applicable has to be followed so in these certain matters we can just maybe

these certain matters we can just maybe look out to the management that if they

look out to the management that if they can give us a representation to

can give us a representation to specifically those areas where which we

specifically those areas where which we are auditing after almost you can say

are auditing after almost you can say the entire Financial year is over so it

the entire Financial year is over so it is like an annual audit that we do post

is like an annual audit that we do post the 31st of March so during the course

the 31st of March so during the course whatever has happened to which we do not

whatever has happened to which we do not have a direct access as an external

have a direct access as an external because Auditors are uh necessarily

because Auditors are uh necessarily required to be Outsiders to the

required to be Outsiders to the organization and we have to audit it

organization and we have to audit it independently so that is why we seek an

independently so that is why we seek an kind of representation from the

kind of representation from the management so manuri you can come on

management so manuri you can come on your comments on the

your comments on the same so ad as you said yes there are a

same so ad as you said yes there are a few things which you are not readily

few things which you are not readily available

available for you to access you can ask

for you to access you can ask representations but at times we feel

representations but at times we feel that we have to give representations for

that we have to give representations for like a few days few uh uh minutes back

like a few days few uh uh minutes back we discussed whether the minutes have

we discussed whether the minutes have been signed off at the right time or

been signed off at the right time or there is uh um or the the data has been

there is uh um or the the data has been circulated the notices have been

circulated the notices have been circulated on the right time so we get

circulated on the right time so we get requests like that also to be put in

requests like that also to be put in into the manage uh letter so yes there

into the manage uh letter so yes there are certain things which we can support

are certain things which we can support you uh the but there are at times the

you uh the but there are at times the requests which come in are very

requests which come in are very unreasonable also so the right balance

unreasonable also so the right balance has to be maintained and more than that

has to be maintained and more than that I would say that the disclosure

I would say that the disclosure requirements have become so strict right

requirements have become so strict right now with under the the new LOD

now with under the the new LOD regulations that everything whatever has

regulations that everything whatever has to be disclosed we are as compliance

to be disclosed we are as compliance officers we are already obligated to

officers we are already obligated to discl goes to them on the stock

discl goes to them on the stock exchanges even for if you say if you say

exchanges even for if you say if you say that our quarterly results our half

that our quarterly results our half results everything has been prepared and

results everything has been prepared and put up so I feel that yes you can for

put up so I feel that yes you can for for your records have some

for your records have some representations but we have to be very

representations but we have to be very reasonable in what we are being asked

reasonable in what we are being asked with because as it is with the

with because as it is with the disclosure requirements we are already

disclosure requirements we are already putting whatever and I think on an

putting whatever and I think on an average listic company in a quarter not

average listic company in a quarter not less than 50 to 60 disclosures we are

less than 50 to 60 disclosures we are doing to the stock exchanges so if you

doing to the stock exchanges so if you compile and you look at all that we have

compile and you look at all that we have already disclosed signed off by the MD

already disclosed signed off by the MD signed off by the in the limited riew

signed off by the in the limited riew and placed

and placed it for at least for listed companies

it for at least for listed companies this letter is taking things to the next

this letter is taking things to the next level add to

level add to what ad what you and M have said just to

what ad what you and M have said just to add to that by merely having a repres

add to that by merely having a repres management representation letter you are

management representation letter you are not gaining anything tomorrow regulator

not gaining anything tomorrow regulator when he is asking you as a secretarial

when he is asking you as a secretarial auditor you are not discharge your

auditor you are not discharge your responsibilities or accountabilities

responsibilities or accountabilities that point of time this management

that point of time this management representation letter according to me

representation letter according to me only a piece of paper oh yes you rightly

only a piece of paper oh yes you rightly said that c everything you may not be

said that c everything you may not be able to do it say for example the

able to do it say for example the company has placed the name boats at all

company has placed the name boats at all its Branch offices and that kind of

its Branch offices and that kind of stuff you may not be able to do it there

stuff you may not be able to do it there a benefit of Doubt will be given

a benefit of Doubt will be given certainly to you but not everywhere

certainly to you but not everywhere number one number two I have said this

number one number two I have said this in several forums as a secretarial

in several forums as a secretarial auditor what exactly you have to do

auditor what exactly you have to do while you are discharging your

while you are discharging your responsibilities in fact when I joined

responsibilities in fact when I joined my chared accountancy on the first week

my chared accountancy on the first week itself we have been I have been told by

itself we have been I have been told by my principal that when you go for an

my principal that when you go for an audit you have to see through your ears

audit you have to see through your ears and you have to listen through your eyes

and you have to listen through your eyes I was confused at that time

I was confused at that time you through my through my eyes means

you through my through my eyes means what what the client is showing you

what what the client is showing you don't see that only go beyond that

don't see that only go beyond that similarly what client is telling you

similarly what client is telling you don't hear that only go beyond that that

don't hear that only go beyond that that means what when you are going for a

means what when you are going for a secretarial audit as m has rightly said

secretarial audit as m has rightly said that the listed entities have to

that the listed entities have to disseminate lot of information so the

disseminate lot of information so the exchanges the the are the websites of

exchanges the the are the websites of the companies having a repository of the

the companies having a repository of the information during that Financial year

information during that Financial year so the secretarial auditor has to do his

so the secretarial auditor has to do his homework before he is going for the

homework before he is going for the audit and asking that already what is

audit and asking that already what is available in the public domain if you

available in the public domain if you are again asking the company to give you

are again asking the company to give you that information and taking that as the

that information and taking that as the face value is not correct so in fact you

face value is not correct so in fact you know suppose if I am the the on the

know suppose if I am the the on the other side of the thing suppose if I am

other side of the thing suppose if I am the company secretary in service I will

the company secretary in service I will assess your performance that when you

assess your performance that when you come to my uh this thing to my company

come to my uh this thing to my company for audit how well you prepared are and

for audit how well you prepared are and similarly we know that very well unlike

similarly we know that very well unlike statut Auditors our appointment is not

statut Auditors our appointment is not for a period of five years at one go it

for a period of five years at one go it is an year to year based renew so we are

is an year to year based renew so we are appointing you only for one year so it

appointing you only for one year so it is the responsibility of the company

is the responsibility of the company secretaries who are in service also when

secretaries who are in service also when I'm looking for a strong secretarial

I'm looking for a strong secretarial auditor one of the parameters I will see

auditor one of the parameters I will see is that how well the auditor is prepared

is that how well the auditor is prepared before he is stepping into my company to

before he is stepping into my company to conduct the audit or ad this is also one

conduct the audit or ad this is also one message to you please ensure that your

message to you please ensure that your team is well prepared before

you and and I would add to what sir said is that we also look at you for guidance

is that we also look at you for guidance because you have audited so many

because you have audited so many companies so you are much more aware of

companies so you are much more aware of what could be the risk not now going

what could be the risk not now going forward so we so rather we would say

forward so we so rather we would say that we should get a good checklist from

that we should get a good checklist from you which will prepare us for the coming

you which will prepare us for the coming audits also and it should come to us on

audits also and it should come to us on a not at the end of the year but during

a not at the end of the year but during the course of the year so that when you

the course of the year so that when you come we are able to say that yes you've

come we are able to say that yes you've done a great job you have provided us

done a great job you have provided us with all the right support and here we

with all the right support and here we are happy to share our uh this report

are happy to share our uh this report with you so that you know you can tell

with you so that you know you can tell us where we can become better see there

us where we can become better see there is no point of doing postmortem after

is no point of doing postmortem after the end of the year you have been

the end of the year you have been appointed it is the board who appoints

appointed it is the board who appoints you in the beginning of the year you

you in the beginning of the year you will come for the audit at the end of

will come for the audit at the end of the year that is a different thing but

the year that is a different thing but during this 8 to nine months if we get

during this 8 to nine months if we get the right support and the right guidance

the right support and the right guidance then if we miss we are also

then if we miss we are also like too many things coming up

like too many things coming up management is also expecting us to be

management is also expecting us to be always at the helm of things so we

always at the helm of things so we expect that you would guide us and tell

expect that you would guide us and tell us where we should maintain caution and

us where we should maintain caution and what are the things we should do it and

what are the things we should do it and what are the timelines also so if you do

what are the timelines also so if you do that then obviously your job as

that then obviously your job as secretarial Auditors at the end of the

secretarial Auditors at the end of the year will be very

year will be very simple in fact M just to add to that you

simple in fact M just to add to that you know I have said that what just

know I have said that what just secretarial auditor has to do it at the

secretarial auditor has to do it at the same point of time as a corporate

same point of time as a corporate secretary what we can also do is that I

secretary what we can also do is that I can share my experience in Reliance what

can share my experience in Reliance what we used to do was that we used to

we used to do was that we used to prepare the quarterly uh what's called

prepare the quarterly uh what's called as know files of keeping that because

as know files of keeping that because you know in my listed entity in r as

you know in my listed entity in r as such we used to have a quarterly audit

such we used to have a quarterly audit and for other companies we used to have

and for other companies we used to have half yearly audits so what we used to do

half yearly audits so what we used to do was before we called the secretary

was before we called the secretary auditor we used to keep the files ready

auditor we used to keep the files ready and know every information is there in

and know every information is there in that so that it should be self exlan net

that so that it should be self exlan net that means the secretary auditor should

that means the secretary auditor should be able to conduct based on the

be able to conduct based on the documents we are giving it maybe 10 15%

documents we are giving it maybe 10 15% only it's not like know by that

only it's not like know by that everything he has to ask then only I

everything he has to ask then only I will produce that it is wasted of both

will produce that it is wasted of both sides you know the the time the precious

sides you know the the time the precious time will be wasted in that so what Al

time will be wasted in that so what Al my advice piece of advice to the

my advice piece of advice to the participants is that whenever a

participants is that whenever a secretari audit is going to take place

secretari audit is going to take place if you you are the PCS form please go

if you you are the PCS form please go prepared see the website of the stock

prepared see the website of the stock exchanges see the websites of the

exchanges see the websites of the company at the same point of time keep

company at the same point of time keep your ears and eyes open as far as the

your ears and eyes open as far as the media is concerned and if anything H is

media is concerned and if anything H is happening in your client company and at

happening in your client company and at the same point of time if you are the

the same point of time if you are the corporate secretary before you invite

corporate secretary before you invite the audit to conduct the audit keep the

the audit to conduct the audit keep the files ready and you as a company

files ready and you as a company secretary know that what exactly is the

secretary know that what exactly is the auditor is looking into keep the things

auditor is looking into keep the things ready so that you know that the audit

ready so that you know that the audit will happen within not time otherwise

will happen within not time otherwise what happened is it may take months

what happened is it may take months together or days together the audit is

together or days together the audit is going on frustrating both

going on frustrating both sides yeah yeah go

ahead okay so so I think we put it very nicely so this battle goes on but yes uh

nicely so this battle goes on but yes uh as regards I would just tell one thing

as regards I would just tell one thing as regards letting know of the

as regards letting know of the compliances well before so know we are

compliances well before so know we are also Bound by certain scope and

also Bound by certain scope and everything so like auditing around the

everything so like auditing around the entire year becomes a kind of task but

entire year becomes a kind of task but yes as far as possible definitely as

yes as far as possible definitely as Auditors we also want to guide so that

Auditors we also want to guide so that no non-compliances are seen in the

no non-compliances are seen in the audities company

audities company side uh okay so we'll now go to the

side uh okay so we'll now go to the annual secretarial compliance uh

report uh so annual secretarial compliance report is uh just a

compliance report is uh just a germination of Regulation 24 a and the

germination of Regulation 24 a and the relevant law is only sebi lodr and it

relevant law is only sebi lodr and it has no mention of it in the companies

has no mention of it in the companies act so just to give a brief of the scope

act so just to give a brief of the scope that is followed in this report so since

that is followed in this report so since a lot of discussions has already

a lot of discussions has already happened that if there is a MR3 y againa

happened that if there is a MR3 y againa a uh acsr so basically the reason behind

a uh acsr so basically the reason behind the intention or rather the intention of

the intention or rather the intention of sebi to have this report in place is as

sebi to have this report in place is as we just now discussed there are a lot of

we just now discussed there are a lot of uh there are a lot of kind of

uh there are a lot of kind of intimations that we are doing to stock

intimations that we are doing to stock exchanges so in a way the stock exchange

exchanges so in a way the stock exchange or the authority has a database of all

or the authority has a database of all the non-compliances that a listed entity

the non-compliances that a listed entity is actually doing so as so we have this

is actually doing so as so we have this additional responsibility of bringing

additional responsibility of bringing into light that once again in front of

into light that once again in front of the management so when this report goes

the management so when this report goes to the board of directors they are also

to the board of directors they are also in a position to understand where they

in a position to understand where they have gone wrong because we might might

have gone wrong because we might might well feel that we might not uh kind of

well feel that we might not uh kind of give out a non-compliance or we get into

give out a non-compliance or we get into settlements but on the other hand sebi

settlements but on the other hand sebi there as the authority he has a list or

there as the authority he has a list or the database of all the non-compliances

the database of all the non-compliances that is taking place so therefore this

that is taking place so therefore this ACS report is very specific to only the

ACS report is very specific to only the sebi regulations and circulars and one

sebi regulations and circulars and one important thing that this report focuses

important thing that this report focuses uh on is of the previous year's

uh on is of the previous year's non-compliances

non-compliances when we talk about a secretarial audit

when we talk about a secretarial audit it is very very specific to the period

it is very very specific to the period during review so it is for a One

during review so it is for a One Financial year supposedly

Financial year supposedly 20223 but when we do the ACs report it

20223 but when we do the ACs report it is for the financial year 20223 visis

is for the financial year 20223 visis what has been done in 2122 that is the

what has been done in 2122 that is the non-c compliances which was reported in

non-c compliances which was reported in the previous years also needs to be

the previous years also needs to be taken care of in this

report uh so applicability is it is to the equity listed entities and high

the equity listed entities and high value debt listed entities a format a

value debt listed entities a format a format has undergone a change for this

format has undergone a change for this Current financial year onwards so

Current financial year onwards so previously it was a it was something

previously it was a it was something which was not very exhaustive now now

which was not very exhaustive now now when we go through the format we'll be

when we go through the format we'll be in a better position to

in a better position to understand uh so then coming to

understand uh so then coming to inclusion in the annual report so uh we

inclusion in the annual report so uh we know that annual report is something

know that annual report is something which is out of of companies act and

which is out of of companies act and therefore this report need not form a

therefore this report need not form a part of the annual report it is only an

part of the annual report it is only an intimation that has to be given to the

intimation that has to be given to the stock exchange and it need not to be

stock exchange and it need not to be included in the annual report as such

included in the annual report as such then timelines for submission is within

then timelines for submission is within 60 days from the end of financial year

60 days from the end of financial year and who can furnish so uh it has to be a

and who can furnish so uh it has to be a peer reviewed practicing company

peer reviewed practicing company secretary so now why the focus on peer

secretary so now why the focus on peer reviewed company secretary is when the

reviewed company secretary is when the audit firm itself is undergoing an audit

audit firm itself is undergoing an audit so they also have their documentations

so they also have their documentations in place so it gives an additional

in place so it gives an additional responsibility on the PCS when a peer

responsibility on the PCS when a peer reviewed firm is actually giving out

reviewed firm is actually giving out this report so uh now uh maybe we can go

this report so uh now uh maybe we can go through few of the sources through which

through few of the sources through which we can get to see the compliances I

we can get to see the compliances I think most of it has been previously

think most of it has been previously discussed if we see the certificate with

discussed if we see the certificate with manjuri very rightly pointed out about

manjuri very rightly pointed out about the compliance certificate which is

the compliance certificate which is placed before the board so there is is a

placed before the board so there is is a compliance certificate which needs to be

compliance certificate which needs to be placed before the board which gives a

placed before the board which gives a detailed uh I mean detailed report of

detailed uh I mean detailed report of all the laws that is applicable so that

all the laws that is applicable so that can be checked minutes is obviously like

can be checked minutes is obviously like the uh it's like the G for us so we get

the uh it's like the G for us so we get to know about a company from the minutes

to know about a company from the minutes only so the minutes of the board the

only so the minutes of the board the Committees and the shareholders meetings

Committees and the shareholders meetings then the terms of reference of the

then the terms of reference of the Committees so even in the previous uh

Committees so even in the previous uh lodr Master Class we had we had focused

lodr Master Class we had we had focused on what is the importance of the

on what is the importance of the Committees so the importance of

Committees so the importance of committees are also growing day by day

committees are also growing day by day because there are certain things which

because there are certain things which has to be necessarily rooted only

has to be necessarily rooted only through those committees so the terms of

through those committees so the terms of reference can be checked of those

reference can be checked of those committees then the certificates the

committees then the certificates the director's disclosures also become

director's disclosures also become important we have to see whether uh

important we have to see whether uh particularly the disclosures with

particularly the disclosures with regards to the PIP regulations or their

regards to the PIP regulations or their change in interest of directors during

change in interest of directors during the year if that has been given then an

the year if that has been given then an updated list of related parties I think

updated list of related parties I think a lot has been spoken about the uh

a lot has been spoken about the uh related parties adjudication order that

related parties adjudication order that has been received off late wherein the

has been received off late wherein the secretarial auditor the statutory

secretarial auditor the statutory auditor all have been penalized because

auditor all have been penalized because they were not in a position or they have

they were not in a position or they have not identified the related parties so it

not identified the related parties so it is very important for us to have an

is very important for us to have an updated list of related parties and go

updated list of related parties and go through all the transactions that the

through all the transactions that the companies entering into with them and uh

companies entering into with them and uh also additionally to check if the proper

also additionally to check if the proper approvals for the same transactions have

approvals for the same transactions have taken place or

not uh so now uh uh structured digital database I think uh yes again on the

database I think uh yes again on the audity side I can tell you this was a

audity side I can tell you this was a kind of a huge thing that had come in

kind of a huge thing that had come in for the financial year 2223 where we as

for the financial year 2223 where we as an auditor have faced a lot of issues

an auditor have faced a lot of issues because there were understanding

because there were understanding barriers there were no CL Clarity

barriers there were no CL Clarity regarding it but of course as on date

regarding it but of course as on date everybody is on the same page and we

everybody is on the same page and we know that there has to be a sdd for the

know that there has to be a sdd for the listed entities and so we have to go

listed entities and so we have to go through I mean we take a virtual walk

through I mean we take a virtual walk through that STD whether all the upsi

through that STD whether all the upsi have been captured or not uh then the

have been captured or not uh then the codes and policies which are not

codes and policies which are not available on website uh needs to be

available on website uh needs to be taken then documents of previous years

taken then documents of previous years as for the preservation policy relevant

as for the preservation policy relevant confirmations from the

confirmations from the company

company uh so for this particular uh ascr so one

uh so for this particular uh ascr so one thing to focus is most of the things

thing to focus is most of the things that we report in this uh annual

that we report in this uh annual secretarial compliance report are

secretarial compliance report are available in the public domain itself so

available in the public domain itself so when we talk about an annual report for

when we talk about an annual report for the listed entity it becomes mandatory

the listed entity it becomes mandatory for them to have the annual reports

for them to have the annual reports hosted on the website so the website of

hosted on the website so the website of the company is one stop place where we

the company is one stop place where we can get almost all the compliances that

can get almost all the compliances that we want to look at so uh the the it has

we want to look at so uh the the it has become mandatory for all the listed

become mandatory for all the listed entities to have a functional website

entities to have a functional website and they have to uh host a kind of

and they have to uh host a kind of plethora of things in that website from

plethora of things in that website from where the auditor can also pull out the

where the auditor can also pull out the documents that is required uh then of

documents that is required uh then of course is the stock exchange disclosures

course is the stock exchange disclosures and intimations that is available in the

and intimations that is available in the nsse and BSE and once we get to know the

nsse and BSE and once we get to know the name of the company we are in a position

name of the company we are in a position to kind of see what are the disclosures

to kind of see what are the disclosures and the intimations and the timelines

and the intimations and the timelines whether it has has been followed or not

whether it has has been followed or not then the penalties imposed by BC and NSC

then the penalties imposed by BC and NSC and sebi so this is something uh which

and sebi so this is something uh which is again hosted in the website so as an

is again hosted in the website so as an auditor I think these are the places or

auditor I think these are the places or these are the documents which should be

these are the documents which should be specifically relied upon because even if

specifically relied upon because even if the company in a is not in a position to

the company in a is not in a position to disclose or the company says that

disclose or the company says that probably we have not been penalized

probably we have not been penalized maybe to cross verify what the company

maybe to cross verify what the company is saying just to be in the line with

is saying just to be in the line with what we want to to do this is the place

what we want to to do this is the place where we can find all of these

where we can find all of these compliances and website of the company

compliances and website of the company holds the at most importance where we

holds the at most importance where we can get through almost all the things

can get through almost all the things that is

required uh so now moving on to the format of the annual secretarial

format of the annual secretarial compliance report so as we've already

compliance report so as we've already discussed that it is only specific to

discussed that it is only specific to sebi lodr so first and it is not only it

sebi lodr so first and it is not only it is germinating out of sebi lodr but to

is germinating out of sebi lodr but to note her it is not only taking into

note her it is not only taking into consideration SEI lodia regulations it

consideration SEI lodia regulations it does take into reg account all of the

does take into reg account all of the other acts also which might get

other acts also which might get applicable for example if a listed

applicable for example if a listed company has done a buyback of Securities

company has done a buyback of Securities so accordingly the SE buyback

so accordingly the SE buyback regulations becomes applicable so a

regulations becomes applicable so a Prohibition of insider trading

Prohibition of insider trading regulations become applicable so all of

regulations become applicable so all of these have to be taken care of uh now

these have to be taken care of uh now moving on specifically to the format

moving on specifically to the format that this is the new format which has

that this is the new format which has been given for the financial year

been given for the financial year 2223 so as we know we've been

2223 so as we know we've been deliberating on the importance of

deliberating on the importance of Secretarial standards and here it is as

Secretarial standards and here it is as the first point which itself shows why

the first point which itself shows why secretarial standards are important so

secretarial standards are important so when we go back to the MR3 or the

when we go back to the MR3 or the secretarial audit report we are giving a

secretarial audit report we are giving a declaration that we are complying with

declaration that we are complying with the secretarial standards the same thing

the secretarial standards the same thing has been followed by sebbi also that we

has been followed by sebbi also that we will have to give a declaration very

will have to give a declaration very specifically about the secretarial

specifically about the secretarial standards being in place so as an

standards being in place so as an auditor I would reach out or I would say

auditor I would reach out or I would say the Audi company where we feel that

the Audi company where we feel that maybe a numbering has been missed or a

maybe a numbering has been missed or a summary has not been announced by the

summary has not been announced by the chairman during a VC meeting we might uh

chairman during a VC meeting we might uh we might feel that these are very little

we might feel that these are very little little compliances which need not be

little compliances which need not be maybe uh I mean qualified in a report

maybe uh I mean qualified in a report but again when we go back to a ascr for

but again when we go back to a ascr for a listed entity we have to give a

a listed entity we have to give a compliance status so it can be either a

compliance status so it can be either a yes or no for secretarial standards na

yes or no for secretarial standards na is obviously not applicable because one8

is obviously not applicable because one8 makes it mandatory for all companies to

makes it mandatory for all companies to uh I mean to follow the secretarial

uh I mean to follow the secretarial standards

standards uh yeah just one minute adti since know

uh yeah just one minute adti since know you Ted up on my uh what's called a soft

you Ted up on my uh what's called a soft nve you know whenever I talk about secet

nve you know whenever I talk about secet standards I became very passionate and

standards I became very passionate and emotional the reason being I am

emotional the reason being I am associated with this right from 2016

associated with this right from 2016 with the SSB board that point of time

with the SSB board that point of time onwards I used to say that if any the

onwards I used to say that if any the best installation for a company

best installation for a company secretary as a KMP as well as the board

secretary as a KMP as well as the board of directors are

of directors are concerned in comparison to the companies

concerned in comparison to the companies act

act 2013 the responsibilities and

2013 the responsibilities and accountabilities which have been

accountabilities which have been interested upon the the directors as

interested upon the the directors as well as the company secretary because SS

well as the company secretary because SS one and two are more of procedural War

one and two are more of procedural War oriented so people used to have a

oriented so people used to have a difficulty in compliance with the

difficulty in compliance with the procedure know like taking attendance

procedure know like taking attendance sheets leing know that keeping the

sheets leing know that keeping the uh reports and all these things whereas

uh reports and all these things whereas in fact you know by having all these

in fact you know by having all these things it is bringing a kind of

things it is bringing a kind of discipline into the secretari department

discipline into the secretari department prior to SS one in fact the compete

prior to SS one in fact the compete secur used to struggle to put the agenda

secur used to struggle to put the agenda in place and circulate it before to the

in place and circulate it before to the directors even one night before before

directors even one night before before they used to push it to the directors

they used to push it to the directors the company secretaries used to struggle

the company secretaries used to struggle a lot because the other departments were

a lot because the other departments were not cooperating with them that kind of a

not cooperating with them that kind of a situation used to be there whereas now

situation used to be there whereas now it is mandatory for the company

it is mandatory for the company secretaries to circulate the

secretaries to circulate the agenda days before the board meeting in

agenda days before the board meeting in view of that a kind of a discipline has

view of that a kind of a discipline has been brought in in the companies and all

been brought in in the companies and all even across the Departments wherever

even across the Departments wherever they want any kind of board approvals

they want any kind of board approvals they have to give the board notes and

they have to give the board notes and the information to the secretary

the information to the secretary Department much before that at the same

Department much before that at the same point of time if I am a director and if

point of time if I am a director and if I'm suppose I'm asking for the minutes

I'm suppose I'm asking for the minutes of the previous meetings before my

of the previous meetings before my induction as a director I mean my

induction as a director I mean my appointment as a director or after my

appointment as a director or after my session as a

session as a director when the company secretary has

director when the company secretary has been asked by the management are we Duty

been asked by the management are we Duty bound to provide the minutes because the

bound to provide the minutes because the law was not clear so the company

law was not clear so the company secretary was also not very clear

secretary was also not very clear whether to advise the management whether

whether to advise the management whether the director has a legal right to ask

the director has a legal right to ask for the minutes certified copy of the

for the minutes certified copy of the minutes or even the inspection of the

minutes or even the inspection of the minutes the law was not clear now after

minutes the law was not clear now after ss1 has

ss1 has come I been appointed as a director on

come I been appointed as a director on your board today I can see the minutes

your board today I can see the minutes of the I can inspect the minutes of the

of the I can inspect the minutes of the company right from its Inception if I'm

company right from its Inception if I'm ceased to be a director still I can ask

ceased to be a director still I can ask for the inection of the as the certified

for the inection of the as the certified cies during my tenure as a director of

cies during my tenure as a director of the company so there are n number of

the company so there are n number of benefits out there these things the

benefits out there these things the regulator is more intelligent than us

regulator is more intelligent than us they know that okay secret the

they know that okay secret the importance of the secretary standards

importance of the secretary standards that's why right from the beginning the

that's why right from the beginning the amount of importance what they have

amount of importance what they have given our

given our fraternity given ACC to but of course

fraternity given ACC to but of course off late we are falling in line because

off late we are falling in line because as I told you in MR3 it is there now the

as I told you in MR3 it is there now the secret comport also it has been brought

secret comport also it has been brought in so you have no option but to fall in

in so you have no option but to fall in line we have to comply with the

line we have to comply with the standards and of course at the end of

standards and of course at the end of the day it is according to me for the

the day it is according to me for the benefit of the company secretar only

benefit of the company secretar only okay whether you have to give a serial

okay whether you have to give a serial number to every meeting but similarly

number to every meeting but similarly you have to what's called as okay page

you have to what's called as okay page numbering is to be there after the

numbering is to be there after the chairman signs he has to put the DAT he

chairman signs he has to put the DAT he has to put the place ear even the

has to put the place ear even the chairmans were not signing and in the

chairmans were not signing and in the comp secret what they were doing is they

comp secret what they were doing is they us to put the date with a different pen

us to put the date with a different pen in fact now if you do that you know the

in fact now if you do that you know the r may say this is that the chairman has

r may say this is that the chairman has not done so it is a non-compliance you

not done so it is a non-compliance you don't know so these are all certain fine

don't know so these are all certain fine points which company secretaries have to

points which company secretaries have to understand that and also to sensitize

understand that and also to sensitize the both managements like your CFO CEOs

the both managements like your CFO CEOs directors whatever anybody has to do it

directors whatever anybody has to do it they have to do it there is no other

they have to do it there is no other option yeah go

option yeah go ahead uh sir so if I can add here also

ahead uh sir so if I can add here also as you rightly said so uh one of the

as you rightly said so uh one of the experiences that we've had that the

experiences that we've had that the agenda point which you just now

agenda point which you just now mentioned so in fact we've come across

mentioned so in fact we've come across situations where the secretarial

situations where the secretarial Department actually reaches us to

Department actually reaches us to reaches out to us saying that you

reaches out to us saying that you knowingly put it as an observation so

knowingly put it as an observation so that we are able to put it to the

that we are able to put it to the management that yes this has become that

management that yes this has become that important because there are situations

important because there are situations we as Auditors also understand that they

we as Auditors also understand that they are not able to persuade the management

are not able to persuade the management of why it has to be done so in fact

of why it has to be done so in fact secretarial standards has also formed a

secretarial standards has also formed a part of our observation when we've

part of our observation when we've issued

reports in fact as you rightly say Aditi and the secr certificates when the SEC

and the secr certificates when the SEC standards was introduced and things we

standards was introduced and things we used to call the secal auditor to be

used to call the secal auditor to be present in the board meeting and we

present in the board meeting and we wanted to board of director to hear from

wanted to board of director to hear from him apart from what he has put in his

him apart from what he has put in his report what other things he has got the

report what other things he has got the observations what other things he what

observations what other things he what is the suggestion we he has got we used

is the suggestion we he has got we used to make the directors to listen from him

to make the directors to listen from him directly initially we were doing

that so the next point is adoption and timely updation of the policies so I

timely updation of the policies so I think we've also dwelt upon this fact

think we've also dwelt upon this fact how important policies are becoming day

how important policies are becoming day by day so for example materiality of uh

by day so for example materiality of uh related parties now that has become very

related parties now that has become very important and every day we see new

important and every day we see new changes coming into those regulations so

changes coming into those regulations so we need to have a specific policy for

we need to have a specific policy for that as well as uh uh preservation

that as well as uh uh preservation policy or the CSR policy so we have to

policy or the CSR policy so we have to check in detail whether the required

check in detail whether the required approvals have been given by respective

approvals have been given by respective committees the same has been approved by

committees the same has been approved by the board or not uh then Website

the board or not uh then Website Maintenance and closures on the website

Maintenance and closures on the website be it a listed company or a debt listed

be it a listed company or a debt listed company for that matter Equity or debt

company for that matter Equity or debt so they have separate regulations

so they have separate regulations wanting them to uh have these certain

wanting them to uh have these certain information which which has to be there

information which which has to be there in the website and accordingly timely

in the website and accordingly timely dissemination of that has to be done

dissemination of that has to be done under a separate section so that is also

under a separate section so that is also checked and if if at all we find

checked and if if at all we find something as missing then we kind of

something as missing then we kind of adise the management to have that uh

adise the management to have that uh uploaded on

time uh so disqualification of directors uh then none of the directors are

uh then none of the directors are disqualified is what we have to certify

disqualified is what we have to certify details related to subsidiaries of

details related to subsidiaries of listed entities have been examined so

listed entities have been examined so this this is completely a uh duplication

this this is completely a uh duplication or we may say a copy of Regulation 24

or we may say a copy of Regulation 24 which we right now discussed so we need

which we right now discussed so we need to identify which are the material uh

to identify which are the material uh subsidiary and accordingly we will have

subsidiary and accordingly we will have to check whether all the compliances

to check whether all the compliances relating to that has been done or not

relating to that has been done or not then preservation of documents again has

then preservation of documents again has become mandatory and we as a listed

become mandatory and we as a listed entity we uh you need to have a

entity we uh you need to have a preservation policy in place and that

preservation policy in place and that again has to find itself in the website

again has to find itself in the website of the

of the company uh performance evaluation so I

company uh performance evaluation so I think performance evaluation of the

think performance evaluation of the board is very important so in order to

board is very important so in order to understand whether the board of

understand whether the board of directors are actually functioning in

directors are actually functioning in the right direction or not so it is kind

the right direction or not so it is kind of evaluation being done to the board

of evaluation being done to the board independent directors and the Committees

independent directors and the Committees at the start of every Financial year so

at the start of every Financial year so that also has to be checked whether this

that also has to be checked whether this has been done or not then uh related

has been done or not then uh related party transactions as we discussed uh

party transactions as we discussed uh there are certain uh so listed companies

there are certain uh so listed companies have to PRI prior they have to go to the

have to PRI prior they have to go to the audit committee to seek the approvals so

audit committee to seek the approvals so whether that listed entity has taken the

whether that listed entity has taken the uh requisite approvals or not and then

uh requisite approvals or not and then what are the details and they have to

what are the details and they have to quantify there is a statement of related

quantify there is a statement of related party transactions that has to be placed

party transactions that has to be placed before the audit as well as the board

before the audit as well as the board then quantification of those

then quantification of those transactions so all of these have to be

transactions so all of these have to be checked then disclosure of events or

checked then disclosure of events or information so this is regulation 30

information so this is regulation 30 wherein we have to give an intimation to

wherein we have to give an intimation to the stock exchange so whether all of

the stock exchange so whether all of these informations if at all uh if at

these informations if at all uh if at all when we go through the minutes of an

all when we go through the minutes of an company we get to see there are certain

company we get to see there are certain events that has occurred so we have to

events that has occurred so we have to cross check whether the requisite

cross check whether the requisite information has gone out to the stock

information has gone out to the stock exchanges or

exchanges or not then prohibition of insider trading

not then prohibition of insider trading so probably as an auditor I would say

so probably as an auditor I would say this was one point that we could reach

this was one point that we could reach out to when the auditor when the audity

out to when the auditor when the audity was of a opinion that this is not

was of a opinion that this is not applicable or probably we were not aware

applicable or probably we were not aware of so this was one point where we

of so this was one point where we focused as Auditors that sebbi has

focused as Auditors that sebbi has mandatory

mandatory brought up this point in the report

brought up this point in the report wherein we have to disclose the

wherein we have to disclose the compliance status as regards to the pit

compliance status as regards to the pit regulations uh similarly the actions

regulations uh similarly the actions taken by sebi or Stock Exchange so as

taken by sebi or Stock Exchange so as discussed earlier we we should not be

discussed earlier we we should not be only depending on what the uh audity

only depending on what the uh audity company is giving us with we have this

company is giving us with we have this sebbi website wherein these penalties

sebbi website wherein these penalties and the fines imposed by them are

and the fines imposed by them are recorded and so we can refer back to

recorded and so we can refer back to those actions taken and that has to be

those actions taken and that has to be again uh given in this report and the

again uh given in this report and the additional non-compliances if any so

additional non-compliances if any so what I feel in the 11 points that has

what I feel in the 11 points that has been covered so most of the important

been covered so most of the important compliances which is required for a

compliances which is required for a listed entity has been covered so apart

listed entity has been covered so apart from these 11 points even if we come

from these 11 points even if we come across any additional non-compliances

across any additional non-compliances that has to be again

reported uh so now this is uh which is compliances relating to the appointment

compliances relating to the appointment or reappointment of Auditors of the

or reappointment of Auditors of the listed entities and the material

listed entities and the material subsidiaries so when it comes to auditor

subsidiaries so when it comes to auditor again I will uh come I mean I will come

again I will uh come I mean I will come across one of the experiences that we

across one of the experiences that we have had so appointment of auditor is

have had so appointment of auditor is something which is very clearly

something which is very clearly mentioned in the act and as a listed

mentioned in the act and as a listed entity rotation of statutory Auditors

entity rotation of statutory Auditors becomes mandatory so a lot of times it

becomes mandatory so a lot of times it so happens that there is a Casual

so happens that there is a Casual Vacancy uh During the period of five

Vacancy uh During the period of five years but then we have to consider that

years but then we have to consider that as one tenure so uh so these are the few

as one tenure so uh so these are the few questions and answers that needs to be

questions and answers that needs to be done during a period during the audit or

done during a period during the audit or maybe when we are issuing this report so

maybe when we are issuing this report so that might be the intent because of

that might be the intent because of which this specific auditor related

which this specific auditor related compliances have also formed a part of

compliances have also formed a part of this report so uh if an auditor has

this report so uh if an auditor has resigned within 45 days then a limited

resigned within 45 days then a limited review has to be given if are resigning

review has to be given if are resigning after 45 days then for the next quarter

after 45 days then for the next quarter the reports have to be given so all of

the reports have to be given so all of that with regards to Casual vacancies or

that with regards to Casual vacancies or a change in position of the auditor has

a change in position of the auditor has to be

reported uh now coming to a few uh points which has now been included so in

points which has now been included so in 2019 when the format has format had come

2019 when the format has format had come in for this annual secretarial

in for this annual secretarial complaints it was not so exhaustive it

complaints it was not so exhaustive it was kind of very much limited to the

was kind of very much limited to the non-c compliances that had happened in

non-c compliances that had happened in the last year that that we were

the last year that that we were reporting and it was very much

reporting and it was very much restricted to few of the things as

restricted to few of the things as compared to the one which we are seeing

compared to the one which we are seeing now so uh there are three three four

now so uh there are three three four sections which have been newly added for

sections which have been newly added for example there is a fine amount there is

example there is a fine amount there is a type of action that the listed entity

a type of action that the listed entity is taking when they are deviating from

is taking when they are deviating from the compliances that is required to be

the compliances that is required to be done then there is an observation or

done then there is an observation or remarks of the practicing company

remarks of the practicing company secretary and the management response to

secretary and the management response to that so here also I can just say maybe

that so here also I can just say maybe there are certain uh situations wherein

there are certain uh situations wherein it is beyond the listed companies uh

it is beyond the listed companies uh control that they are being

control that they are being non-compliant for example mostly if we

non-compliant for example mostly if we take into uh account government

take into uh account government companies so in government companies it

companies so in government companies it is usually not the board who has the

is usually not the board who has the authority to appoint directors so most

authority to appoint directors so most of the board composition in government

of the board composition in government companies is uh either short of an

companies is uh either short of an independent director or that of a woman

independent director or that of a woman director so in these cases it is

director so in these cases it is actually not the management or the

actually not the management or the audity company's fault but then in the

audity company's fault but then in the management response we can take a note

management response we can take a note of that of the actual condition as to

of that of the actual condition as to why the vard composition is not

correct uh so along with that we will have to provide a list of all the

have to provide a list of all the observations in the report for the

observations in the report for the previous year along with the actions uh

previous year along with the actions uh taken by the listed

taken by the listed entity

entity uh now this I uh we have just discussed

uh now this I uh we have just discussed upon all this the existing tables which

upon all this the existing tables which which the new additions that has come up

which the new additions that has come up in the annual secretarial compliance

in the annual secretarial compliance report is the type of action the fine

report is the type of action the fine amount and the management response any

amount and the management response any deviation which is found from the

deviation which is found from the compliances that has to be necessarily

compliances that has to be necessarily reported in the annual secretarial

reported in the annual secretarial compliance report uh now coming to the

compliance report uh now coming to the amendment so post this uh amendment that

amendment so post this uh amendment that has recently come in previously it was

has recently come in previously it was only the PDF copy of the ascr which was

only the PDF copy of the ascr which was required to be filed so now they've made

required to be filed so now they've made it mandatory to be filed in the xbrl

it mandatory to be filed in the xbrl mode as well so for the the for the

mode as well so for the the for the current year it was the uh due date was

current year it was the uh due date was June 30th 2023 and for the upcoming uh

June 30th 2023 and for the upcoming uh years it would be 15th of June 20 uh I

years it would be 15th of June 20 uh I mean 15th of June henceforth for which

mean 15th of June henceforth for which it is going to be

applicable uh so now we can take a few case

case uh in which we we can understand the

uh in which we we can understand the importance of the secretarial standards

importance of the secretarial standards that we were focusing or the role and

that we were focusing or the role and responsibilities of the secretarial

responsibilities of the secretarial auditor on the

auditor on the whole uh sir would you like to take it I

whole uh sir would you like to take it I mean casewise

mean casewise how so uh if we refer to this one as

how so uh if we refer to this one as case one that is the ROC uh of Delhi and

case one that is the ROC uh of Delhi and harana what the we have come AC come

harana what the we have come AC come across penalties so this was an order of

across penalties so this was an order of 19 January

2022 in the matter of Polaris India private limited so we uh as the company

private limited so we uh as the company had not kind of followed the secretarial

had not kind of followed the secretarial standards we we were kind of uh

standards we we were kind of uh discussing on the secretarial standards

discussing on the secretarial standards at large so the penalties are also not

at large so the penalties are also not very less if we look at the amount so it

very less if we look at the amount so it is kind of huge penalties which is being

is kind of huge penalties which is being levied for non-compliance of Secretarial

levied for non-compliance of Secretarial standards

standards so the the company and all the officers

so the the company and all the officers in default even the past director who

in default even the past director who had been in default during that course

had been in default during that course of action was penalized because of the

of action was penalized because of the non-compliance with regards to

non-compliance with regards to secretarial

standards so similarly we have other cases as well the ROC Pune has also

cases as well the ROC Pune has also taken a stricter view of uh

taken a stricter view of uh non-compliance of Secretarial standards

non-compliance of Secretarial standards with regards to uh Clause 7.14 when

with regards to uh Clause 7.14 when there was a non-compliance so that was

there was a non-compliance so that was also penalty was levied by The ROC Pune

also penalty was levied by The ROC Pune so that also was a heavy amount like

so that also was a heavy amount like 45,000 was penalized to the officers in

45,000 was penalized to the officers in default and the com directors

default and the com directors each so similarly we have quoted I mean

each so similarly we have quoted I mean we are running through a few cases

we are running through a few cases wherein uh case studies wherein the

wherein uh case studies wherein the secretarial standards and the role of

secretarial standards and the role of the Auditors to bring in to light these

the Auditors to bring in to light these non-c compliances is growing in import

non-c compliances is growing in import import day by

day so uh so this is like different roc's uh what we've covered here is

roc's uh what we've covered here is there are different roc's first was the

there are different roc's first was the ROC Delhi then was the ROC Pune now is

ROC Delhi then was the ROC Pune now is Roc Chennai so all the roc's are taking

Roc Chennai so all the roc's are taking into consideration the importance of the

into consideration the importance of the secretarial standards and they are

secretarial standards and they are penalizing the company under different

penalizing the company under different Clauses of the uh secretarial standard

Clauses of the uh secretarial standard one or two as is the non compliance

prevailing so that's all from my side thank you everyone for your patient uh

thank you everyone for your patient uh hearing wonderful Aditi very

hearing wonderful Aditi very nicely you have done the

nicely you have done the presentation and very precisely you have

presentation and very precisely you have covered and brought in all the

covered and brought in all the aspects very

aspects very nice just to go back to one slide

in particular case of madas fertilizers we have talked in the past also I again

we have talked in the past also I again tend to emphasize on this particular

tend to emphasize on this particular case this is relating to gift

case this is relating to gift distribution done at the AGM by the

distribution done at the AGM by the madas fertilizations Company Limited

madas fertilizations Company Limited initially the ROC has actually penalized

initially the ROC has actually penalized company and the director and the file

company and the director and the file was very heavy and they made an appeal

was very heavy and they made an appeal and went to the A

and went to the A when AI was reviewing the case we

when AI was reviewing the case we categorically said is a responsibility

categorically said is a responsibility of the company secretary and the company

of the company secretary and the company secretary alone to ensure the

secretary alone to ensure the secretarial complaints which is required

secretarial complaints which is required as per the secretarial standard so in

as per the secretarial standard so in which case what he has done is he has

which case what he has done is he has set the whole order against the penalty

set the whole order against the penalty Leed upon the company and the director

Leed upon the company and the director he issued instruction to the

he issued instruction to the adjudication officer to initiate

adjudication officer to initiate separate proding only the company

separate proding only the company security and conduct the case so here he

security and conduct the case so here he has referred actually the second

has referred actually the second standard he has referred the guance to

standard he has referred the guance to he has said what is the role of the

he has said what is the role of the company secretary that really a very

company secretary that really a very highlighting case showing the importance

highlighting case showing the importance of the company secretary what we are all

of the company secretary what we are all supposed to do and again needless to

supposed to do and again needless to mention Mr sudagar has been repeatedly

mention Mr sudagar has been repeatedly saying in every seminar about the import

saying in every seminar about the import of the second standard the guidance Etc

of the second standard the guidance Etc which we have to take care of it that is

which we have to take care of it that is the only point I want to add at this

the only point I want to add at this Junction I think we can take the

Junction I think we can take the questions

now I think we left it with the material subsid you stop sharing

what of our listed entity foreign subsidy the minutes are not placed in

subsidy the minutes are not placed in the listed entity because the law and

the listed entity because the law and act are different how they will follow

act are different how they will follow their local laws and acts need not be

their local laws and acts need not be given in the proper formats and

given in the proper formats and maintaining are different in this case

maintaining are different in this case how we can consider unlisted foreign

how we can consider unlisted foreign subsidary please comment on

this let me take it in this manner that it is your unlisted foreign subsidiary

it is your unlisted foreign subsidiary so when when and it is your obligation

so when when and it is your obligation to follow the listing agreement so

to follow the listing agreement so whenever you are follow incorporating a

whenever you are follow incorporating a subsidary in any foreign location you

subsidary in any foreign location you have to understand not only their laws

have to understand not only their laws you have to also see how you will

you have to also see how you will implement or you will ensure that your

implement or you will ensure that your governance is done for that listed

governance is done for that listed subsidary so you will follow you will

subsidary so you will follow you will make everything according to that

make everything according to that country's law as well as ensure that

country's law as well as ensure that whatever governance you need to do for

whatever governance you need to do for the Indian under the Indian regulations

the Indian under the Indian regulations that are also followed because finally

that are also followed because finally it is it gets comes and gets

it is it gets comes and gets Consolidated in India so we have to

Consolidated in India so we have to ensure that governance is maintained at

ensure that governance is maintained at any cost wherever the location of the

any cost wherever the location of the company till the time it is a part of

company till the time it is a part of your group governance has to be done as

your group governance has to be done as per the regulations which are followed

per the regulations which are followed in India so practical

in India so practical difficulties Cann not be a reason for

difficulties Cann not be a reason for which governance is not done so I agree

which governance is not done so I agree with you if borrowing of the private

with you if borrowing of the private limited company

limited company 31323 is more than 100 CR secret auditor

31323 is more than 100 CR secret auditor is applicable for the year 2223 or 23 24

is applicable for the year 2223 or 23 24 since the wording of the section says

since the wording of the section says capital turnover borrowing existing on

capital turnover borrowing existing on the date of the latest audited financial

the date of the latest audited financial statement that has to be taken into

statement that has to be taken into account yeah it is actually when you say

account yeah it is actually when you say 31323 that means the latest audited

31323 that means the latest audited balance sheets is actually

balance sheets is actually 2223 so if it is 2223 based on that

2223 so if it is 2223 based on that because when the audit is get over then

because when the audit is get over then only you'll know so in which case it

only you'll know so in which case it will be applicable in the subsequent

will be applicable in the subsequent year because based on the previous

year generally I note that the secret auditor appointment and the audit report

auditor appointment and the audit report is placed only at the board meeting

is placed only at the board meeting should the secret auditor appointment

should the secret auditor appointment audit process be the report of the

audit process be the report of the rooted through the audit committee first

rooted through the audit committee first before it is recommended to the board

before it is recommended to the board second I am informed in some of the

second I am informed in some of the cases second auditor performs the audit

cases second auditor performs the audit remotely without even visiting the

remotely without even visiting the office is this

acceptable uh sir I would like to answer this question uh so first part of the

this question uh so first part of the question is again I will tell you it's a

question is again I will tell you it's a gray area because when we look at the

gray area because when we look at the functions of the audit committee there

functions of the audit committee there it has been mentioned as appointment of

it has been mentioned as appointment of Auditors so we as Auditors we always

Auditors so we as Auditors we always want that it is to be rooted so in a lot

want that it is to be rooted so in a lot of cases we are of an opinion that it

of cases we are of an opinion that it should be rooted through the audit

should be rooted through the audit committee and uh since it is uh like

committee and uh since it is uh like auditing of all the records of an

auditing of all the records of an organization it should be rooted but

organization it should be rooted but then again uh sir you can give your

then again uh sir you can give your comments on that because we we as

comments on that because we we as Auditors we feel that it should be

Auditors we feel that it should be rooted through the audit committee the

rooted through the audit committee the appointment thank you no before this

appointment thank you no before this program actually I did a

program actually I did a survey uh to find out the practices in

survey uh to find out the practices in about five six companies that I was

about five six companies that I was aware of uh at least three of them said

aware of uh at least three of them said that they don't do it they do it

that they don't do it they do it directly at the board uh because I think

directly at the board uh because I think if there is any qualification then it

if there is any qualification then it has to be addressed in the board's

has to be addressed in the board's report uh the second aspect they also

report uh the second aspect they also the two other companies said they always

the two other companies said they always rooted uh through the audit committee

rooted uh through the audit committee irrespective of the fact that it is an

irrespective of the fact that it is an annual exercise and the term terms of

annual exercise and the term terms of reference does not specifically talk

reference does not specifically talk about it but my point basically to all

about it but my point basically to all of you is that the cost audit comes to

of you is that the cost audit comes to the audit committee the staty auditor

the audit committee the staty auditor comes to the audit committee the

comes to the audit committee the internal auditor comes to the audit

internal auditor comes to the audit committee so why should the secretarial

committee so why should the secretarial audit be excluded just because it is not

audit be excluded just because it is not specified there the role of the audit

specified there the role of the audit committee if you look at it terms of

committee if you look at it terms of reference it talks about compliance and

reference it talks about compliance and legal your regulations everything it

legal your regulations everything it goes through the audit committee first

goes through the audit committee first and then only it goes to the board I

and then only it goes to the board I agree that the board will not recommend

agree that the board will not recommend anything in this case but at least the

anything in this case but at least the board will not have the time to actually

board will not have the time to actually look at how the appointment is made the

look at how the appointment is made the internal auditor is also appointed by

internal auditor is also appointed by the board the staty auditor is appointed

the board the staty auditor is appointed by the members but still it goes through

by the members but still it goes through the process now somebody told me that

the process now somebody told me that the secretary auditor does not have any

the secretary auditor does not have any engagement with the audit committee now

engagement with the audit committee now I think that is a very weak argument

I think that is a very weak argument because uh it is true that just because

because uh it is true that just because you are having an engagement every

you are having an engagement every quarter it should go through the audit

quarter it should go through the audit committee but if you don't have an

committee but if you don't have an engagement every quarter then you don't

engagement every quarter then you don't go through the audit committee I think

go through the audit committee I think that's a very weak argument from my

that's a very weak argument from my perspective if you want good governance

perspective if you want good governance we have to look at the Spirit of the law

we have to look at the Spirit of the law and it is not practically possible to

and it is not practically possible to look at every situation there are many

look at every situation there are many times when the board has to take a

times when the board has to take a decision and still the management

decision and still the management believes let us take it through the

believes let us take it through the audit committee at least one of the

audit committee at least one of the Committees I'm not saying more than one

Committees I'm not saying more than one committee so I think from my perspective

committee so I think from my perspective uh it is important for uh any

uh it is important for uh any audit uh to go through the audit

audit uh to go through the audit committee especially when it relates to

committee especially when it relates to compliance uh and things like that

compliance uh and things like that because that is primarily the

because that is primarily the responsibility of the audit committee to

responsibility of the audit committee to oversee because after all the role of

oversee because after all the role of the audit committee is oversight right

the audit committee is oversight right so unless and the board will not have

so unless and the board will not have that much time because if you're looking

that much time because if you're looking at strategy and many other things merg

at strategy and many other things merg Acquisitions the big ticket items uh why

Acquisitions the big ticket items uh why should the board get into the process

should the board get into the process now the second part of my question is uh

now the second part of my question is uh the PCS that you mentioned in the two

the PCS that you mentioned in the two cases I was told that they do remotely I

cases I was told that they do remotely I mean every document is sent through

mean every document is sent through email that person has never visited the

email that person has never visited the office never interacted with other

office never interacted with other management Personnel so my question was

management Personnel so my question was actually around it to say you know I

actually around it to say you know I mean I'm not saying that the guy has to

mean I'm not saying that the guy has to come everywhere but at least should they

come everywhere but at least should they not be one meeting with the management

not be one meeting with the management other than the secretarial other than

other than the secretarial other than the company

secretary uh what is your experience I mean when you do secretarial audit when

mean when you do secretarial audit when you are appointed do you have at least

you are appointed do you have at least one meeting even if not physically do

one meeting even if not physically do you do it virtually right that that's

you do it virtually right that that's exactly what I was coming to so see uh

exactly what I was coming to so see uh we have all gone through the coid phase

we have all gone through the coid phase which has made us believe in the virtual

which has made us believe in the virtual presence right so it is I would say

presence right so it is I would say prior to the co phase it was all

prior to the co phase it was all physical audits only which was being

physical audits only which was being conducted so that was the way how it was

conducted so that was the way how it was nobody actually knew of sharing of

nobody actually knew of sharing of documents over emails and all of that so

documents over emails and all of that so there was a physical audit which was

there was a physical audit which was being conducted but as you said uh

being conducted but as you said uh definitely when we are onboarded by an

definitely when we are onboarded by an uh management of a company to conduct

uh management of a company to conduct their audit it becomes the atmost

their audit it becomes the atmost responsibility to have a preliminary

responsibility to have a preliminary introductory meeting with them to

introductory meeting with them to understand their operations because

understand their operations because until and unless we get a proper

until and unless we get a proper background of the company for whom we

background of the company for whom we are auditing then probably we are

are auditing then probably we are missing out on a lot of compliances that

missing out on a lot of compliances that might get applicable to it yes so uh

might get applicable to it yes so uh yeah so it becomes very important that

yeah so it becomes very important that we have a preliminary meeting with them

we have a preliminary meeting with them probably uh their entire team with whom

probably uh their entire team with whom we are going to be coordinating in the

we are going to be coordinating in the due course of time similarly a

due course of time similarly a introduction of uh the head auditor and

introduction of uh the head auditor and the audit audit team also who is going

the audit audit team also who is going to perform the audit or conduct the

to perform the audit or conduct the audit and then we take it ahead as per

audit and then we take it ahead as per the convenience of the audit committee

the convenience of the audit committee if they prefer sharing it over the mail

if they prefer sharing it over the mail or having a v transfer whatever is the

or having a v transfer whatever is the mode if they prefer electronic transfer

mode if they prefer electronic transfer that is also agreed and if they want a

that is also agreed and if they want a physical audit or physical presence in

physical audit or physical presence in the office so that is again mutually

the office so that is again mutually agreed that's fine may actually go one

agreed that's fine may actually go one step ahead yes I will actually think

step ahead yes I will actually think widely if the statutory auditor

widely if the statutory auditor appointment is subject to the

appointment is subject to the shareholders approval why not the

shareholders approval why not the secretarial Auditors appointment also

secretarial Auditors appointment also subject to be a shareholders approval

subject to be a shareholders approval why differently we are treating sir

why differently we are treating sir there are geographies which have taken

there are geographies which have taken this and in Bangladesh I know of the

this and in Bangladesh I know of the secretarial auditor is appointed by the

secretarial auditor is appointed by the shareholders okay so this is already uh

shareholders okay so this is already uh it is how the how it is uh taken as but

it is how the how it is uh taken as but that's and I would also like to add one

that's and I would also like to add one thing is uh what we have been discussing

thing is uh what we have been discussing uh also is limited review is also done

uh also is limited review is also done by the our uh statutary Auditors

by the our uh statutary Auditors secretarial Auditors also should

secretarial Auditors also should actually

actually start conducting reviews if not

start conducting reviews if not quarterly at least six monthly so that

quarterly at least six monthly so that at the end of the time when the report

at the end of the time when the report has to be done everything does not just

has to be done everything does not just pile up so we should also consider this

pile up so we should also consider this as a good governance practice if limited

as a good governance practice if limited review of Secretarial a

review of Secretarial a can also be done yeah I will ask

can also be done yeah I will ask actually sud sud what is your view

actually sud sud what is your view actually why not the secret La should be

actually why not the secret La should be appointed by the shareholders of the

company this particular thing was discussed at the I mean Ministry level

discussed at the I mean Ministry level while companies act 2013 was there so

while companies act 2013 was there so though the proposal was

though the proposal was there in the I mean it was felt that

there in the I mean it was felt that this is not a right time for the I not

this is not a right time for the I not to put it to the

to put it to the shareholders no reason r or reason for

shareholders no reason r or reason for that but uh recently the SSB board we

that but uh recently the SSB board we have given some good practices for the

have given some good practices for the audit Committee in that we have

audit Committee in that we have recomended

recomended that the secondary auditor appointment

that the secondary auditor appointment is to be rooted through audit committee

is to be rooted through audit committee but as on date it is not mandatory yeah

but as on date it is not mandatory yeah I also Wily think because when you talk

I also Wily think because when you talk about the auditor let it be the cost

about the auditor let it be the cost auditor let it inter auditor SEC auditor

auditor let it inter auditor SEC auditor auditor is the auditor everybody should

auditor is the auditor everybody should have the same disclination anyway today

have the same disclination anyway today law stands this way only but as M puts

law stands this way only but as M puts it in Bangladesh it is subject to the

it in Bangladesh it is subject to the shareholders approval it's a very good

shareholders approval it's a very good practice I would say really speaking

thing one practical question can a subsidary company write in their letter

subsidary company write in their letter head XY is limited into bracket and ABC

head XY is limited into bracket and ABC group holding

company I don't know what to answer gives because I have not seen any such

gives because I have not seen any such letter head Etc I have seen people

letter head Etc I have seen people saying that this is the company and they

saying that this is the company and they write in which group there are that they

write in which group there are that they normally

normally wrate a group company of

XYZ I know rpt has been done many times earlier but one small doubt is there

earlier but one small doubt is there kindly clarify in time permits when

kindly clarify in time permits when subsidy of the rpt where listed company

subsidy of the rpt where listed company is not a party more than 10% of the

is not a party more than 10% of the Standalone 10 hour requests audit

Standalone 10 hour requests audit committee approval listed company so is

committee approval listed company so is this criteria the rpt with a related

this criteria the rpt with a related parties or with a single related party

parties or with a single related party when it exceeds the

threshold even if it is a single related party when it exceeds the threshold it

party when it exceeds the threshold it requires the audit committee approval of

requires the audit committee approval of the

the list

list okay there is a suggestion has come

okay there is a suggestion has come actually he says that sir one more

actually he says that sir one more request as you successfully conducting

request as you successfully conducting the webinar series of the p and also

the webinar series of the p and also conducting lodia why not you kindly

conducting lodia why not you kindly conduct on S regulations yeah we will

conduct on S regulations yeah we will take subst substantial acquisition take

take subst substantial acquisition take over I think yeah we will do that at

over I think yeah we will do that at appropriate time okay certainly we will

appropriate time okay certainly we will do

do that my presentation wonderful

that my presentation wonderful presentation can secretarial

presentation can secretarial auditor file and certify various eforms

auditor file and certify various eforms in

ad can the secret auditor certify various e forms in R that's what you ask

various e forms in R that's what you ask me so uh sir here again the corporate

me so uh sir here again the corporate governance Norms comes in so uh What uh

governance Norms comes in so uh What uh what should be done is basically a firm

what should be done is basically a firm can do it but not the secretarial

can do it but not the secretarial auditor by a firm what I mean is if we

auditor by a firm what I mean is if we are following a Chinese wall policy

are following a Chinese wall policy wherein teams are not intersecting with

wherein teams are not intersecting with each other so so in that case uh the

each other so so in that case uh the form uh like certification of the forms

form uh like certification of the forms can be done and the secretarial audit

can be done and the secretarial audit team is quite different from the ones

team is quite different from the ones who are certifying the

who are certifying the form the company has actually filed the

form the company has actually filed the SSP with the prescribed time but based

SSP with the prescribed time but based on the query from the stock exchanges

on the query from the stock exchanges regarding some

regarding some reclassification it files the Revis SSP

reclassification it files the Revis SSP post to the prescribed for is already

post to the prescribed for is already over is it the matter of reporting the

over is it the matter of reporting the ACR for the delay of filing the

SHP I don't think it is so know because that company is not listed by that time

that company is not listed by that time so hence SC is not applicable to that at

so hence SC is not applicable to that at all okay it is still in the process of

all okay it is still in the process of listing stage only

listing stage only correct not even listing it not even

correct not even listing it not even listing it is at the IPO

listing it is at the IPO yeah correct because the scr comes into

yeah correct because the scr comes into play only when the company becomes

play only when the company becomes listed

listed company sir I'm being unmuted can I talk

company sir I'm being unmuted can I talk for yeah sure yeah thanks thanks sir uh

for yeah sure yeah thanks thanks sir uh actually sir my answer I was not getting

actually sir my answer I was not getting you know one of we have just put in

you know one of we have just put in money in our one of a company and they

money in our one of a company and they are becoming our subsidiary actually and

are becoming our subsidiary actually and they are struggling with their

they are struggling with their establishment of Brands and all but they

establishment of Brands and all but they are they are actually you know in a

are they are actually you know in a letterheads and and all they are willing

letterheads and and all they are willing to write our name uh while they are you

to write our name uh while they are you know establishing their brand and they

know establishing their brand and they are giving to any agencies they are

are giving to any agencies they are putting our brand as a group company

putting our brand as a group company that is why I was specifically asked so

that is why I was specifically asked so I have said as for law they can write an

I have said as for law they can write an associate company but uh group company

associate company but uh group company they are putting you know my company

they are putting you know my company name as a group company name so will

name as a group company name so will there be a right in doing

there be a right in doing this see the of the company also so

this see the of the company also so governed by the companies act you cannot

governed by the companies act you cannot have letter the way you want to have it

have letter the way you want to have it so you have to have the bare minimum

so you have to have the bare minimum whatever the requirements are there

whatever the requirements are there comply with that after that over and

comply with that after that over and above you can do whatever you feel like

above you can do whatever you feel like as far as The Branding is concerned but

as far as The Branding is concerned but this group company concept that is only

this group company concept that is only there but you cannot to the best of my

there but you cannot to the best of my knowledge you cannot bring the group

knowledge you cannot bring the group concept company I sry aspect on the

concept company I sry aspect on the letter of the company at

least okay thank you thank you sir why SEC auditor is not certifying

sir why SEC auditor is not certifying the form because by certifying he can

the form because by certifying he can audit the forms and can see all the

audit the forms and can see all the compliances of that level and

compliances of that level and appropriate time somebody is saying that

appropriate time somebody is saying that it is the conflict of interest nothing

it is the conflict of interest nothing else it is a conflict of interest that's

else it is a conflict of interest that's why they should not do it yeah correct

why they should not do it yeah correct according to me it should not be

according to me it should not be actually as put if the company is having

actually as put if the company is having a Chinese concept the teams are

a Chinese concept the teams are different a different team can but

different a different team can but auditing person should not that's what I

auditing person should not that's what I also feel

also feel strongly I think that is all the

strongly I think that is all the questions I have nothing else is

questions I have nothing else is there I think it is we are already at

there I think it is we are already at one

one t still I can see more than 100 people

t still I can see more than 100 people are

are all so yeah

yes but before we conclude before we conclude B let me say that next week

conclude B let me say that next week being CH Diwali we don't have the

being CH Diwali we don't have the webinar on that day and we will will

webinar on that day and we will will have the next webinar on 18th only okay

have the next webinar on 18th only okay and we will continue with master class

and we will continue with master class and the the flyer will be circulated an

and the the flyer will be circulated an appropriate time and thanks very much M

appropriate time and thanks very much M once again for your gracious presence in

once again for your gracious presence in our webinar and I'm sure that in future

our webinar and I'm sure that in future also at an appropriate time we will

also at an appropriate time we will invite you and accept you will accept

invite you and accept you will accept our invite at that point of time thank

our invite at that point of time thank you so much and AD is an excellent

you so much and AD is an excellent presentation and uh your experience of

presentation and uh your experience of your thank you so ad you experience of

your thank you so ad you experience of your secretary Audits and complaints

your secretary Audits and complaints report it is very much visible and it is

report it is very much visible and it is an excellent presentation once again and

an excellent presentation once again and I'm sure the participants got benefited

I'm sure the participants got benefited thanks very much Bala for your

thanks very much Bala for your moderation and thanks each and every

moderation and thanks each and every participant uh I mean that for your

participant uh I mean that for your presence and uh thank you and goodbye

presence and uh thank you and goodbye God bless you all thank you thanks a lot

God bless you all thank you thanks a lot to everybody I wish you all well in

to everybody I wish you all well in advance our Diwali greetings to you have

advance our Diwali greetings to you have a great time have a good Festival we

a great time have a good Festival we meet after Dali thank you

meet after Dali thank you thank you everyone thank

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