Compliances – Secretarial Audit Compliance Management and Due Diligence Important Questions

Question 1.
Write a note on: “Compliance Management”.
Answer:

  1. Compliance management is the method by which corporate manage the entire compliance process. It includes the compliance program, compliance audit, compliance report etc.
  2. It is also known as “compliance solution”.
  3. Corporate compliance management involves a full process of research and analysis as well as investigation and evaluation.
  4. Corporate compliance management is undertaken in order to determine the potential issues and get a realistic view about how the entity is performing and how it is likely to perform in the future.
  5. Company Secretaries with core competence in compliance and cor-porate governance play a crucial role in the corporate compliance management in an organisation.

Question 2.
What are the areas required to be covered in establishing a compliance management framework?
Answer:
Any corporate compliance management framework includes:

  • Compliance Identification
  • Compliance Ownership
  • Compliance Awareness
  • Compliance Reporting
  • Periodical Compliance MIS.

Compliance Identification : The process involves the identification of compliances under various legislations applicable to the company in consultation with the functional heads. The legal team has to identify the legislations applicable to the company and identify the compliances that are required under each legislation, rules and regulations made thereunder.

Compliance Ownership : The ownership of the various compliances has to be described function-wise and individual wise. Clear description of primary and secondary ownership is also very important. While the primary owner is mainly responsible for the compliance, the secondary owner (usually the supervisor of the primary owner) has to supervise the compliance. For example: Secretarial Officer/Company Secretary may be primarily responsible.

Compliance Awareness : This includes establishment of the legal com-pliance management and creation of awareness of the various Legal Compliances amongst those responsible. Sometimes, the compliances are handled by persons who are not fully aware of the requirements of the legislations and hence creating appropriate awareness amongst the owners is very important.

Compliance Reporting : The status of Compliances or non-compliances should be communicated to the concerned person/authority. Report¬ing of non-compliances ensures that appropriate corrective action is being taken by the responsible person in case of the failure in doing compliances.

Periodical Compliance MIS : It is a type of reporting that occurs at a pre-decided period (at least quarterly, if not monthly). This report contain the status of the various compliances need to be done by the company as well as any gap in the compliance and other incidents which are need to be reported to Board, Senior Management of the Company.

Question 3.
A subsidiary to a listed company, irrespective of its registered status, to a large extent is treated as a listed company by the authorities. As the Secretarial advisor and auditor of XYZ Ltd., which is a Public Ltd. company and a subsidiary to a listed company ABC Ltd. How would you ensure the compliance of Corporate Governance requirements by XYZ Ltd., with reference to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015?
Answer:
As per the Regulation 24 of the SEBI (LODR) Regulations, 2015, the following compliances are required to be ensured by a subsidiary of a listed company with reference to Corporate Governance:
1. At least one independent director on the board of directors of the listed entity shall be a director on the board of directors of an unlisted material subsidiary incorporated in India.

2. The audit committee of the listed entity shall also review the financial statements, in particular the investments made by the unlisted subsidiary.

3. The minutes of the meetings of the board of directors of the unlisted subsidiary shall be placed at the meeting of the board of directors of the listed entity.

4. 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 significant transactions and arrangements entered into by the unlisted subsidiary.

5. A listed entity shall not dispose of shares in its material subsidiary resulting in reduction of its shareholding (either on its own or together with other subsidiaries) to less than fifty per cent or cease the exercise of control over the subsidiary without passing a special resolution in its General Meeting except in cases where such divestment is made under a scheme of arrangement duly approved by a Court/Tribunal or under a resolution plan duly approved under section 31 of the In solvency Code and such an event is disclosed to the recognised stock exchanges within one day of the resolution plan being approved.

6. Selling, disposing and leasing of assets amounting to more than twenty per cent of the assets of the material subsidiary on an aggregate basis – during a financial year shall require prior approval of shareholders by way of special resolution, unless the sale/disposal/lease is made under a scheme of arrangement duly approved by a Court/Tribunal or under a resolution plan duly approved under section 31 of the In-solvency Code and such an event is disclosed to the recognised stock exchanges within one day of the resolution plan being approved.

7. Where a listed entity has a listed subsidiary which is itself a holding company, the provisions of this regulation shall apply to the listed subsidiary in so far as its subsidiaries are concerned.

As a Secretarial advisor and auditor of XYZ Ltd., which is a Public Ltd. company and a subsidiary to a Listed company ABC Ltd., I would focus on checking the compliance of XYZ Ltd. of the above cited points and thereby ensure the compliance of Corporate Governance requirements by XYZ Ltd. with reference to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Question 4.
XYZ Ltd., a listed company, seeks your advice, as the Secretarial Auditor of the company, on the inclusion of Extract Annual Return in the Board’s Report for the financial year 2017-18.
Answer:
1. As per the provisions under Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 an extract of the annual return in Form MGT-9 is to be attached with the Board’s Report of the company.

2. However, the amendment in Section 92(3) through Companies (Amendment) Act, 2017 provides that every company shall place a copy of the Annual Return on the website of the Company, if any and the web-link of such Annual Return shall be disclosed in the Board’s Report. But the same is not applicable for Financial Year 2017-2018 as it is not notified during Financial Year 2017-2018.

Therefore as a Secretarial Auditor, it is advised to the Company that for the Financial Year 2017-18, the company should prepare the Extract of the Annual Return in Form MGT-9 and attach the same with the Board’s Report.

Question 5.
You are appointed as Compliance Officer in a listed company. An Independent Director asks you to describe the scope of Corporate Compliance. Prepare a brief note. Answer:
To
Mr. X
Independent Director
Subject: Scope of Corporate Compliance
Dear Sir,
As desired, the note on the Corporate Compliance is as under:
Corporate compliances broadly include compliance of Corporate & Eco¬nomic Laws, Securities Laws, Commercial Laws including Intellectual Property Rights Laws, Labour Laws, Tax Laws, Cyber Laws which is also known as the Information Technology Law, Pollution Control Laws, Industry Specified laws and all other laws affecting the company concerned depending upon the type of industry/activity. The broad coverage of laws includes the compliances of the following laws:

  • Companies Act, 2013 and the Rules and Regulations framed there under, MCA-21 requirements and procedures.
  • Secretarial Standards/Accounting Standards/Cost Accounting Stan¬dards issued by ICSI/ICAI/ICMAI, respectively.
  • Foreign Exchange Management Act, 1999 and the various Notifications, Rules and Regulations framed thereunder.
  • Competition Act, 2002.
  • SEBI Act, 1992.
  • Securities (Contracts) Regulation Act, 1956 and rules made thereunder.
  • SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015.
  • Depositories Act, 1996.
  • Intellectual Property Rights Laws.
  • Income Tax Act, 1961.
  • Customs Act, 1962.
  • GST Laws.
  • Labour Laws.
  • Environment Laws.
  • Industry Specific Laws.
  • Local Laws include Municipal and Civic Administration Laws, Shops and Establishments etc.

Regards,
__________
Compliance Officer
__________ Ltd.

Question 6.
Explain the compliances under Securities & Exchange Board of India (Listing Obligations and Disclosure Requirements) [SEBI (LODR)] Regulations, 2015 relevant to the common obligations to any listed entity indicating the time period and event of each.
Answer:
Following are common obligations to Listed Entity:
Regulation 7(3) : Submission of Compliance Certificate to Exchange:
Submission of Compliance Certificate to Stock Exchange certifying that all activities in relation to both physical and electronic share transfer facility are maintained either in house or by Registrar to an issue and share transfer agent registered with the Boar d.

Time Limit : Within one month of end of each half of the financial year.

Regulation 7(5) : Appointment/Alteration of Share Transfer Agent:
The Company can manage in house Share Transfer Facility. But as and when the total number of holders of securities of the listed entity exceeds INR 1,00,000. The listed entity shall appoint Share Transfer Agent.

Time Limit : Intimate to the Stock Exchange such appointment or alteration within 7 days on entering into agreement shall be placed before the Board of Directors in subsequent Meeting.

Regulation 13 : Grievance Redressal Mechanism:
The listed entity shall file with the recognized stock exchange(s) a statement giving:

  • The number of investor complaints pending at the beginning of the quarter,
  • Those received during the quarter, ‘
  • Disposed of during the quarter and
  • Those remaining unresolved at the end of the quarter.

Time Limit : Within 21 days of the end of the each quarter. Same statement shall be placed before the Board of Director quarterly.

Question 7.
Zen Pvt. Limited had a paid up share capital of INR 35 crore in the previous year. The Company Secretary advises the Company that it is mandatory to appoint the auditor as per the requirements of Sec. 139(2) of the Companies Act, 2013. The company is having public borrowings viz. from banks INR 25 crore, financial institutions INR 20 crore and public deposits of INR 7.5 crore. Examine the requirement of applicability of mandatory term/rotation in the appointment of auditor with reference to the changed scenario since June, 2017.
Answer:
Provisions of section 139 (2) of the Companies Act, 2013 and Rule 5 of the Companies (Audit and Auditors) Rules, 2014, as amended, deals with
applicability of mandatory term/rotation in the appointment of auditor and the said provision is applicable to the following class of companies:

  • All unlisted public companies having paid up share capital of Rupees 10 crore or more;
  • All private limited companies having paid up share capital of Rupees 50 crore or more;
  • All companies having paid up share capital below the threshold limit mentioned in (a) and (b) above but having public borrowings from financial institutions, banks or public deposits of 50 crore or more.

Accordingly, Zen Pvt. Limited will get be covered as per provision (c) above and therefore, it is mandatorily required to rotate the Auditor as per the provisions of section 139(2) of the Companies Act, 2013.

Question 8.
XYZ Ltd. is having paid up share capital of INR 10.00 crore as on 31 st March ,2019. Whether the company is required to appoint a Company Secretary in the Company? What would be your answer if the said XYZ is a Private Limited Company? Explain the relevant provisions regarding the appointment of a Company Secretary in employment by the Company.
Answer:
1. According to section 203 of the Companies Act, 2013 & Rule 8 of the Companies (Appointment and Remuneration) Rules, 2014, Every listed company and every other public company having paid up share capital of rupees ten crores or more is required to appoint a whole time Company Secretary, Managing Director and CFO.

2. Further Rules 8A of the Companies (Appointment and Remuneration) Rules, 2014 provides that a company other than a company covered under rule 8 which has a paid-up share capital of five crore rupees or more shall have a whole-time company secretary.

Hence, XYZ Ltd. as a Public Company is required to appoint Whole Time Company Secretary.

Further on 31st March, 2019 if XYZ is a Private Limited Company then it has to appoint Whole-time Company Secretary if paid up capital of the Company is INR 5 Crore or above as per Rule 8A of the Companies (Ap pointment and Remuneration) Rules, 2014.

Question 9.
List out the records which are required to be maintained by the LLPs under the LLP Act, 2008.
Answer:
The records required to be maintained by the LLPs under LLP Act, 2008 are classified in grouping as discussed below:

Records to be preserved Permanently:

  • Incorporation document [Section 11 (1)(b)]
  • Notice of situation of registered office [Section 13]
  • Information with regard to Limited Liability Permanent Partnership Agreement or any changes made therein [Section 23(2)]
  • Notice of other address of any limited liability Permanent partnership at which documents to be served [Section 13(2)]

Records to be preserved for 21 Years: All papers, registers, refund orders and correspondence relating to the limited liability partnership liquidation accounts to be preserved for 21 years.

Records to be preserved for 5 Years:

  • Copies of Government orders relating to limited liability partner-ship; registered documents of limited liability partnership which have been fully wound up and finally dissolved together with.
  • correspondence relating to such limited liability partnership;
  • papers relating to legal proceedings from the date of disposal of the case and appeal, if any;
  • copies of statistical returns furnished to Government;
  • All correspondences including correspondences relating to scrutiny of accounts, annual returns, prosecutions, reports to the Central Government and the Tribunal and the correspondences relating to complaints.

Records to be preserved for 3 Years:

  • All books, records and papers, other than those specified in other categories.
  • Routine correspondence regarding payment of fees, additional filing fees and correspondence about the return of documents.

Records of foreign limited liability partnerships: Registered documents of foreign limited liability partnerships which cease to have any place of business in India shall be destroyed after expiry of three years from such date if limited liability partnerships cease to have any place of business in India.

Question 10.
Discuss the various exemption availed by Section 8 companies under the Companies Act, 2013.
Answer:
Various exemptions availed by Section 8 Companies under the Companies Act, 2013 are discussed as below:
1. The provisions of clause (24) of Section 2 shall not apply. Thus, Company Secretary of Section 8 Company need not be a member of the Institute of Company Secretaries of India.

2. The requirement of minimum paid up share capital under Section 2(68) of Companies Act, 2013 shall not apply. Also, the requirement of minimum paid up share capital under Section 2(71) of Companies Act, 2013 shall not apply.

3. Section 96(2) of Companies Act, 2013 inter alia covers time, date, venue of Annual General Meeting. In case of Section 8 companies, the time, date and place of each Annual General Meeting are decided upon before hand by the board of directors having regard to the directions, if any, given in this regard by the company in its general meeting.

4. Section 101 (1) of Companies Act, 2013 deals with notice of the General meeting with clear 21 days notice. In case of Section 8 Companies 14 clear days notice is sufficient for a general meeting. ‘

5. Section 118 of Companies Act, 2013 deals with minutes of proceedings of general/board and other meetings. Provision of Section 118 does j not apply to Section 8 companies except that minutes may be recorded within thirty days of the conclusion of every meeting in case of companies where the articles of association provide for confirmation | of minutes by circulation.

6. Section 136(1) of the Companies Act, 2013 deals with the rights of members to copies of audited financial statement before twenty one days of the date of annual general meeting. Section 8 companies may send the audited financial statements, 14 days before the date of Annual General Meeting.

7. In clause (b) and first proviso to Section 149(1) of the Companies Act, 2013 exemption is provided with respect to provisions related maxi¬mum number of directors and permission of shareholders for having director beyond 15.

8. The cluster of sub-sections of section 149 of the Companies Act, 2013 given herein pertains to Independent Directors. These provisions will not apply to a Section 8 Company.

9. Section 150 of the Companies Act, 2013 deals with manner of selection of Independent Directors and maintenance of databank of independent directors, which is not applicable to Section 8 companies.

10. Proviso to sub-section (5) of Section 152 of the Companies Act, 2013 relates to appointment of independent directors. It is not applicable to Section 8 companies.

11. Section 160 of the Companies Act, 2013 deals with right of persons other than retiring directors to stand for directorship. Section 160 shall not apply to Section 8 companies whose articles provide for election of directors by ballot.

12. Section 165(1) of the Companies Act, 2013 deals with restrictions on number of directorships. Directorship of Section 8 Companies are not reckoned for this purpose.

13. Section 173(1) of the Companies Act, 2013 mandates convening of first board meeting within 30 days of incorporation and minimum of four board meeting every year with a gap not exceeding 120 days be¬tween two consecutive meetings. With regard to Section 8 companies this section shall apply only to the extent that the Board of Directors of such Companies shall hold at least one meeting within every six calendar months.

14. Section 174(1) of the Companies Act, 2013 states that the quorum for a meeting of the Board of Directors of a company shall be one third of its total strength or two directors, whichever is higher and the participation of the directors by video conferencing or by other audio visual means shall also be counted for the purposes of quorum under this sub-section. In case of Section 8 companies, the quorum for the Board Meetings shall be either eight members or twenty five per cent of its total strength whichever is less. However, the quorum shall not be less than two members.

Question 11.
Describe the procedure for identification of the activity-wise compliances, Sector-wise compliances and Industry specific compliance in a company.
Answer:
The procedure for identification of the activity wise compliances, Sector wise compliances and Industry specific compliance in a company discussed below:

Identification of Activity wise compliances:
The activity-wise compliances include the compliances relating to the business activities of the company such as Banking Company, Insurance Company, Housing Development Company, IFSC Company, NBFC, Section 8 Company, Producer Company, Chit Fund Company, Plantation Company etc. These companies are governed under the Companies Act, 2013 as well as the Laws, Rules, Regulations under which they have been registered.

Identification of Sector wise compliances:
For the sector wise compliances, the companies can be broadly divided in to the Agriculture & Allied Activities, Manufacturing, Construction, Power, Electricity; Gas & Water, Mining & Quarrying, Business Services, Real Estate, Trading, Community; Personal & Social Services, Transport, Storage & Communications, Finance, Insurance etc. These companies are governed under the Companies Act, 2013 along with the sector specific laws, rules, regulations, policies, procedures and state and local laws applicable to the company.

Identification of Industry specific compliances:
For identification of the industries specific compliance, it is necessary to correlate the business activity of the company with the various laws applicable to such business activity. For example if the company is dealing cement industry which is related to the Construction sector & Real Estate, Mining, Supply, Distribution and Trading of raw material, Bye product etc., the company may horizontally or vertically associated with such business activity or in multiple business activity relating to any industry and the sector. In such situation, professional should be careful and use the expertise in identification of the business activity and sector and industry specific law. Some of the business activities along with the allied sub-activity are provided as under:

Agriculture, Forestry, Fishing Construction
Mining and Quarrying Trade
Manufacturing Transport and storage
Electricity, gas, steam and air condition supply Accommodation and Food Service
Water supply, sewerage and waste management Information and communication
Professional, Scientific and Technical Financial and insurance Service
Support service to Organizations Real Estate
Hospital and Medical Care Education
Personal and Household service Arts, entertainment and recreation

Question 12.
Discuss five circumstances in which Newspaper Advertisements to be given under Companies Act, 2013.
Answer:
Application for Grant of License under section 8 by existing company [Rule 20(3) of the Companies (Incorporation) Rules, 2014] : The company shall within one week from the date of application, publish a notice in Form No. INC-26 at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the proposed company is to be situated or is situated and circulating in that district and at least once in English language in an English newspaper circulating in that district.

Change in registered office from the Jurisdiction of one Registrar to another within the same state [Section 12(5) read with Rule 28(2)(a) of the Companies (Incorporation) Rules, 2014] : Publish a notice, at least once in a daily newspaper published in English and in the principal language of that district in which the registered office of the company is situated and circulating in that district.

Change in registered office from One State or Union Territory to another [Section 13(4) read with Rule 30(6) of the Companies (Incorporation) Rules, 2014] : Advertise the application in the Form No. INC.26 in a vernacular newspaper in the principal vernacular language in the district in which the registered office of the company is situated and at least once in English language in an English newspaper circulating in that district at least 14 days before the date of hearing.

Closure of Foreign Register [Section 88(4) read with Rule 7(5) of the Companies (Management and Administration) Rules, 2014] : A foreign register shall be open to inspection and may be closed and extracts may be taken there from and copies thereof may be required in the same manner, mutatis mutandis, as is applicable to the principal register except that the advertisement before closing the register shall be inserted in at least two newspapers circulating in the place where in the foreign register is kept.

Postal Ballot [Section 110 read with Rule 22(3) of the Companies (Management and Administration) Rules, 2014] : An advertisement shall be published at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated and having a wide circulation in that district and at least once in English language in an English newspaper having a wide circulation in that district about having dispatched the ballot papers and specifying the matters prescribed in the said sub-rule.

Question 13.
Discuss four circumstances where disclosures to be made at Website of the Company.
Answer:
It is not mandatory for a private company to maintain a Website. In case, the company has maintained a website, then the following disclosures are required to be made at its website:

Particulars:
1. Companies registered under Section 8 seeking conversion into any other kind [Section 8 and Rule 22 of the Companies (Incorporation) Rules, 2014] : Notice in Form INC-19 shall be published on the website of the Company, if any and as may be notified or directed by the Central Government.

2. Publication of name by Company [Section 12 and Rule 26 of the Companies (Incorporation) Rules, 2014] : Every Company which has a website for conducting Online business or otherwise, shall disclose/ publish its name, address of its registered office, the Corporate Identity Number, Telephone Number, fax number if any, email and the name of the person who may be contacted in case of any queries or grievances on the landing/home page of the said website.

3. Notice of the General Meeting [Section 101 & Rule 18(3)(iA) of the Com¬panies (Management and Administration) Rules, 2014] : The notice of the general meeting of the Company shall be simultaneously placed on the website of the Company and on the website as may be notified by the Central Government.

In case of Private Company – Section 101 shall apply, unless otherwise specified in this section or the articles of the Company provide otherwise. – (Notification No. G.S.R. 464(E) dated 5th June, 2015). Section 122 provides that the provisions of section 101 shall not apply to a One Person Company.

4. Resolutions Requiring Special Notice [Section 115 & Rule 23(4) of the Companies (Management and Administration) Rules, 2014] : Where it is not practicable to give the notice in the same manner as it gives notice of any general meetings, such notice shall be posted on the website, if any, of the company.

Question 14.
Discuss compliance obligations of Listed Entity which has Listed its Securitised Debt Instruments under SEBI (LODR) Regulations, 2015 specifically mentioning time period and events?
Answer:
Following are compliance obligations of listed entity which has listed its Securitised Debt Instruments:
Particulars:
1. Issue new securities [Regulation 82(1)]:
Time Period : Prior to issue new Securitised Debt Instrument.
Event : To issue new securitized debt instruments either through a public issue or on private placement basis.

2. Intimation [Regulation 82(2)]:
Time Period : At least 2 working days before the Board Meeting excluding date of intimation & date of meeting.
Event : The meeting of its board of trustees, at which the recommendation or declaration of issue of securitized debt instruments or any other matter affecting the rights or interests of holders of securitized debt instruments is proposed to be considered.

3. Financial Information [Regulation 82(3)]:
Time period: Within 7 days from the end of month/actual payment date on monthly basis.
Event: Submission of such statements, reports or information including financial information pertaining to Schemes to stock exchange.

4. Record Date [Regulation 87(2)]:
Time period : At least 7 working days before the record date excluding the date of intimation & record date.
Event : Notice to stock exchange/s regarding record date.

Question 15.
Discuss obligations of Listed Entity which has listed its Indian Depository Receipts under SEBI (LODR) Regulations, 2015 by way of clearly mentioning the nature of event and time period for each obligation?
Answer:
Following are the obligations of Listed Entity which has listed its Indian Depository Receipts under SEBI (LODR) Regulations, 2015 :
1. Indian Depository Receipt holding pattern & Shareholding details [Regulation 69(1)]:
Event : The listed entity shall file with the stock exchange the Indian Depository Receipt holding pattern on a quarterly basis.
Time Period : Within 15 days at the end of each quarter.

2. Financial Result [Regulation 70(1)]:
Event: The listed entity shall file periodical financial results with the stock exchange.
Time Period: Within such time as per the listing requirements of the home country.

3. Annual Report [Regulation 71(1)]:
Event : The listed entity shall submit to stock exchange an annual report.
Time Period : At the same time as it is disclosed to the security holder in its home country.

4. Corporate Governance [Regulation 72(2)]:
Event : The listed entity shall submit to stock exchange a comparative analysis of the corporate governance provisions that are applicable in its home country.
Time Period : Within such time as per the listing requirements of the home country.

5. Record Date [Regulation 78(2)]:
Event : Notice to stock exchange regarding record date.
Time Period : At least 4 working days before the record date.

Question 16.
Write detailed note on: “Prior Intimation to Stock Exchange about Board Meeting under SEBI (LODR) Regulations, 2015”.
Answer:
As per Regulation 29(2) of SEBI (LODR) Regulations, 2015, at least 2 working days in advance (excluding the date of intimation & date of Board Meeting) the intimation about the meeting in which following matters are due to consideration:

  • Proposal for Buy-back of Securities.
  • Proposal for voluntary delisting of listing entity from the Stock Exchange(s).
  • Declaration/Recommendation of Dividend.
  • Proposal for declaration of Bonus Securities.
  • Issue of convertible securities including convertible debentures or of debentures carrying a right to subscribe to equity shares or the passing over of dividend.
  • Proposal for declaration of Bonus Securities.
  • Fund raising by following ways of Further Public Offer, Rights Issue, American Depository Receipts/Global Depository Receipts/ Foreign Currency Convertible Bonds, Qualified Institutions Placement, Debt Issue, Preferential Issue or any other method and for determination of issue price.

As per Regulation 29(3) of SEBI (LODR) Regulations, 2015, at least 11 working days in advance intimation is required for:

  • Any alteration in the form or nature of any of its securities that are listed on the stock exchange or in the rights or privileges of the holders thereof.
  • Any alteration in the date on which the interest on debentures or bonds or the redemption amount of redeemable shares or of debentures or bonds shall be payable.

Question 17.
Write Short Note on: “Quarterly Compliance Report on Corporate Governance under SEBI (LODR) Regulations, 2015”
Answer:
As per Regulation 27(2) of SEBI (LODR) Regulations, 2015 within 15 days from the closure of quarter, the listed entity shall submit a quarterly compliance report on corporate governance in the format as specified by the Board. The Details of all material transactions with related parties shall be disclosed. The Report shall be sign either by compliance officer or by chief executive officer.

Question 18.
Write Short Note on: “Common obligations to Listed Entity under SEBI (LODR) Regulations, 2015”.
Answer:
Following are common obligations to Listed Entity:
Regulation 7(3) : Submission of Compliance Certificate to Exchange Submission of Compliance Certificate to Stock Exchange certifying that all activities in relation to both physical and electronic share transfer facility are maintained either in house or by Registrar to an issue and share transfer agent registered with the Board.

Time Limit : Within one month of end of each half of the financial year.

Regulation 7(5) : Appointment/Alteration of Share Transfer Agent The Company can manage in house Share Transfer Facility. But as i and when the total number of holders of securities of the listed entity exceeds 1,00,000. The listed entity shall appoint Share Transfer Agent.

Time Limit : Intimate to the Stock Exchange such appointment or alteration within 7 days on entering into agreement shall be placed before the Board of Directors in subsequent Meeting.

Regulation 13: Grievance Redressal Mechanism
The listed entity shall file with the recognized stock exchange(s) a statement giving:

  • The number of investor complaints pending at the beginning of the quarter,
  • Those received during the quarter,
  • Disposed of during the quarter, and
  • Those remaining unresolved at the end of the quarter.

Time Limit: Within 21 days of the end of the each quarter. Same statement shall be placed before the Board of Director quarterly.

Question 19.
Write Short Note on: “Benefits of Corporate Compliance Management”.
Answer:
Following are the benefits of Corporate Compliance Management:

  • Better compliance of the law.
  • Real time status of legal/statutory compliances.
  • Safety valve against unintended non-compliances/prosecutions etc.
  • Real time status on the progress of pending litigation before the judicial/ quasi-judicial authority.
  • Cost saving by avoiding penalties/fines and minimizing litigation.
  • Better brand image and positioning of the company in the market.
  • Enhanced credibility/creditworthiness that only a law abiding company can command.
  • Goodwill among the shareholders, investors, and stakeholders.
  • Recognition as Good corporate citizen.

Secretarial Audit Compliance Management and Due Diligence ICSI Study Material