Search and Status Report – Secretarial Audit Compliance Management and Due Diligence Important Questions

Question 1.
Write Short Note on the following: “Search and Status Report on the position of borrowings made by a Company”.
Answer:
Search and Status Report are basic tools for banks to know the viability of their customer who approach the bank for Cash Credit Limits, Term Loans or otherwise. The sole motto of banks is to provide loans against interest.

The current position of the assets being pledged by the companies become important and the only way to know whether such property is already pledged to some other bank or not is the Search Report.

The following basic information about the existing loans taken by the Company is given by the Company Secretary through such reports:

  • The date of loan taken by the company and the charge created in such respect.
  • The name and address of the charge holders.
  • The type of charge i.e. whether joint charge or consortium charge.
  • The amount of loan.
  • The property charged/pledged against such loan.
  • The terms and conditions of such loan i.e., rate of interest, terms of repayment, margin money and extent of operation.

Question 2.
Write Short Note on the following: “Importance of Search/Status Report”.
Answer:

  • The scope of Search and Status report depends upon the requirements of the Bank/Financial Institution/Lender/Investor concerned.
  • A Search and Status report prepared by a Company Secretary in Practice helps Banks / Financial Institutions / Lenders / Investors to take conscious decision regarding the quantum of loan/credit facility to be sanctioned and investment to be made.
  • It also helps in taking an informed and speedy decision assuring the creditworthiness or otherwise of the company.

Question 3.
Write Short Note on the following: “Charges requiring Registration”.
Answer:
The following are the list of charges which is required to be registered with the Registrar of Companies:

  • A charge for the purpose of securing any issue of debentures;
  • A charge on uncalled share capital of the Company;
  • A charge on any book debts of the Company;
  • A charge on any immovable property, wherever situate, or any interest therein;
  • A charge on calls made but not paid;
  • A charge on goodwill or on patent or a license under a patent or on a ” trade-mark or on a copyright or a license under a copyright.

Question 4.
Write Short note on the following: “Time limit for filing the forms for charges requiring registration with the Registrar of Companies”.
Answer:
As per Sections 77 and 79 of Companies Act, 2013 for creation of charge or modification of charge or acquisition of property which is subject to charge the form is required to be filed within thirty days from the date of creation, modification or acquisition. However the Registrar may, on an application by the company, allow such registration to be made:

  • in case of charges created before the commencement of the Companies (Amendment) Ordinance, 2019, within a period of three hundred days of such creation; or
  • in case of charges created on or after the commencement of the Companies (Amendment) Ordinance, 2019, within a period of sixty days of such creation, on payment of such additional fees as may be prescribed.

As per Section 82 of Companies Act, 2013 for satisfaction of charge the form is required to be filed within a period of 30 days from the date of satisfaction. However, Registrar may on an application by the company or the charge holder, allow such intimation of payment or satisfaction to be made within a period of three hundred days of such payment or satisfaction on payment of such additional fees as may be prescribed.

Question 5.
A charge in favour of a public financial institution to secure a sum of INR 300 crore was not created by Dream House Construction Ltd. within the statutory period and the Company Law Board /Tribunal on an application made by the Company did not grant the extension of time. Is it possible to revive the said charge?
Answer:
In the given case, charge in favour of a public financial institution to secure a sum of INR 300 crore was not created by Dream House Construction Ltd. within the statutory period. Also, Tribunal on an application made by the Company did not grant the extension of time.

As per Section 77(3) of Companies Act, 2013 provides for certain charges to be void against liquidator appointed under this Act or the Insolvency and Bankruptcy Code, 2016, as the case may be or any other creditor unless registered and a certificate of registration of such charge is given by the Registrar.

Section 77 of the Companies Act, 2013 requires a company to file form for registration within 30 days after the date of creation of charge with the registrar along-with complete particulars together with the instrument, if any, creating, evidencing or modifying the charge or a copy thereof verified in the prescribed manner for registration.

Registrar may, on application by the company, allow such registration to be made:

  • in case charge created before the commencement of the Companies (Amendment) Ordinance, 2019, within a period of three hundred days of such creation.
  • in case charge created on or after the commencement of the Companies (Amendment) Ordinance, 2019, within a period of sixty days of such creation, on payment of such additional fees as may be prescribed.

Otherwise the charge shall be void against the liquidator and creditors and on the charge becoming void, thus money shall immediately become payable.

Question 6.
Rosy Trading Ltd. borrowed a sum of INR 20 Lakh from a bank on the mortgage of entire assets of the company and on execution of personal guarantee by all its directors, who stood as sureties for the loan. After one year, the company went into liquidation. For paying off the bank loan, on passing a Board Resolution, the directors advanced money to the company to discharge the liability towards the bank loan.

However, no action for satisfaction of charge against the property of the company with the Registrar of Companies was taken. Directors claimed that they were subrogated to the position of mortgagee bank on paying off the debt and thus wanted to claim the money in priority to others. You have been engaged to decide their claim. Decide giving reasons and citing case law.
Answer:
In the given case, Rosy Trading Ltd. borrowed a sum of INR 20 Lakh from a bank on the mortgage of entire assets of the company and on execution of personal guarantee by all its directors .who stood as sureties for the loan. After one year, the company went into liquidation then for paying off the bank loan on passing a Board Resolution the directors advanced money to the company to discharge the liability towards the bank loan.

However, no action for satisfaction of charge against the property of the company with the Registrar of Companies was taken. Directors claimed that they were subrogated to the position of mortgagee bank on paying off the debt and wanted to claim the money in priority to others.

As per Section 77(3) of Companies Act, 2013 provides for certain charges to be void against liquidator appointed under this Act or the Insolvency and Bankruptcy Code, 2016, as the case may be or any other creditor unless registered and a certificate of registration of such charge is given by the Registrar.

If a charge which requires registration is not registered then during liquidation a creditor with an unregistered charge assumes the status of an unsecured creditor.

In case of Prabhu v. Official liquidator, it was observed in the judgment that there was no registered deed crediting mortgage in favour of appellant. But the appellant advanced money to the company. The company paid the amount due to the bank using the money advanced by the appellant’s group. At the time when winding up application was filed, he has no case that there is a charge for the property. So, he was not subrogated to the position of the bank.

Thus, in the given case, the directors of Rosy Trading Ltd. are not entitled to claim money in priority to others. Although, the directors advanced money on passing the Board resolution, yet application of charge as per Section 77 of the Companies Act, 2013 not got registered in their favour in the records of the ROC.

Accordingly, their position was of an ordinary unsecured creditor.

Question 7.
“MCA-2I offers the facility to view documents and also search and other facilities of public documents online.” Explain the statement and narrate the procedure for examination of records filed by a company with the Register of Companies.
Answer:
MCA-21 offers the facility to view documents and also search and other facilities of public documents. This facility is useful for users and banks and financial institutions while sanctioning loAnswer: This facility enables viewing of public documents of companies for which payment has been made by user. The document can be viewed only within 7 days after the payment has been confirmed and are available only for 3 hours after the user has started viewing the first document of the company –
(a) User has to access My MCA portal and login to the My MCA portal.

(b) Click on the ‘My Documents’ tab after logging into the system.

(c) List of company names will be displayed, for which user have already paid for public viewing. It also displays:

  • Date of request Le. the date, when user made the request to view the company document.
  • Status of the request Le. whether viewed or to view.

(d) Click on the view link under status field.

(e) The documents are grouped under five categories i.e. user has to click on the desired category under which the document falls.

(f) If more than one document is listed, the user can arrange them name wise or date wise.

(g) On clicking the document name, the document shall be displayed for viewing.

Question 8.
Critically examine and comment on the following:
“The All-India Financial Institutions while granting term loans to companies insist on certain formalities to be completed by a company availing such loan”.
Answer:
The All-India Financial Institutions while granting term loans to companies insist on certain formalities to be completed by a company availing such loan. These include furnishing of certificates by company secretaries in practice in regard to the following:

  • Necessary power of a company and its directors to enter into a loan agreement.
  • Borrowing limits of a company under section 180(z)(c) of the Companies Act, 2013 including details of share capital-authorised, issued, subscribed and paid-up and the actual borrowing.
  • List of members of the Company.
  • Copies of resolutions passed at meeting to be furnished to financial institutions.

Question 9.
State the legal provisions contained in the Companies Act, 2013 for registration of charges, Also, state the consequences of non-filing of charges.
Or
Excel Ltd. has borrowed a sum of INR 10 crore by mortgaging its fixed assets. As a Company Secretary, indicate the steps you would take to get the charge registered with the Registrar of Companies. State the consequences if the charge is not registered.
Answer:
1. As per Section 77 of Companies Act, 2013 for creation of charge or acquisition of property which is subject to charge the form is required to be filed within thirty days from the date of creation or acquisition.

2. However the Registrar may, on an application by the company, allow such registration to be made:

  • in case of charges created before the commencement of the Companies (Amendment) Ordinance, 2019, within a period of three hundred days of such creation; or
  • in case of charges created on or after the commencement of the Companies (Amendment) Ordinance, 2019, within a period of sixty days of such creation, on payment of such additional fees as may be prescribed.

3. Following are the consequences in case of Non-registration of Charge:

  • Charge becomes void: A charge which is compulsorily required to be registered but which is not registered is void. This does not mean that the creditors cannot recover their dues. It only means that the benefit of security charged is not available to them.
  • Repayment of Money: The security becomes void by non-registration it does not affect the contract or obligation of the Company to repay the money thereby secured.
  • Punishment under section 86 of Companies Act, 2013:

4. Non-registration of particulars of charge is punishable with fine.

5. Company shall be liable to fine from INR 5,00,000.

6. Every Officer of the company who is in default shall be liable to a penalty of INR 50,000.

Question 10.
Critically examine and comment on the following: “The scope of a search report depends upon the requirements of the bank or financial institution concerned.”
Answer:
The scope of Search and Status report depends upon the requirements of the Bank/Financial Institution/Lender/Investor concerned. A Search and Status report prepared by a Company Secretary in Practice helps Banks/Financial Institutions/Lenders/Investors to take conscious decision regarding the quantum of loan/credit facility to be sanctioned and investment to be made. It also helps in taking an informed and speedy decision assuring the creditworthiness or otherwise of the company.

Search and Status Report is mainly beneficial for following entities:
1. By Banks: Search and Status Report are basic tools for banks to know the viability of their customer who approach the bank for Cash Credit Limits, Term Loans or otherwise. The sole motto of banks is to provide loans against interest.

2. By Directors: An individual before becoming the Director of the Company may get the Search Report prepared from a Professional for following reasons:

  • To know the present directors of the company.
  • To know the assets and liabilities of the company.
  • To know the complete history as per ROC records since incorporation.

3. By Shareholders: Shareholders may also demand the Search Report of the company for the following reasons:

  • To know the status of the company.
  • To know the status of their shares held in the company.
  • To know the directors of the company.
  • To know the complete history as per ROC records since incorporation.

4. Government Authorities: Government Authorities like Income-tax Authorities, RBI, SEBI etc. can also get the Search Report prepared discerning the present status of the Company and various other financials filed by the company with the concerned Registrar of Companies.

5. Customers and Suppliers: Before entering into any agreement/con¬tract with the company, the suppliers or the Customers get the Search Report prepared.

Question 11.
Critically examine and comment on the following: “The scope of a search report depends upon the requirements of the lender who advances funds to the Company.” Answer:
1. The scope of a search report depends upon the requirements of the lender who advances funds to the Company.

2. The Search and Status Reports of a Company enable Banks /Financial Institutions / Lenders /Investors in making their lending and investment decisions. They also give an overview to such Lenders/Investors on the control and management of the Company and help them in deciding whether or not to enter into a lending/investment contract with the Company.

3. The main objective of a Search and Status Report is to help Lenders and Investors take an informed decision. It gives Lenders/Investors an insight into the Company, through its history & provides all the necessary details of the Company and its directors as well as the credit history of the company and its directors. It helps Lenders and Investors to take rational decisions on the quantum of loan/investment, sufficiency of security and its nature and other such requirements.

4. As the Report provides historical information about the past charges created in favour of earlier lenders, it enables new Lenders/Investors to assess the exact position of the company and to foresee where they would stand, if the company were to get into liquidation. Such Search and Status Reports act as a basis for Lenders/Investors to take correct lending/investment decisions.

Question 12.
What is the Search and Status Report? What are the points to be considered while finalizing the Search and Status Report?
Answer:
1. The Search and Status Report is not merely verbatim reporting of the information as made available but also, supplemented by observations / comments by the Company Secretary or such other professional who furnishes the Report. It has two facets. The first being ‘search’ involving physical inspection of documents and the second activity ‘status’ which comprises of reporting of the information as made available by the search. Thus, it acts as a ‘Progress Report’ of the company and gives ready reference to the exact situation.

2. The Search and Status Report acts as a tool to confirm and evidence information and contains information on status of charges. It is basically a report furnished based on the information gathered by a search of specific records made available for inspection in a Public Office or in any other convenient form. It is not merely verbatim reporting of the information as made available but also supplemented by observations/ comments by the person who furnishes the report. .

3. Following points to be considered while finalizing the Search and Status Report:

  • Identify those charges and modification of charges, which have been created in favour of a particular lender.
  • Take the particulars of the documents creating the charge as specified in CHG-1 and CHG-9 under the Companies Act, 2013.
  • Ascertain as to whether the amount secured by the charge as per the documents executed has been duly mentioned.
  • Ascertain as to whether ‘properties’ offered as security are mentioned as per the documents creating the charge and attached with the Forms and verify whether they are as per the terms of Sanction.
  • Check whether the terms and conditions governing the charge have been mentioned.
  • Ascertain whether the name of the lender is properly mentioned.
  • In case of modification of charge ascertain whether the names of documents effecting the modification are mentioned and whether the particulars of modification are clearly mentioned.

Question 13.
The balance sheet of Neeraj Fertilizer Ltd. as at 31st March, 2015 disclosed the following details:

Particulars (INR in Crore)
Authorised Share Capital (Equity Shares) Paid-up Share Capital 500
Statement of Profit and Loss (Cr.) 200
General reserve 30
Debenture Redemption Reserve 70
Loan (long-term) 50
Temporary Loan payable on demand 20
Short-term Loan 15

Board of Directors of the Company wishes to borrow an additional sum of INR 300 crore from the Company’s financial institution. The Borrowing was duly approved at a Board meeting. One of the directors has raised objection for such borrowing and argued that said borrowing was beyond the powers of the Board of Directors.

The Board of Directors seeks your advice, being a company’s advisor about the borrowing limits and compliances required with the provisions of the Companies Act, 2013. Advise the company.
Answer:
1. Section 180(1)(c) of the Companies Act, 2013 prohibits the Board of directors of a company from borrowing a sum which together with the monies already borrowed exceeds the aggregate of the paid-up share capital of the company and its free reserves apart from temporary loans obtained from the company’s bankers in the ordinary course of business unless they have received the prior sanction of the company by a special resolution in general meeting.

2. Explanation to section 180(1)(c) provides that the expression “temporary loans” means loans repayable on demand or within six months from the date of the loan such as short-term, cash credit arrangements, the discounting of bills and the issue of other short term loans of a seasonal character, but does not include loans raised for the purpose of financial expenditure of a capital nature.

3. According to the above provisions, the board of directors of Neeraj Fertilizer Ltd. can borrow without the approval of the shareholders in the general meeting, up to .an amount calculated as follows:

  • Paid up share capital = ₹ 200 crores.
  • Free reserves (Profit & and loss + General reserve) – 30 + 70 = ₹ 100 crores.
  • Total (i + ii) : ₹ 300 crores.
  • The company has long term loan of ₹ 50 crores.
  • Total amount up to which the company can borrow [(iii) – (iv)]= ₹ 250 crores.

4. In the given case,The board of directors of Neeraj Fertilizer Ltd. wishes to borrow an additional sum of ₹ 300 crores from the company’s financial institution. Thus, the objection of one of director is correct and the said borrowing will be beyond the powers of the Board of directors.

5. In order to borrow the said amount the company has to comply with the following requirements:

  • Hold the Board Meeting and issue the notice of general meeting.
  • Hold general meeting and pass the special resolution for trans-acting the matter stated above.
  • File Form No. MGT-14 with the fee or additional fee as provided in the Companies (Registration Offices and Feqs) Rules, 2014 with the ROC within 30 days of passing the special resolution.

Question 14.
The process of preparing search/status report enables determination out of total borrowing power, the extent up to which the company has already borrowed money or created charges on its movable and immovable properties and also the balance limit to borrow. However, there are certain exceptions of the term ‘borrowing of money’. Enumerate those exceptions i.e. the borrowings which are not included in determining the limit on borrowings.
Answer:
The term ‘borrowing of money’ includes all type of borrowings whether secured or unsecured, loan in the nature of debentures or otherwise etc. However, the following are exceptions to it as enumerated under section 180(1)(c) of the Companies Act, 2013:
1. Temporary loans obtained from the company’s bankers in the ordinary course of business : The expression “temporary loans” means loans repayable on demand or within six months from the date of the loan such as short-term, cash credit arrangements, the discounting of bills and the issue of other short-term loans of a seasonal character, but does not include loans raised for the purpose of financial expenditure of a capital nature;

2. Acceptance by a banking company: In the ordinary course of its business, of deposits of money from the public, repayable on demand or otherwise, and with drawable by cheque, draft, order or otherwise, shall not be deemed to be a borrowing of monies by the banking company within the meaning of Section 180(l)(c) of the Companies Act, 2013.

3. Contingent liability like amount outstanding on deferred payment agreement or under guarantees issued by bank or in respect of letter of Credit.

Question 15.
Explain the procedure for search Report under IPR Laws.
Answer:
Procedure for Search Report under IPR Laws
1. Preparing checklist : The checklist should contain a list of information required to understand the company’s business and its existing protected and protectable IP rights.

2. Segregating the IP assets relevant for the transaction from irrelevant ones: This activity should be done as soon as the preliminary perusal of the target’s business assets is done. It is important to connect additional IP rights with the main IP rights for the transaction.

3. Analysing all documents carefully: This activity includes analysing documents, relating to registration or agreements in the nature of licensing and franchising agreements, consultancy agreements, tech-nology transfer agreements, other contracts where IP clauses are included.

4. Verifying facts and confirm that the information is correct: This activity is important to verify the legality of documents. It is not prudent to merely rely on all details without cross-checking the same from other available sources.

5. Analyzing protected and protectable IP rights: After receiving full information/documents, IP rights, already subsisting or potential ones is required to be analyzed. Status check, validity check, ownership check, claim check and conflict check should be conducted in a proper
manner.

6. Drafting of status and search report: The final report should contain all the observations in relation to IP rights that would be the part of the transaction, before the prospective buyer/investor.

The IPR Search Report should also contain all the associated risks and liabilities along with strategies to deal with such issues which will help the prospective buyer/investor understand the pros and cons of the transaction.

Question 16.
Write Short Note on: “Purpose and objective of Search and Status Report”.
Answer:
Purpose:
1. A Search and Status Report traces the history of a Company’s property and how it has charged/mortgaged its assets with various Banks/Financial Institutions/Lenders over a period of time, before reaching the present bank that has demanded for the Search and Status Report.

2. A Search and Status Report assists the Bank/Financial Institution/Lender to evaluate the extent up to which the Company has already borrowed funds and created charges against its, movable and/or immovable properties. This information is vital for considering the Company’s request for grant of loans and other credit facilities.

Objectives:
1. The main objective of a Search and Status Report is to help Lenders and Investors take an informed decision.

2. It gives Lenders/Investors an insight into the Company, through its history & provides all the necessary details of the Company and its directors as well as the credit history of the company and its directors.

3. It helps Lenders and Investors to take rational decisions on the quantum of loan/investment, sufficiency of security and its nature and other such requirements.

4. It make available historical information about the past charges created in favour of earlier lenders, it enables foresee where they would stand, if the company were to get into liquidation.

Question 17.
List out reasons for which shareholders of any company can demand the Search Report of the Company?
Answer:
Shareholders may also demand the Search Report of the company for the following reasons:

  1. To know the status of the company.
  2. To know the status of their shares held in the company i.e., how many shares they are holding, on which date their shares were transferred, from whom the shares were transferred.
  3. To know the Directors of the company.
  4. To know the complete history as per ROC records since incorporation.

Question 18.
List the basic information which banks want to know with the help of Search and Status Report about the existing loans taken by the Company?
Answer:
The following basic information about the existing loans taken by the Company is given by the Company Secretary through such reports:

  1. The date of loan taken by the company and the charge created in such respect.
  2. The name and address of the charge holders.
  3. The type of charge i.e., whether joint charge or consortium charge.
  4. The amount of loan.
  5. The property charged/pledged against such loan.
  6. The terms and conditions of such loan i.e., rate of interest, terms of repayment, margin money and extent of operation.

Question 19.
Mr. Alexander before becoming director of Alpha Limited requires Search Report prepared by Professional. List the reasons for which Mr. Alexander need search report for the said purpose?
Answer:
Following are reasons for which Mr.Alexander requires Search report Prepared by Professional before becoming director of Alpha Limited:

  • To know the present directors of the company.
  • To know the assets and liabilities of the company.
  • To know the complete history as per ROC records since incorporation.

Question 20.
Write Short Note On: “Inspection of various documents maintained by the Company”.
Answer:
According to the scope of the Search report, the professional should go through the various documents required for the purpose of the report, some the documents which may require are as under:

  • Various clauses of Memorandum and Articles of Association.
  • Forms filed with the Registrar of Companies with receipts.
  • All statutory registers.
  • Report of Internal Auditor.
  • Copies of contracts made between the company and any of the related parties.
  • Transfer and Transmission of Share.
  • Instruments creating, modifying or satisfying charges.
  • Various Disclosures from Directors
  • Related Party Transactions.
  • Corporate Social Responsibility (CSR)
  • Directors and Key Managerial Personnel (KMP).

Question 21.
Mr. Aman want to cross verify the documents from MCA Records. List out the name of records which are required to be verified for the purpose of following:
(a) Date of Incorporation.
(b) Name of the Company.
(c) Corporate Identity Number.
(d) Address of Registered Office of the Company.
(e) Authorised Share Capital.
(f) Paid-up Share Capital.
(g) Name and Address of Present Directors (with their date of joining).
Answer:
As Mr. Aman want to cross verify the documents from MCA Records, following are name of records which are required to be verified for the following purpose:

Purpose of Verification Records to be verified for particular .
Date of Incorporation Certificate of Incorporation
Name of the Company Memorandum of Association Certificate of Incorporation or Fresh Certificate of Incorporation/ Change of Name.
Corporate Identity Number Certificate of Incorporation/Fresh Certificate upon change of name / Certificate of registration of NCLT Order for shifting registered office to another State.
Address of Registered Office of the Company. INC-22, MGT-14 Resolution(s) of Board/General Body, INC-28 with copy of NCLT Order.
Authorised Share Capital. Memorandum of Association, SH – 7, MGT-14
Paid-up Share Capital MGT-14, PAS-3, Register of Members, Annual Return.
Name and Address of Present Directors (with their date of joining) Articles of Association, DIR-12, Register of Directors.

Question 22.
Write Short Note on: “Procedure for Search Report under IPR Laws”.
Answer:
Following Procedure required to be followed for Search Report under IPR Laws:
1. Preparing checklist : The checklist should contain a list of information required to understand the company’s business and its existing protected and protectable IP rights

2. Segregating the IP assets relevant for the transaction from irrelevant ones This activity should be done as soon as the preliminary perusal of the target’s business assets is done. Also, at times, there could be associated and/or supplementary IP rights involved in addition to the main IP rights.

3. Analysing all documents carefully : This activity is important as it helps in analysing the nature of documents, whether they are registration documents or agreements in the nature of licensing and franchising agreements, consultancy agreements, technology transfer agreements, other contracts where IP clauses are included, like joint venture agreements, master services agreements, employment agreements, etc.

4. Verifying facts and confirm that the information is correct: This activity is important to verify the legality of documents. It is not prudent to merely rely on all details without cross-checking the same from other available sources, like, from public records of the IP Offices and Google database.

5. Analyzing protected and protectable IP rights: Analyzing protected and protectable IP rights requires Status check, validity check, ownership check, claim check and conflict check should be conducted in a proper manner.

6. Drafting of status and search report: The final report should contain all the observations in relation to IP rights that would be the part of the transaction, before the prospective buyer/investor.

Question 23.
List Five key areas to be analysed while preparing the Search and Status Report relating to IPR?
Answer:
Five key areas to be analysed while preparing the search and status report relating to IPR:

  • Key Area 1: What domestic and foreign patents (and patents pending) does the company have?
  • Key Area 2: Has the company taken appropriate steps to protect its intellectual property (including confidentiality and invention assignment agreements with current and former employees and consultants)?
  • Key Area 3: Are there any material exceptions from such assignments (rights preserved by employees and consultants)?
  • Key Area 4: What registered and common law trademarks and service marks does the company have?
  • Key Area 5: What copyrighted products and materials are used, con-trolled, or owned by the company?

Question 24.
Write Short Note on: “Ten attributes Included in Property Title Search”.
Answer:
Following ten attributes included in Property Title Search:

  • Ownership: Status of ownership (sole or joint) and the documents stating the same.
  • Deed Copy: Recent deeds in respect to the property.
  • Legal Description: Description of the property in legal parlance.
  • Chain documents: Previous owner of the property.
  • Possession: Actual Possession of the property.
  • Right of way: The Right of way given to the owner.
  • Leases: Leases on the property which can affect the property status.
  • Mortgage: Whether the property has been mortgaged or not?
  • Tax Payment: Details of tax payment in relation to the property.
  • Bankruptcy Search: Report of bankruptcy of the owner of the property.

Question 25.
List out the key documents to be analysed while preparing the search and status report relating to following transactions undertaken by Companies:
(a) Public Issue
(b) Takeovers
(c) Right Issues
(d) Debt Offer Document
(e) Buy-back.
(f) Mutual Funds
Answer:
The key documents to be analysed while preparing the search and status report relating to following transactions undertaken by Companies:

Transactions Documents to be Analysed
In case of Public Issue 1. Draft Offer Documents filed with SEBI.
2. Red Herring Documents filed with SEBI.
3. Final Offer Documents filed with SEBI.
In case of Take overs 1. Letter of Offer.
2. Formats as per SEBI (SAST) Regulations, 2011.
3. Other required Documents.
In case of Right Issues 1. Draft Letters of Offer filed with Securities and Exchange Board of India.
2. Final Letters of Offer filed with Stock Exchanges.
In case of Debt Offer Document 1. Draft filed with Stock Exchange.
2. Final filed with Registrar of Companies.
In case of Buy back 1. Tender Offers.
2. Open Market through Stock Exchanges.
In case of Mutual Funds 1. Draft document.
2. Statement of Additional Information (SAI).
3. Scheme Information Document (SID).
4. Key Information Memorandum (KIM).

Question 26.
List out the key documents to be analysed in case of following:
(a) InvIT Public Issue.
(b) InvIT Private Issue.
Answer:
Following key documents to be analysed in case of following:

Particulars Key Documents
(a) In case of InvIT Public Issue 1. Draft offer documents filed with SEBI.
2. Offer Documents filed with SEBI.
3. Final Offer Documents filed with SEBI.
(b) In case of InvIT Private Issue 1. Placement Memorandum filed with SEBI.
2. Final Placement Memorandum filed with

Question 27.
What steps taken by professional for preparation of Search and Status Report regarding Stock Exchanges?
Answer:
Following steps taken by professional for preparation of Search and Status Report regarding Stock Exchanges:

Preparing checklist: The checklist should contain list of information required to understand the company’s business, listing details, board meetings, results calendar, corporate actions, financial results, share-holding data, pledge data, scheme of arrangement etc.

Analysing all documents carefully : This activity is important as it helps to analyse the nature of documents which are available on public domain with respect to listing details, corporate actions, public notices, financial resultants, XBRL, sustainability reports, disclosures, offer document etc.

Verifying facts and confirm that the information is correct: This activity is important to verify the legality of documents or information.

Drafting of status and search report: The final report should contain all observations based on the information available, before the pros-pective buyer/investor. It should also contain all associated risks and liabilities along with strategies to deal with such issues which would help the prospective buyer/investor understand the pros and cons of the transaction.

Question 28.
List out ten Key documents to be analyzed for preparation of Search and Status Report on information/documents available on NSE and BSE Website.
Answer:
Ten Key documents to be analysed while preparing the search and status report on information /documents available on NSE and BSE website:

  • Corporate Announcements.
  • Corporate Actions.
  • Financial Results.
  • Board Meetings.
  • Shareholders Meetings.
  • Voting Results.
  • Results Calendar.
  • Shareholding Patterns.
  • Corporate Governance Report.
  • Offer Documents.

Secretarial Audit Compliance Management and Due Diligence ICSI Study Material