SECRETARIAL AUDIT COMPLIANCE MANAGEMENT AND DUE …

1 STUDY MATERIAL. PROFESSIONAL PROGRAMME. SECRETARIAL AUDIT . COMPLIANCE MANAGEMENT . AND DUE DILIGENCE. MODULE 2. PAPER 4. THE INSTITUTE OF COMPANY SECRETARIES OF INDIA. TIMING OF HEADQUARTERS. Monday to Friday Office Timings to Public Dealing Timings Without financial transactions to With financial transactions to Phones 011-45341000. Fax 011-24626727. Website E-mail Laser Typesetting by Satyabrata Mohapatra, Noida and Printed at HT Media Ltd, Greater Noida ii PROFESSIONAL PROGRAMME. SECRETARIAL AUDIT , COMPLIANCE . MANAGEMENT AND DUE DILIGENCE. SECRETARIAL AUDIT is a process to check COMPLIANCE under the provisions of various laws and rules/ regulations/. procedures applicable to organization. It is conducted by an independent professional to ensure that the company has complied with the appealable legal and procedural requirements and has also followed the due process.

2 It is essentially a mechanism to monitor COMPLIANCE with the requirements of stated laws. COMPLIANCE MANAGEMENT is the method by which corporate manage the entire COMPLIANCE process with the help of check list of COMPLIANCE calendar. It includes COMPLIANCE program, COMPLIANCE AUDIT , COMPLIANCE report etc. In other words it is called COMPLIANCE solution. SECRETARIAL AUDIT and COMPLIANCE MANAGEMENT are the routine tools for effective governance. COMPLIANCE MANAGEMENT is into a corporate system to avoid non compliances and the SECRETARIAL AUDIT is carried out on periodical basis by an independent professional. Due diligence is a pre-emptive tool to assess a business transaction. Due diligence is an investigative process for providing the desired comfort level about the potential investment and to minimize the risks such as hidden uncovered liabilities, poor growth prospects, price claimed for proposed investment being on higher side etc.

3 , In general, due diligence process is based on transaction. This study material is published to aid the students in preparing for the paper on SECRETARIAL AUDIT , COMPLIANCE MANAGEMENT and Due diligence of Professional Programme. It is part of the educational kit and guide the students step by step through each phase of preparation while emphasizing on key concepts, principles, comprehending, integrating and advising to resolve complex issues case studies and decision making. Company Secretaryship being a professional course, requires the examination standards to be set very high, with emphasis as expert of concepts, applications, procedures and case laws, for which sole reliance on the contents of the study material may not be enough. Besides Company Secretaries Regulations, 1982 it requires the students to be conversant with the amendments in the laws made upto six months preceding the date of examination.

4 This study material may therefore be regarded as basic material and must be read along with the respective amendments in the Act, Rules, Regulations, Order, Circulars, Clarification notified by the Central Government or issued by the respective Regulators. The coverage of subject is Hybrid in nature which requires integrated application of several Core / Ancillary areas or references of the other subjects included in the ICSI Syllabus. This study material has covered such topics to a limited context. The students are advised to refer the relevant topics from the Bare Acts, Rules & regulations and study material of the respective subjects or from the publications such as ICSI Auditing Standards, guidance note on SECRETARIAL AUDIT , Annual SECRETARIAL COMPLIANCE AUDIT , Peer Review, Quality review etc., referencer published by the ICSI.

5 The amendments notified up to July, 2021 have been incorporated in this study material. However, it may happen that some developments might have taken place during the printing of the study material and its supply to the students. The students are therefore advised to refer to the supplement uploaded on ICSI website from time to time and ICSI Journal Chartered Secretary and other publications for updation of study material. In the event of any doubt, students may contact the Directorate of Academics at Although due care has been taken in publishing this study material, yet the possibility of errors, omissions and/or discrepancies cannot be ruled out. This publication is released with an understanding that the institute shall not be responsible for any errors, omissions and/or discrepancies or any action taken in that behalf.

6 Should there be any discrepancy, error or omission noted in the study material, the Institute shall be obliged, if the same are brought to its notice for issue of corrigendum. iii PROFESSIONAL PROGRAMME. SECRETARIAL AUDIT , COMPLIANCE . MANAGEMENT AND DUE DILIGENCE. This study material is divided into two parts with following weightage of marks: Part I COMPLIANCE MANAGEMENT (40 Marks). Part II - c AUDIT and Due Diligence (60 Marks). Part I- COMPLIANCE MANAGEMENT The primary responsibility of a company secretary is to ensure the development and implementation of the COMPLIANCE framework in a company, COMPLIANCE requirement in the various types of the company based on the activity, sector and industry. As the company secretary play a significant role in the creation of the COMPLIANCE chart of the company and is required to report to the board about the COMPLIANCE status of the company.

7 It is expected from the student to be well versed with the COMPLIANCE requirement to the various types of the companies. This part of study material also covers the documentation, maintenance and search reports. This includes that how records/ documents should be managed by the company secretary and what are the various methods for maintenance of records. However, for various purposes company need to refer the historical documents from the internal records as well as from the various other sources such as records from MCA, Stock Exchanges, records of various other registrars etc. In view of the various regulatory actions and requirements, it is necessary for professional to know about the companies and their promoters/directors before taking up any assignment or before engaging for any signing and certification work.

8 This part of the study material also covers the role of company secretaries in the various business segments and the requirements, obligation and penal provisions relating to the KYC, signing and certification requirements. Part II - SECRETARIAL AUDIT and Due Diligence Section 204 of the Companies Act, 2013, enable the company secretaries to conduct SECRETARIAL AUDIT report for the listed and the public companies and Regulation 24A of SEBI (LODR) Regulations provides for the SECRETARIAL AUDIT for every listed entity and its material unlisted subsidiaries, which has open up the new area for company secretaries as SECRETARIAL auditor. Further, under various other regulations, the company secretaries are recognised for providing certification and to act as auditor. The part II of the study material covers these auditing principles, techniques, coverage and the reporting requirement for such audits.

9 The ICSI has constituted the Auditing Standards Board to prescribe the Auditing Standards for the members of ICSI, The Institute of Company Secretaries of India (ICSI) has issued four ICSI Auditing Standards. The Standards are required to be observed by the Company Secretaries undertaking Audits. The Standards seek to promote best auditing practices, uniformity and consistency while conducting audits. The review of the systems and process adopted by the professional provide support in the setting up the benchmarks of professional practices, the study cover the peer review and quality review guidelines issued by the ICSI and ethical standards to be maintained by the professional. iv The strategic and investment decision of any company depends on the due diligence report on the affairs of the company and the company secretaries are engaged by the companies for various purposes of due diligence, the study includes the various requirements in performing such due diligence.

10 The study also covers non- COMPLIANCE under the Companies Act, 2013, SEBI Act, 1992 and the regulations made thereunder. Students are strongly advised to go through the ICSI Publications, amendments in laws, articles, and research papers for the detailed understanding and updation for the subject. v PROFESSIONAL PROGRAMME. SECRETARIAL AUDIT , COMPLIANCE . MANAGEMENT AND DUE DILIGENCE. Legal and Regulatory Framework 1. Companies Act, 2013 and Rules made thereunder 2. Securities Contracts (Regulation) Act, 1956 and Rules made thereunder 3. SEBI Act, 1992\and Regulations made thereunder including: a. SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009/2018. b. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. c. SEBI (Share Based Employee Benefits) Regulations, 2014. d. SEBI (Issue of Sweat Equity) Regulations, 2002.