Compliance Certificate Under Section 383a

As per the proviso in sub-section (1) of Section 383A of the Companies Act, 1956 every company not required to employ a whole-time secretary under Sub-section (1) and having a paid-up share capital of ten lakh rupees or more shall file with the Registrar a certificate from a secretary in whole-time practice in such form and within such time and subject to such conditions as may be prescribed, as to whether the company has complied with all provisions of the Act and a copy of such certificate shall be attached with Board’s report referred to in Section 217. Accordingly, every company having a paid-up share capital of rupees ten lakhs or more but less than rupees five crores is required to file with the Registrar of Companies a Compliance Certificate from a Secretary in Whole-time Practice and also attach a copy of that certificate with Board’s report which are not required to employ a whole-time secretary but has nevertheless employed. However, the company having paid up share capital of less than _ 5 crores, such a company is not required to obtain compliance certificate from a practising company secretary.

According to Sub-rule (1) of Rule 3, every company not required to employ a whole-time secretary under Section 383A(1) of the Act and having a paid-up share capital of ten lakh rupees or more shall obtain a certificate from a secretary in whole-time practice.

For the purpose of this proviso the relevant date for determining the paid-up share capital shall be date on which the Board’s report is signed. Further Sub-rule (2) of Rule 3 provides that the Compliance Certificate shall relate to the period pertaining to the financial year of the company. So, every company to which the section is applicable is required to obtain a Compliance Certificate from a secretary in whole-time practice for the financial year in which the Board’s report is signed on or after 1st February 2001.

In exercise of the powers conferred by Clause (1) of Part II of the Second Schedule to the Company Secretaries Act, 1980 (56 of 1980), as amended by the Company Secretaries (Amendment) Act, 2006, the Council of the Institute of Company Secretaries of India has specified that w.e.f. January 1, 2008: A member of the Institute in practice who is entitled—

(i) to issue compliance certificate pursuant to the proviso to sub-section (1) of Section 383A of the Companies Act, 1956 (1 of 1956); and/or

(ii) to sign an Annual Return pursuant to the proviso to sub-section (1) of Section 161 of the Companies Act, 1956 (1 of 1956), shall be deemed to be guilty of professional misconduct if he—

— issues compliance certificates; and/or

— signs Annual Return for more than eighty companies in aggregate, in a calendar year.

Provided, however, that in the case of a firm of Company Secretaries, the ceiling of eighty companies aforesaid would apply to each partner therein who is entitled to (i) sign the compliance certificate in terms of the proviso to Sub-section (1) of Section 383A of the Companies Act, 1956; (ii) sign Annual Return in terms of the proviso to Sub-section (1) of Section 161 of the Companies Act, 1956.

Under e-filing system of MCA, companies are required to file Compliance Certificate on-line with the Registrar of Companies within 30 days from the date on which its Annual General Meeting is held. Provided that where the annual general meeting of such company for any year has not been held, then it shall be filed with the Registrar within thirty days from the latest day on or before which that meeting should have been held in accordance with the provisions of the Act.

The form for filing compliance certificate with the Registrar is e-form 66.

As per Sub-rule (3) of Rule 3 secretary in whole-time practice, for the purpose of issue of Compliance Certificate, shall have right to access at all times the registers, books, papers, documents and records of the company and shall be entitled to require from the officers or agents of the company, such information and explanations as he may think necessary for the purpose of such certificate.

The Compliance Certificate must be laid by the Company at its Annual General Meeting (Sub-rule (4) of Rule 3). As a good secretarial practice, the certificate should be read at the meeting and also made available to the members for inspection. It is also necessary for the company to attach a copy of the Compliance Certificate with the Board’s report while forwarding the same to members and others under Section 219 of the Act.

Vide Circular No. 18/2011 dated 29.4.2011, it is clarified that the company would be in compliance of Section 219(1) of Companies Act, 1956, in case, a copy of Balance Sheet etc. is sent by electronic mail to its members subject to the fact ha the company has obtained:

(a) e-mail address of members registered with the company or with the concerned depository for receiving Annual Report

(b) These statements are displayed on website of company.

(c) If e-mail address of members not registered for receiving the documents, then these documents will be sent by other modes of service.

In case of listed companies, if any member insists for physical copies of stock, then these should be sent to him free of cost, a company shall obtain a certificate from either the auditors or practicing company secretaries regarding compliance of conditions of corporate governance as stipulated in Clause 49 and annex the certificate with the directors report to be sent annually to all the shareholders of the company. The certificate shall also be sent to the stock exchanges along with the annual return filed by the company. While publishing chairman’s speech in a newspaper, provisions of Section 197 must be taken into account.