Under Section 92 of the Companies Act, 2013, every company shall prepare annual return in the prescribed form and signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice. The annual return, filed by a listed company or, by a company having such paid-up capital and turnover as may be prescribed, shall be certified by a company secretary in practice in the prescribed form, stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of this Act.
Under this Section a company secretary shall make a statement about the correctness, adequacy of disclosure in annual return and compliance of the Companies Act, 2013 made by the company.
Draft rule suggest that the annual return, filed by a listed company or a company having paid-up share capital of five crore rupees or more and turnover of twenty five crore rupees or more, shall be certified by a Company Secretary in practice.
Proposed blank form annual return run nearly 40 pages and statement of company secretary run in three pages. You may have gone through these forms and may agree with me that these two forms are going to be a serious assignment.
Same time, this is very good provision that profession of company Secretary is defined as expert. Clause (38) say that “expert” includes an engineer, a valuer, a chartered accountant, a company secretary, a cost accountant and any other person who has the power or authority to issue a certificate in pursuance of any law for the time being in force.
Clause (g) of sub – section (1) of Section 245 Such number of member or members, depositor or depositors or any class of them, as the case may be, as are indicated in sub-section (3) may, if they are of the opinion that the management or conduct of the affairs of the company are being conducted in a manner prejudicial to the interests of the company or its members or depositors, file an application before the Tribunal on behalf of the members or depositors for seeking to claim damages or compensation or demand any other suitable action from or against—
(i) the company or its directors for any fraudulent, unlawful or wrongful act or omission or conduct or any likely act or omission or conduct on its or their part;
(ii) the auditor including audit firm of the company for any improper or misleading statement of particulars made in his audit report or for any fraudulent, unlawful or wrongful act or conduct; or
(iii) any expert or advisor or consultant or any other person for any incorrect or misleading statement made to the company or for any fraudulent, unlawful or wrongful act or conduct or any likely act or conduct on his part;
Further, Sub – section (2) of Section 245 Where the members or depositors seek any damages or compensation or demand any other suitable action from or against an audit firm, the liability shall be of the firm as well as of each partner who was involved in making any improper or misleading statement of particulars in the audit report or who acted in a fraudulent, unlawful or wrongful manner.
Accordingly, Auditor, expert, advisor, consultant or any other person may face a class action suit for incorrect or improper or misleading statement. Company Secretary in practice making statement on annual return is a person who may face class action suit.
Further Section 448 deals with punishment for false statement, if in any return, report, certificate, financial statement, prospectus, statement or other document required by, or for, the purposes of any of the provisions of this Act or the rules made thereunder, any person makes a statement,—
(a) which is false in any material particulars, knowing it to be false; or
(b) which omits any material fact, knowing it to be material,
he shall be liable under section 447.
Section 447 has provision for punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud. Where the fraud in question involves public interest, the term of imprisonment shall not be less than three years.
These provisions simply suggest that no company secretary in practice should treat making statement on annual return as a routine matter but a serious assignment. This is urgent need to communicate to all clients about seriousness of this assignment under the Companies Act, 2013.
This Article was published in prestigious newsletter of Mysore chapter of the Institute of Company Secretaries this month.
Please note: I welcome your comments and feedback. This blog post is not a professional advice. Readers may share this post on social media by using buttons given here.
Under secrion 92 the annual retun signing by PCS should be extended to small company.
Thank you for reading my blog carefully.
This will be helpful for regulators and others, if you may write few points to in support of your observation particularly benefit to small companies and stakeholders.