Tag Archives: Company Secretaries

Newly Notified Reporting Entities under the PMLA

During the last one month, there was a heated debate among accounting and legal professionals on two notifications issued by the Indian Ministry of Finance in May 2023. These two notifications first time bring these professionals within the reporting framework of the Prevention of Money – Laundering Act, 2002 (The Act/the PMLA).

With these two notifications, professionals like Company Secretaries, Chartered Accountants, Cost Accounts and Advocates come under the definition of “Reporting Entities.” Presently, banks, financial institutions and other intermediaries come into the definition of the Reporting Entities.

The Reporting Entities is defined under the Act in Section 2(1)(wa) as inserted with effect from 15 February 2013. It says the “reporting entity” means a banking company, financial institution, intermediary or a person carrying on a designated business or profession.

The terms banking company defined in Section 2(1)(e), financial institutions in Section 2(1)(l), and intermediary in Section 2(1)(n) of the PMLA. For our analysis, the meaning of “a person carrying on a designated business or profession” is important.

Section 2(1)(sa) defines a person carrying on a designated business or profession in the following exhaustive terms:

person carrying on designated business or profession” means,—
(i) a person carrying on activities for playing games of chance for cash or kind, and includes such activities associated with casino; 

(ii) Inspector-General of Registration appointed under section 3 of the Registration Act, 1908 (16 of 1908) as may be notified by the Central Government;

(iii) real estate agent, as may be notified by the Central Government;

(iv) dealer in precious metals, precious stones and other high-value goods, as may be notified by the Central Government;

(v) person engaged in safekeeping and administration of cash and liquid securities on behalf of other persons, as may be notified by the Central Government; or

(vi) person carrying on such other activities as the Central Government may, by notification, so designate, from time to time.

For the present discussion, sub-clause (vi) hereinabove is important.

Both notifications, dated 3 May 2023 and 9 May 2023, used this sub-clause for bringing legal and accounting professionals into the reporting framework of the PMLA.

The Notification S.O. 2036(E) dated 3 June 2023 brings certain activities carried out by the “relevant persons” including legal and accounting professionals, into the reporting framework. The Notification S.O. 2135(E) dated 9 May 2023 brings certain other activities carried out by any person into the reporting framework but excludes these activities when carried out by legal and accounting professionals.

So, prima facie, certain activities are included irrespective of the person carrying out these activities. For this discussion, Company Secretaries, Chartered Accountants, Cost Accounts and Advocates are the “Relevant Persons” as also mentioned in these notifications.

The 9 May 2023 Notification clarified that any activity that is carried out by an advocate, a chartered accountant, cost accountant or company secretary in practice who is engaged in the formation of a company to the extent of filing a declaration under Section 7(1)(b) of Companies Act, 2013 (18 of 2013) shall not be regarded as an activity for the purposes of Section 2(1)(sa)(vi) of the PMLA. So, the signing this declaration on the company incorporation form does not require reporting, but all other activities associated with incorporation may.

All other activities listed under these two notifications shall make the “relevant person” a “reporting entity.” These activities are:

  • buying and selling of any immovable property;
  • managing of client money, securities or other assets;
  • management of bank, savings or securities accounts;
  • organisation of contributions for the creation, operation or management of companies;
  • creation, operation or management of companies, limited liability partnerships or trusts, buying and selling of business entities;
  • acting as a formation agent of companies and limited liability partnerships;
  • acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a firm or a similar position in relation to other companies and limited liability partnerships;
  • providing a registered office, business address or accommodation, correspondence or administrative address for a company or a limited liability partnership or a trust;
  • acting as (or arranging for another person to act as) a trustee of an express trust or performing the equivalent function for another type of trust; and
  • acting as (or arranging for another person to act as) a nominee shareholder for another person.

The impact of these two notifications on the “relevant persons”- an advocate, a chartered accountant, cost accountant or company secretary in practice- becomes “reporting entities” under the PMLA for these activities so notified. The Reporting entities shall comply with the Reporting framework given under Chapter IV of the PMAL. We will discuss the Reporting Framework under the PMLA in the subsequent discussion.


Propaganda against Compliance Tools

Politics is claimed to be a dirty game of propaganda in India and the public already accepted it as a reality of life. Unfortunately, Indian professionals start using similar tools against compliance regime and compliance professionals. Role of the media is also come to under strong protest recently. This is evident that Indian media do no research and do not cross verify the facts. Recently published propaganda titled “FM Nirmala Sitharaman urged to waive e-form 22A for firms” published by Deccan Chronicle on 12th June 2019 and copied by few others seems to be published without cross-checking on law and facts.

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Start Down India, Stand up MCA21

What is MCA21 (or MCA@! as some company secretaries writing it in private chat)? Today, one article published in a newspaper link here, tried to explain this most trusted mission mode project by Government of India which became most taunted Mast Mood Project by Corporate of India.

The Story starts unfolding when one corporate contractor took over from another. In a public event, an officer of a company claimed to took over the bullock cart.

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Today, I am posting an article posted earlier on my Hindi Blog which was criticized just because it made public a view many time reflected by Industry but various interest groups do not want to debate; and certainly not a correction. But, this need debate. I invite views of readers in comment section given after the post. Though, this post took example of Company Secretaries, many other professions and vocations are in similar situation.

पिछले एक  आलेख में मैंने कंपनी सेक्रेटरी के बहाने देश के रोजगार परिदृश्य की विवेचना की थी| आज कंपनी सेक्रेटरी के बहाने देश में शिक्षा के स्तर की चर्चा करेंगे|

दिल्ली रेडिमेड कंपनी सेक्रेटरी का उत्पाद केंद्र है| यहाँ के उच्च स्तरीय कोचिंग सेंटर परीक्षा की बहुत श्रेष्ठ तैयारी कराते हैं| साथ ही बहुत से श्रेष्ठ कंपनी सेक्रेटरी बिना पैसे लिए संस्थान की ओर से छात्रों के ज्ञान बाँटते हैं|

परन्तु, पिछले वर्ष एक कंपनी के डायरेक्टर ने मुझे कहा था कि एक बार में कंपनी सेक्रेटरी परीक्षा पास कर कर आने वाले दस प्रत्याशी उसे पब्लिक कंपनी और पब्लिक सेक्टर कंपनी का अंतर नहीं बता सके| इसके लिए प्रायः भारतीय कंपनी सेक्रेटरी संस्थान को दोष दिया जाता हैं| मगर इसके कहीं अधिक दोषी हमारा समाज और शिक्षा के प्रति सामाजिक धारणा है|

यह सब हुआ कैसे?

पहला तो छात्र ज्ञान प्राप्त करने के लिए नहीं वरन परीक्षा पास करने के लिए पढने लगे हैं| परीक्षा पास करने के लिए उन गूढ़ प्रश्नों के उत्तर याद कर लिए जाते हैं जिन्हें प्रायः परीक्षा में पूछा जाता है या पूछा जा सकता है| याद करने की यह प्रक्रिया इतनी मशीनी है कि उसमें कानूनी गहराई समझने के लिए गुंजाईश ही नहीं बची है|

जब यह छात्र किसी भी कोचिंग सेंटर में जाते हैं तो कोचिंग सेंटर का लक्ष्य होता है, पास हुए छात्रों की संख्या और प्रतिशत बनाये रखना| उनके यहाँ किसी भी सवाल जबाब का कोई स्थान नहीं रहता| केवल बचकाने प्रश्न छात्रों के सामने रखे जाते है जो उन्हें जबाब याद करने की ओर ले जायें, न कि समझने दें| हाँ, अगर कोई छात्र प्रश्न पूछता है तो उसे उत्तर दिया जाता है मगर इस भगदड़ में प्रायः छात्र प्रश्न पूछने की जगह उत्तर याद करने में लगे रहते है|

संस्थान अपने पुराने ढर्रे पर चल रहा है| प्रायः कोचिंग सेंटर और छात्र पूछे जाने वाले सवालों का पहले से जो अंदाजा लगाते हैं उस से मिलते जुलते सवाल आते है| परीक्षा में बहुत सटीक उत्तर के कमी रहती है| अभी हाल ही में एक सम्म्मेलन में बात उठी थी की अगर कोई परीक्षक जरा भी सख्ती से नंबर देता है तो उसके पास संस्थान की ओर से चेतावनी सन्देश आ जाता है|

जब यह छात्र उत्तीर्ण होकर नौकरी के लिए जाते हैं तो कंपनियां उनको अनुकूल नहीं पातीं| बहुत सी बातें जो छात्र जीवन में डट कर पढ़ी गयीं है वो कई बार कंपनी में नहीं होनी होतीं; जैसे मर्जर| जो कार्य कंपनी में रोज होते हैं उनपर छात्र जीवन में कभी ध्यान नहीं दिया गया होता जैसे; कानूनी विवेचना, रेजोलुसन, बोर्ड मीटिंग, समझौते| यह केवल छात्र की ही गलती है नहीं है वरन उस सिस्टम की भी है जो कोर्स को तैयार करता है| रोजमर्रा के काम पढाई में हल्के लिए जाते हैं जबकि उनमें अगर एक्सपर्ट हों  तो समय भी बचेगा और बोर्ड की निगाह में जगह भी बनेगी| मगर कहा जा रहा है कि आज कंपनी सेक्रेटरी मिनटबुक में दो लाइन भी बिना नक़ल के नहीं लिख सकते|

मगर क्या यह देश का परिदृश्य नहीं हो गया है? क्या इसी कारण अंडर एम्प्लॉयमेंट भारत का एक स्वीकार्य सच नहीं  बन गया है?

Ceiling on Secretarial Audit and Annual Return

Institute of Company Secretaries of India on 7th April 2015 informed its members by mail that it has put ceiling on Secretarial Audit and Annual Return. “The Council of the Institute has issued “Guidelines for Issuing Secretarial Audit Report, Signing and Certification of Annual Return” in supersession of the “Guidelines for Issuing Compliance Certificate and Signing of Annual Return” issued by the Council on 27th November, 2007”, the mailed apparently send by president of the institute declares. These new guidelines are issued on 6th April 2015.

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Introducing: AishMGhrana Governance Professional

The Institute of Company Secretaries of India has its Continuing willingness to present itself as a world leader as professional body of Corporate Governance professionals. This is a welcome transformation of Company Secretary from a mere clerk to Corporate Governance professional. The ICSI said as a member of CSIA it will ask the World Trade Organization (WTO) to include corporate governance and related areas in its mode of business classification.

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Bipin S. Acharya

Bipin S. Acharya

After a long weekend, when I come back to work, my mail folders dedicated for peer group read more than 150 mails. What happened? It would have been an eventless week as government is on election mode and no major policy change was expected. Unfortunately, there was very sad news. On 28th January 2012, our beloved Company Secretary Sh. Bipin S. Acharya has left for heavenly abode. According to Hindu calendar, that was day of Basant Panchmi, the first day of spring. This is a day of cultural significance and dedicated to goddess Saraswati of knowledge and wisdom. Naturally, god has no other suitable day as an option to call a practising scholar like him.

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The minister of corporate affairs Mr. Veerappa Moily  on 12th December 2011 moved 3 bills namely; the Chartered Accountants (Amendment) Bill, 2010, the Cost and Works  Accountants (Amendment) Bill, 2010 and the Company Secretaries (Amendment) Bill, 2010

These bills were to amend sub-section (2) of Section 2 of three Acts namely the Chartered Accountant Act, 1949, the Cost and Works Accountants Act, 1959 and the Company Secretaries Act, 1980.

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