SEBI LODR - PEER REVIEW & RECONCILIATION OF SHARE CAPITAL - PPT.pptx

SEBI LODR - PEER REVIEW & RECONCILIATION OF SHARE CAPITAL

1. 1 RRR CHAMBERS Email ID- [email protected] RRR Chambers - [email protected]

2. PEER REVIEW & RECONCILIATION OF SHARE CAPITAL Disclosure of Material Events RRR Chambers - [email protected]

3. It is the reconciliation of total shares of a company held in NSDL, CDSL by the shareholders with the total admitted, issued and listed capital. 3 CONCEPT RRR Chambers - [email protected]

4. 4 RECONCILIATION OF SHARE CAPITAL RRR Chambers - [email protected]

5. PAPER-1 Maximum marks for each right answer (1M) For each wrong answer (0.5M) negative mark RECONCILIATION & SHARE CAPITAL AUDIT REPORT 5 Let’s Recap RRR Chambers - [email protected]

6. Reconciliation of Share capital audit report is a requirement of? SEBI (LODR) (Listing Obligations and Disclosure Requirement) Regulations 2015 Depositories and Participants Regulations SEBI (Depositories and Participants)Regulations, 2018 Both a&b Securities Contract Regulation Act 1956 6 PART-A RRR Chambers - [email protected]

7. Reconciliation of Share capital audit report can be issued by? By Company Secretary in Practice By qualified Charted Accountant By a Cost Accountant I only I&II only I&III only I,II,III 7 RRR Chambers - [email protected]

8. Regulation 76 of the SEBI (Depositories and Participants) Regulations,2018 , provides that every issuer shall submit audit report on a quarterly basis to the concerned stock exchanges audited by practicing Company Secretary or a qualified Chartered Accountant, or a practicing Cost Accountant for the purpose of reconciliation of the total issued capital, listed capital and capital held by depositories in dematerialized form. The details of changes in share capital during the quarter and the in-principle approval obtained by the issuer from all the stock exchanges where it is listed in respect of such further issued capital 8 REGULATORY ASPECTS RRR Chambers - [email protected]

9. REGULATORY ASPECTS 9 Sub-regulation (2) lays down that the audit report under sub regulation (1) shall also give the updated status of the register of members of the issuer and confirm that security have been dematerialized as per requests within 21 days from the date of receipt of request by the issuer and where the dematerialization has not been affected within the said stipulated period, the report shall disclose the reasons for such delay. Further, sub-regulation (3) provides that the issuer shall immediately bring to the notice of the depositories and the stock exchanges, any difference observed in its issued, listed, and the capital held by depositories in dematerialized form. RRR Chambers - [email protected]

10. Reconciliation of Share capital audit report is a requirement of? SEBI (LODR) (Listing Obligations and Disclosure Requirement) Regulations 2015 Depositories and Participants Regulations SEBI (Depositories and Participants)Regulations, 2018 Both a&b Securities Contract Regulation Act 1956 Answer ‘b’ 10 RRR Chambers - [email protected]

11. Reconciliation of Share capital audit report can be issued by? By Company Secretary in Practice only By qualified Charted Accountant By a Cost Accountant I only I&II only I&III only I,II,III Answer ‘d’ 11 RRR Chambers - [email protected]

12. What to be reconciliation or how to be reconciliation RRR Chambers - [email protected]

13. The scope of this report is for the Reconciliation? Total issued capital Total paid up capital Total listed capital Total admitted capital with both the Depositories I only II&III only II&III only I,II,III,IV 13 RRR Chambers - [email protected]

14. Reconciliation capital audit is relating to the updation of? i . Updation of register of members ii. Registration of share transfer iii. Demat accounts iv. Register of shareholders a. i only b. ii & iv only c. i & ii only d. I, ii, iii & iv 14 RRR Chambers - [email protected]

15. The scope of the certificate would comprise the following: a. Reconciliation of • Total issued capital • Total paid-up capital • Total listed capital • Total admitted capital with both the Depositories b. Updation of Register of Members (ROM). c. Confirmation of dematerialization requests within 15 days. d. Shares pending confirmation for more than 15 days from the date of requests and reasons for delay, if any. e. Furnishing, de merger, etc.) f. Confirmation as to whether in-principle approval for listing in respect of all further issues have been received from all stock exchanges where the securities of the company are listed. 15 SCOPE OF CERTIFICATE RRR Chambers - [email protected]

16. The scope of this report is for the Reconciliation? Total issued capital Total paid up capital Total listed capital Total admitted capital with both the Depositories I only II&III only II&III only I,II,III,IV Answer is ‘d’ 16 RRR Chambers - [email protected]

17. Reconciliation capital audit is relating to the updation of? i . Updation of register of members ii. Registration of share transfer iii. Demat accounts iv. Register of shareholders a. i only b. ii & iv only c. i & ii only d. I, ii, iii & iv answer ‘a’ 17 RRR Chambers - [email protected]

18. Which of the following is out of the purview of reconciliation capital audit? Whether Registrar to an Issues (RTA) Certificate with SEBI is renewed or not Whether there is any delay/defect with registrar in completing demat work. Whether any intimation is due to be given to Stock Exchanges, depositories ? Whether certificates received for demat have been destroyed after confirming demat requests ? Whether any wrong confirmation of demat requests is given; if so financial impact of such errors. i only ii only i,ii,iii,iv,v None 18 RRR Chambers - [email protected]

19. Whether Registrar to an Issues (RTA) Certificate with SEBI is renewed or not ? Whether there is any delay/defect with registrar in completing demat work. Whether any intimation is due to be given to Stock Exchanges, depositories ? Whether certificates received for demat have been destroyed after confirming demat requests ? Whether any wrong confirmation of demat requests is given; if so financial impact of such errors. 19 CHECKLIST FOR PCS RRR Chambers - [email protected]

20. Which of the following is out of the purview of reconciliation capital audit? Whether Registrar to an Issues (RTA) Certificate with SEBI is renewed or not Whether there is any delay/defect with registrar in completing demat work. Whether any intimation is due to be given to Stock Exchanges, depositories ? Whether certificates received for demat have been destroyed after confirming demat requests ? Whether any wrong confirmation of demat requests is given; if so financial impact of such errors. i only ii only i,ii,iii,iv,v None Answer is ‘d’ 20 RRR Chambers - [email protected]

21. How to share defects with peers? RRR Chambers - [email protected]

22. Find out the defects in this model RSCA report? XYZ Listed company , which admitted under section 7 of Insolvency Bankruptcy code 2016 the interim resolution professional, immediately after his appointment, he informed the board of directors their powers are suspended, however he informed CS, and CFO and other employes continue their job, he assured that the payment of salaries on time, there afterwards admitted for CIRP on October 7th 2022, he continued his duties as a resolution professional and submitted the following report to the stock exchange identify defects and deviations as peer review auditor, for the report signed by practicing company secretary, and give suggestions/guidance if any 22 PART- B RRR Chambers - [email protected]

23. 23

24. 24 PART-II OTHER IMPORTANT POINTS RRR Chambers - [email protected]

25. Maintenance by the Company Secretary in Practice providing certification services the following: Register of attestation/certification of Annual return and reconciliation of capital carried out in a year (register in accordance with institute guidelines) Copies of all relevant papers and documents obtained from the company for the purpose of annual return & share capital reconciliation certification 25 RRR Chambers - [email protected]

26. SEBI LODR REGULATIONS 2015 RRR Chambers - [email protected]

27. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) 27 RRR Chambers - [email protected]

28. Introduction & Applicability SEBI has notified the SEBI (Listing Obligations and Disclosure Requirements) Regulations (“LODR” or “Listing Regulations”) on Sep 02, 2015 - effective December 1 . Provisions related to ordinary resolution for approval of all material RPT and reclassification of Promoters as public shareholders as prescribed in Regulation 31A have been made applicable with immediate effect The LODR is the consolidation of the compliance requirements by every listed entity into one single document across various types of securities listed on SE. Regulation consists of 11 Chapters and 10 Schedules. For operationalizing certain sections, SEBI is issuing separate circulars Shortened version of Listing Agreement has been notified - required to be executed by ALL listed companies within 6 months. Single LA to be signed for multiple type of securities listed at exchanges RRR Chambers - [email protected]

29. Let’s Recap RRR Chambers - [email protected]

30. PAPER-II Maximum marks for each right answer (1M) For each wrong answer (0.5M) negative mark SEBI (LISTING OBLIGATIONS & DISCLOSURE RREQUIREMENTS) 30 Let’s Recap RRR Chambers - [email protected]

31. SEBI LODR is applicable for ? I. Indian Depository receipts II. Perpetual debt instruments III. Securitized Debt Instruments I Only I&II Only II&III Only All of the above 31 PART-A RRR Chambers - [email protected]

32. The main features of LODR are as follows: Chapter I – Covers Definitions Chapter II – P rovides principles for periodic disclosures by listed entities and incorporates the principles for corporate governance. In the event of the absence of specific requirements or ambiguity, these principles would serve to guide the listed entities. Chapter III – Contains common obligations applicable to all listed entities. Chapter IV – Obligations of listed entity which has listed its specified securities i.e. (a) equity shares and (b) convertible securities Chapter V – Obligation of listed entities which has listed its (a) non-convertible debt securities; or (b) non-convertible redeemable preference shares or both Chapter VI – Obligation of Listed entities which has listed its specified securities and (a) non-convertible debt securities; or (b) non-convertible redeemable preference shares or both Chapter VII – Obligation of listed entity which has its IDR listed Chapter VIII – Obligation of listed entity which has its Securitized Debt Instruments listed. Chapter IX – Obligation of listed entity which has its Mutual Fund Units listed. Chapter X and XI - Obligations of stock exchanges to monitor compliance or adequacy / accuracy of compliance with provisions of these regulations and to take action for non-compliance. Provisions in case of default RRR Chambers - [email protected]

33. APPLICABILITY OF THE REGULATIONS RRR Chambers - [email protected]

34. SEBI LODR is applicable for ? I. Indian Depository receipts II. Perpetual debt instruments III. Securitized Debt Instruments I Only I &II Only II&III Only All of the above Answer ‘d’ 34 RRR Chambers - [email protected]

35. IDENTIFY THE COMMITTEES UNDER SEBI LODR? Audit Committee & Risk Management Committee Nomination and Remuneration Committee Stakeholders Relationship Corporate Social Responsibility Committee I only I and II only I,II & III IV only 35 RRR Chambers - [email protected]

36. COMMITTEES RRR Chambers - [email protected]

37. IDENTIFY THE COMMITTEES UNDER SEBI LODR? Audit Committee & Risk Management Committee Nomination and Remuneration Committee Stakeholders Relationship Corporate Social Responsibility Committee I only I and II only I,II & III IV only Answer c 37 RRR Chambers - [email protected]

38. POLICIES RRR Chambers - [email protected]

39. What is your Business Policy? RRR Chambers - [email protected]

40. WHAT ARE THE POLICIES OF SEBI LODR? Policy on price sensitive information Policy on Anti corruption Whistle Blower policy Policy on materiality of related party transactions I only I and II only I,III,IV III,IV 40 RRR Chambers - [email protected]

41. POLICIES RRR Chambers - [email protected]

42. WHAT ARE THE POLICIES OF SEBI LODR? Policy on price sensitive information Policy on Anti corruption Whistle Blower policy Policy on materiality of related party transactions I only I and II only I,III,IV III,IV Answer ‘d’ 42 RRR Chambers - [email protected]

43. Disclosure RRR Chambers - [email protected]

44. A listed entity is required to disclose “material events” to Stock Exchanges in a time bound manner Material Events Deeme d Mate rial E v ent s C ri te ria base d Mate rial E v ent s The listed entity shall frame a policy for determination of materiality, based on criteria specified in this sub-regulation, duly approved by its board of directors, which shall be disclosed on its website Events specified in Para A of Part A of Schedule III are deemed to be material events Disclosure made to Stock Exchanges under regulation 30 shall also be disclosed on the website of the listed entity for a minimum period of 5 years The listed entity shall disclose all events or information with respect to subsidiaries which are material for the listed entity | 45 Disclosure of Material Events RRR Chambers - [email protected]

45. The disclosures on the company website of the listed entity to be maintained for a minimum period of? 8 years 5 years 3 years 1 year 45 RRR Chambers - [email protected]

46. The disclosures on the company website of the listed entity to be maintained for a minimum period of? 8 years 5 years 3 years 1 year Answer is ‘b’ 46 RRR Chambers - [email protected]

47. COMPLIANCES RRR Chambers - [email protected]

48. How to comply financial year targets? RRR Chambers - [email protected]

49. Find the odd one out so far as irrespective of SEBI LODR? One-time Compliances Quarterly Compliances Half yearly Compliances Yearly Compliances Event based Compliances a. I only b. I & III only c. I, II, III & IV d. V only 49 RRR Chambers - [email protected]

50. COMPLIANCES UNDER SEBI (LODR), 2015 One Time Compliances RRR Chambers - [email protected]

51. QUARTERLY COMPLIANCES COMPLIANCES RRR Chambers - [email protected]

52. HALF YEARLY COMPLIANCES RRR Chambers - [email protected]

53. Yearly Compliances RRR Chambers - [email protected]

54. Find the odd one out so far as irrespective of SEBI LODR? One-time Compliances Quarterly Compliances Half yearly Compliances Yearly Compliances Event based Compliances a. I only b. I & III only c. I, II, III & IV V only Answer d 54 RRR Chambers - [email protected]

55. 55 Which of the following certificates under the SEBI LODR which is not exclusively for practicing company secretary? Transfer or transmission or transposition of securities Secretarial Audit & Secretarial Compliance Report Certificate Of Non-Disqualification of Directors Compliance Certificate RRR Chambers - [email protected]

56. LIST OF THE CERTIFICATES TO BE GIVEN PRACTICING COMPANY SECRETARY BY SEBI LODR 56 S. No Regulation No/Sub Regulation No Instance of the Certificate/ Report 1. (Pursuant to Regulation 34(3) and Schedule V Para C clause (10)( i ) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015) Certificate Of Non-Disqualification of Directors-   ( i ) a certificate from a company secretary in practice that none of the directors on the board of the company have been debarred or disqualified from being appointed or continuing as directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority. 2. 24A: Secretarial Audit Secretarial Audit & Secretarial Compliance Report   {(1) Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial audit and shall annex a secretarial audit report given by a company secretary in practice , in such form as specified, with the annual report of the listed entity.} 3. Regulation 40 (9) Transfer or transmission or transposition of securities  The listed entity shall ensure that the share transfer agent and/or the in-house share transfer facility, as the case may be, produces a certificate from a practicing company secretary within 225[thirty days from] the end of 226[***] the financial year, certifying that all certificates have been issued within thirty days of the date of lodgement for transfer, subdivision, consolidation, renewal, exchange or endorsement of calls/allotment monies. RRR Chambers - [email protected]

57. LIST OF THE CERTIFICATES TO BE GIVEN PRACTICING COMPANY SECRETARY BY SEBI LODR 57 S. No Regulation No/Sub Regulation No Instance of the Certificate/ Report 1. Corporate Governance Report under Regulation 27 of SEBI LODR Corporate Governance Report  (2) (a) The listed entity shall submit a quarterly compliance report on corporate governance in the format as specified by the Board from time to time to the recognised stock exchange(s) within 165[twenty one] days from 166[ the end of each] quarter. 2. Regulation 7 (3) of SEBI LODR Compliance Certificate (STA)  (3)The listed entity shall submit a compliance certificate to the exchange, duly signed by both the compliance officer of the listed entity and the authorised representative of the share transfer agent, wherever applicable, within 44[thirty days from the] end of 45[***] the financial year, certifying compliance with the requirements of sub- regulation (2). 3. Regulation 17(8) of SEBI LODR Compliance Certificate  The chief executive officer and the chief financial officer shall provide the compliance Certificate to the board of directors as specified in Part B of Schedule II.       RRR Chambers - [email protected]

58. List of the certificates to be given Practicing Company Secretary and Practicing Chartered Accountants by SEBI LODR 58 S. No Regulation No/Sub Regulation No Instance of the Certificate/ Report 1. SCHEDULE V- (E) : ANNUAL REPORT [See Regulation 34(3) and 53(f) Compliance Certificate   Compliance certificate from either the auditors or practicing company secretaries regarding compliance of conditions of corporate governance shall be annexed with the directors’ report.       RRR Chambers - [email protected]

59. 59 Which of the following certificates under the SEBI LODR which is not exclusively for practicing company secretary? Transfer or transmission or transposition of securities Secretarial Audit & Secretarial Compliance Report Certificate Of Non-Disqualification of Directors Compliance Certificate Answer is ‘d’ RRR Chambers - [email protected]

60. For the purpose of reclassification of promoters category ,for the shares exceeding 2%of the voting rights following is the essential requirements? Approval of the share holders Application to the stock exchange Lack of control by the promoter As may be decided by stock exchange. I only II only I,II,III only None of the above 60 RRR Chambers - [email protected]

61. The nature shareholders approve required to for the purpose of reclassification of promoters? a. Ordinary resolution b. Special resolution c. Depends on the promoter shareholding. d. As may be decided by stock exchange. 61 RRR Chambers - [email protected]

62. L a y ers of e n tities i n v ol v ed Promoters / PG/ Directors and its relatives/ KMPs Ent i ties / person under P G Entities controlled by the above 2 layers RRR Chambers - [email protected]

63. Reduction in time gap ( NSE Circular of Jun 28, 2021 ): Time gap between BM and shareholders meeting for consideration of reclassification request should be min. 1 month and max. 3 months. Previous requirement: time gap of at least 3 months but not exceeding 6 months Where the process of reclassification is initiated before amendment and notice to shareholders is sent – erstwhile Reg. 31A would apply. Approval of shareholders through an ordinary resolution Exemptions: Approval of shareholders exempted where: Promoters/persons related to promoters seeking reclassification, together, do not hold more than 1% of the total voting rights; reclassification is pursuant to a divorce. Application to SE to be made within 30 days of BM, in that case. Exemptions from the following provisions extend to reclassification pursuant to an order of a regulator under any law; subject to the condition that the promoters seeking reclassification do not remain in control of the listed entity: reg. 31A (4) - conditions to be fulfilled by promoters after reclassification reg. 31A (8 ) (a) & (b) – disclosures to be made to stock exchanges (SEs) In case of reclassification pursuant to an open offer or a scheme of arrangement, exemptions from the following provisions have been extended; subject to the condition that the intent of the erstwhile promoters to reclassify has been disclosed in the letter of offer or scheme of arrangement: reg. 31A (3) (a) - approval of BoDs and shareholders reg. 31A (3) (c) ( i ) – compliance by the listed entity to the requirement for minimum public shareholding under reg. 38 (only in case of open offer) reg. 31A (8 ) (a) & (b) – disclosures to be made to SEs Rationale : In cases where intent of reclassification has already been mentioned in the letter of offer/scheme of arrangement, the requirement of promoter making an application merely procedural since the fact of re-classification is already present in public domain. 63 Reclassification of promoter/ promoter group entities (reg. 31A RRR Chambers - [email protected]

64. For the purpose of reclassification of promoters category ,for the shares exceeding 2%of the voting rights following is the essential requirements? Approval of the share holders Application to the stock exchange Lack of control by the promoter As may be decided by stock exchange. I only II only I,II,III only None of the above Answer is ‘c’ 64 RRR Chambers - [email protected]

65. The nature shareholders approve required to for the purpose of reclassification of promoters? a. Ordinary resolution b. Special resolution c. Depends on the promoter shareholding. As may be decided by stock exchange. Answer is ‘a’ 65 RRR Chambers - [email protected]

66. Mr X is A practicing company secretary subscribe to the xyz limited who share are listed in stock exchange. Mr X is a promoter to the xyz limited. State whether above statement is true or false ? 66 RRR Chambers - [email protected]

67. Definition of P r omoter G r oup Promoter Group In di v idua l P r omoter Body Corp. (A)- 20% or mo r e of capital is he l d by P r omoter (P) (includin g r elati v es – R) Body Corp.- 20% is held by A Firm/ HUF i n w hich P / R holds > 20 % of capital Immediate relatives of Prom oter* Corporate Promoter Su bsidi a r y / Hol d ing Co. Body Corp.- 20% or m o r e i s he l d by P Body Corp. that holds 20 % or mo r e i n P Body Corp. > 20% is he l d by In di viduals /Cos. w h o holds > 20% of capital of iss ue r co. “Promoter Group” has been defined under regulation 2(pp) of SEBI (ICDR) Regulations. Immediate relatives includes spouse of promoter, or any parent, brother, sister or child of the promoter or of spouse. RRR Chambers - [email protected]

68. Statement on Impact of Audit Qualification [reg. 33(6) & reg. 52 (3 ) ] Promoter: defined under Reg 2( oo ) of SEBI (ICDR) Regulations a person who has been named as promoter in a draft offer document or offer document or is identified in Annual Return u/s 92 of Companies Act, 2013; or who has control over the affairs, directly or indirectly, whether as shareholder, director or otherwise with whose advice, directions or instructions the board of directors is accustomed to act: not applicable if merely acting in professional capacity Definition of Promoter RRR Chambers - [email protected]

69. Mr X is A practicing company secretary subscribe to the xyz limited who share are listed in stock exchange. Mr X is a promoter to the xyz limited. State whether above statement is true or false ? Answer is False 69 RRR Chambers - [email protected]

70. CASE STUDY RRR Chambers - [email protected]

71. Dancing with tunes may not always be a good case. RRR Chambers - [email protected]

72. XYZ Listed company , which admitted under section 7 of Insolvency Bankruptcy code 2016 the interim resolution professional, immediately after his appointment, he informed the board of directors their powers are suspended, however he informed CS, and CFO and other employees continue their job, he assured that the payment of salaries on time, there afterwards admitted for CIRP on October 7th 2022, he continued his duties as a resolution professional. The secretarial auditor ( PCS) of the company in his corporate governance report for the year 2023, given a qualified report stating corporate debtor, board of directors, audit committee, and nomination and remuneration committee are not properly constituted. Further related party transactions are not properly disclosed. Examinee such report as a peer review auditor? PART-B Case Study- Corporate Governance Report RRR Chambers - [email protected]

73. IBC Provisions which are exempted for SEBI LODR ( NOTIFICATION No. SEBI/LAD-NRO/GN/2018/21) Regulation 17- Board of Directors-composition Regulation 18 -Audit Committee Regulation 19 -Nomination and remuneration committee Regulation 20 -Stakeholders Relationship Committee Regulation 21 -Risk Management Committee Regulation 23(4) -Related Party Transactions Regulation 31A(9) -Disclosure of Class of shareholders and Conditions for Reclassification Regulation 37(7) -Draft Scheme of Arrangement & Scheme of Arrangement 73 RRR Chambers - [email protected]

74. 74 Thanks for your active listening RRR Chambers - [email protected]

75. PLEASE TREAT PEERS IN EQUAL WAY ALL THE BEST AS PEER REVIEW AUDITOR RRR Chambers - [email protected]