UDIN and eCSIN

Secured way of Attestation

From July and October, the CAs and CSs are mandatory to attest the documents through UDIN. Which is a secured way of attesting the documents and authorizing the same. UDIN is a new concept introduced by both the Institutions of Chartered Accountants and Company Secretaries.

In this edition we will be seeing about the UDIN and it’s applicability for both CA and CS. And also about eCSIN for whole-time Company Secretaries. Our usual Legal terms and News Bites related to notifications by MCA, SEBI, RBI, IT and GST will follow the article.

Saranya Deivasigamani,
CEO

UDIN and eCSIN

In order to avoid documents/ certificates attested by third person misrepresenting themselves as CA / CS Members that are misleading the Authorities and Stakeholders, the Institute of Chartered Accountants of India (ICAI) and the Institute of Company Secretaries of India (ICSI).

ICAI Implementations

ICAI is on receiving number of complaints of signatures of CAs being forged by non CAs. To curb the malpractices, the Professional Development Committee of ICAI has implemented in phased manner an innovative concept of UDIN i.e. Unique Document Identification Number. All Certificates are being made mandatory with effect from 1st July, 2019 as per the Council decision taken at its 379th Meeting held on 17th – 18th December, 2018.

Chartered Accountants having full-time Certificate of Practice can register on UDIN Portal and generate UDIN by registering the certificates attested/certified by them from https://udin.icai.org.

Understanding UDIN

The UDIN is an 18 digit system generated number and it has the following format:

18304676AKTSBN1659

First 2 Digits are YY – Last two digits of the Current Year (in this case 18)

Next 6 Digits is ICAI’s Membership No. i.e, AAAAAA (in this case 304676)

Next 10 Digits are the randomly generated Alpha-numeric number i.e., AANNNAANNN (AKTSBN1659).

The UDIN generated can be used on the document by mentioning it as a watermark or using a pen on the document.

Verification

Authorities / Regulators / Banks / Others can verify UDIN at https://udin.icai.org/search-udin

Cancellation / Revocation

ICAI Members by mentioning the reason can cancelled or revoked the UDIN. Further, for allowing revocation there is no prescribed time limit. An alert message will be sent about the revocation of the UDIN, if any user had searched that UDIN before revocation. In case anybody searches for the revoked UDIN, appropriate statement indicated by Member with the revocation date will be displayed.

Consequences of non generation

As per the Council Decision of ICAI, UDIN generation is compulsory. Hence, not generating UDIN for mandatory certificates or documents may amount to non-adherence of the ICAI Council Decision. Further for the non-adherence of the council decision may attract disciplinary actions as per the Second Schedule Part II of The Chartered Accountants Act, 1949.

ICSI Implementations

ICSI Council deliberated the matter and it was observed that all the representation annexed to the letter were based on incorrect facts and reflected a tendency to avoid the implementation of the law whereas the initiative of MCA was focused in strengthening governance and compliance. It was decided to summit a detailed representation to MCA to maintain status-quo of limits with respect to appointment of whole time company secretary in terms of Rule SA of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

In terms of Clause ( 1) of part II of the Second Schedule to the Company Secretaries Act, 1980 as amended by the Company Secretaries (Amendment) Act, 2006, the Council has made quoting of mandatory UDIN (Unique Document Identification Number) in the documents certified / verified / attested / signed / authenticated by a company secretary in practice for the professional services mentioned in the Unique Document Identification Number (UDIN) Guidelines

Further, the Council has also approved the Unique Document Identification Number (UDIN) Guidelines, 2019, which shall be mandatory w.e.f 1st October, 2019.

Company Secretaries having full-time Certificate of Practice can register on UDIN Portal and generate UDIN by registering the certificates attested/certified by them from http://udin.icsi.edu/

Understanding UDIN

The UDIN shall be a system generated random alphanumeric number. No document shall be required to be uploaded.

The objective of issuing these Guidelines is to:-

enable the stakeholders to verify the authenticity of various documents certified by Company Secretaries in Practice;
prevent counterfeiting of various attestations / certifications;
provide ease of maintaining the Register of Attestation / Certification services rendered by practicing members;
ensure compliance of the Guidelines issued by the Institute w.r.t ceilings on the number of the various certification / attestation services that may be rendered by the practitioners;
auto-prefill details of Certification / Attestation services rendered by practicing members in of the form for renewal of Certificate of Practice.

UDIN shall be generated for the following services rendered by PCS:

i. Certification of Annual Return in Form MGT-8 under Section 92(2) of the Companies Act, 2013 and Rule 11(2) of the Companies (Management and Administration) Rules, 2014.

ii. Issuance of Secretarial Audit Report in terms of Section 204 of the Companies Act, 2013.

iii. Issuance of Secretarial Audit Report to material unlisted subsidiaries of listed entities (whose equity shares are listed) under Regulation 24A of SEBI (LODR) Regulations, 2015.

iv. Issuance of Annual Secretarial Compliance Report to Listed entities (whose equity shares are listed) under SEBI Circular No. CIR/CFD/CMD1/27/2019 dated 8thFebruary, 2019.

v. Certification under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 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 under Schedule V, Part C, Clause(10) (i).

vi. Certification under Regulation 40(9) of SEBI (LODR) Regulations, 2015 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.

vii. Conduct of Internal Audit of Operations of the Depository Participants registered with NSDL and CDSL under the Bye Laws issued by NSDL and CDSL.

viii. Certification under Regulation 76 of SEBI (Depositories and Participants) Regulations, 2018 for Reconciliation of Share Capital Audit.

ix. Acting as Compliance Auditor under third party certification/ Audit Scheme (Amendment), 2018 in the State of Haryana.

x. Diligence reporting for Banks in case of multiple banking/consortium lending arrangements in terms of the circular issued by RBI.

xi. Conduct of Internal Audit of the stock brokers / sub brokers under SEBI Circular no. MIRSD/ DPSIII/ Cir-26/ 08 dated 22nd August 2008 and MRD/DMS/Cir-29/2008 dated 21st October 2008.

xii. Issuance of Certificate in case of the Indian company accepting the investment from a foreign investor, thereby confirming compliance of Companies Act, 2013 and other matters (As per Para 9 (1) (B) (i) of Schedule 1 to Notification No. FEMA 20/2000-RB dated 3rd May 2000)

Provided further that the practicing company secretary may generate the UDIN for any other eForm and document(s) which is not listed above and not mandatory as per these guidelines on voluntary basis.

In terms of Clause ( 1) of part II of the Second Schedule to the Company Secretaries Act, 1980 as amended by the Company Secretaries (Amendment) Act, 2006, the Council has made quoting of eCSIN (Employee Company Secretary Identification Number) mandatorily for every appointment / cessation of Company Secretary in terms of Section 203 of the Companies Act, 2013 read with Rule 8 / Rule SA of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Further, the Council has approved the Employee Company Secretary Identification Number (eCSIN) Guidelines, 2019 which shall be mandatory w.e.f 1st October, 2019

Legal Terms

Perfunctory Judgement

Judgement carried out without real interest, feeling, or effort.

MCA Updates

Form BEN-2 (Return to the Registrar in respect of declaration under Section 90) notified vide the Companies (Significant Beneficial Owners) second Amendment Rules,2019 dated 1st July 2019 is available for filing purposes now.
Form FiLLiP is likely to be revised on MCA21 LLP Forms Download page w.e.f. 3rd July, 2019.
General Notice on DIR-3-KYC No. 07-2019.

SEBI Updates

RBI Updates

IT Updates

GST Updates

No major updates.

Secretarial Audit & Compliance Report

File DPT-3 and MSME-1 before it’s late

Do not forget to file DPT-3 and MSME-1 before it is late. Speaking of timely compliance, there are recent amendments on secretarial compliances made by SEBI.

In this edition, we will be seeing about the Annual Secretarial Audit Report and Annual Secretarial Compliance Report for Listed Entities and their material subsidiaries. This topic is suggested by CS Gayatri Bhide-Phatak, Proprietor of G.S.Bhide & Associates, Practicing Company Secretaries. Our usual Legal terms and News Bites related to notifications by MCA, SEBI, RBI, IT and GST will follow the article.

Saranya Deivasigamani,
CEO

Secretarial Audit & Secretarial Compliance Report

To regulate the secretarial functions and compliance management, the Committee on Corporate Governance, constituted under the Chairmanship of Shri Uday Kotak, in its report dated October 05, 2017, recommended to add Secretarial Compliance report in addition to regular Secretarial Audit report by ever listed Company. The Committee has recommended

Secretarial audit to be made compulsory for all listed entities under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Regulations”) in line with the provisions of the Companies Act, 2013.

Secretarial audit to be extended to all material unlisted Indian subsidiaries in line with the recommendations of the Committee on strengthening group oversight and improving compliance at a group level for listed entities.

SEBI accepted the aforesaid recommendations and amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 amended to include the following Regulation 24A:

“24A: Secretarial Audit

Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial audit and shall annex with its annual report, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed with effect from the year ended March 31, 2019.”

Accordingly, every listed entity and its material unlisted subsidiaries, as applicable has to comply with the following:

Annual secretarial audit report:

(i) Currently, Section 204 of the Companies Act, 2013 read with rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 requires Secretarial Audit by Practicing Company Secretaries (PCS) for listed companies and certain unlisted companies above a certain threshold in From No. MR-3.

(ii) In order to avoid duplication, the listed entity and its unlisted material subsidiaries shall continue to use the same Form No. MR-3 as required under Companies Act, 2013 and the rules made thereunder for the purpose of compliance with Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as well.

Annual secretarial compliance report:

(i) While the annual secretarial audit shall cover a broad check on compliance with all laws applicable to the entity, listed entities shall additionally, on an annual basis, require a check by the PCS on compliance of all applicable SEBI Regulations and circulars/guidelines issued thereunder, consequent to which, the PCS shall submit a report to the listed entity in the manner specified in this circular.

(ii) The format for the annual secretarial compliance report is placed at Annex-A.

(iii) The annual secretarial compliance report in the aforesaid format shall be submitted by the listed entity to the stock exchanges within 60 days of the end of the financial year.

The listed entities and their material subsidiaries shall provide all such documents/information as may be sought by the PCS for the purpose of providing a certification under the Regulations and this circular.
ICSI may consider issuing a guidance note to Practising Company Secretaries to enable them to undertake certifications in accordance with the Regulations and in letter and in spirit.
The Stock Exchanges are advised to bring the provisions of this circular to notice of the listed entities and also to disseminate on their websites.
This amendments shall come into force as under:
With respect to the annual secretarial audit report, in the annual reports of the listed entities and the material unlisted subsidiaries from the financial year ended March 31, 2019 onwards.
With respect to the annual secretarial compliance report, applicable to listed entities, with effect from the financial year ended March 31, 2019 onwards.

Key points to note in the annual secretary compliance report:

The PCS has to examine the following:

All documents and records are made available and provided by the Company.
The filings/ submissions made by the listed entity to the stock exchanges,
Website of the listed entity,
Any other document / filing, as may be relevant, which has been relied upon to make this certification, for the year in respect of compliance with provisions of SEBI Act and SCRA.

The specific Regulations, whose provisions and the circulars/ guidelines issued thereunder, should be examined, include:-

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015;
SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018;
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
SEBI (Buyback of Securities) Regulations, 2018;
SEBI (Share Based Employee Benefits) Regulations, 2014;
SEBI (Issue and Listing of Debt Securities) Regulations, 2008;
SEBI (Issue and Listing of Non-Convertible and Redeemable Preference Shares) Regulations,2013;
SEBI (Prohibition of Insider Trading) Regulations, 2015;
(other regulations as applicable).

Click here for ICSI guidelines / SEBI Cicular

Legal Term

Transpired

(of a secret or something unknown) come to be known; be revealed.

MCA Updates

SEBI Updates

RBI Updates

Extension of relaxation on the guidelines to NBFCs on securitisation transactions.

IT Updates

GST Updates

No major updates.

Incorporation Rules Amendments

Incorporation rules amendments

Recently, the Ministry of Corporate Affairs have integrated the incorporation process with various other Central Government registration services like GST, ESIC and EPF, For this purpose, MCA has introduced a new form called as AGILE which is Application for Goods and services tax Identification number, Employees State Insurance Corporation registration plus Employees Provident Fund organisation registration (AGILE).

Now to start a business, the entrepreneurs need not wait several days for processing from one department to another, everything will be integrated by Ministry of Corporate Affairs.
Saranya Deivasigamani,
CEO

AGILE FORM

AGILE or INC-35 is an additional, optional e-form to be linked with SPICe Form (INC-33).

eForm AGILE INC-35 is required to be filed pursuant to rule 38(A) of the Companies (Incorporation) Rules, 2014. The application for incorporation of a company under rule 38 (A) shall be accompanied with e-form AGILE (INC-35).

Any user who intends to incorporate company through SPICe eform can now also apply for GSTIN / Establishment code as issued by EPFO / Employer Code as issued by ESIC through this eform (INC-35). User is required to file application (SPICe) for incorporation of a company accompanying linked e-form AGILE “Application for Goods and services tax Identification number, employees state Insurance corporation registration pLus Employees provident fund organisation registration” along with eform SPICe MOA (INC-33) and eForm SPICe AOA (INC-34) to obtain GSTIN / Establishment Code / Employer Code.

This process will be applicable only for Companies incorporated by MCA through SPICe application. Other categories of applicants (Tax Deductor, Tax Collector, Casual Taxable person, ISD, etc.) for GSTIN shall follow the existing process of registration through Common Portal for GST registration

Similarly, other type of establishment such as Factory shall follow the existing process of registration through Common Portal for EPFO & ESIC registration.

Key points to be noted while preparing AGILE

GST

Applying for GSTIN / EPFO / ESIC at the time of incorporation is not mandatory.
In case the applicant wish to apply for any additional services at the time of incorporation, applicant can select the type of service that they need to register.
The state and district for which GST / EPFO / ESIC registration needs to be obtained should be same as entered in SPICe eform.
If the establishment is on Lease or hired on rent, mention From and To Date from the Lease / Rental Agreement.
Option for composition is available in the form to be selected and declaration of composition be given.
The applicant has to carefully identify the business categories, HSN Code, SAC Code as provided by the CBIC website (www.cbic.gov.in)
The number of director / Primary Owners / Office Bearers details can be entered for less than or equal to 5 directors / Primary Owners / Office Bearers. Minimum number of proposed directors’ details to be entered for OPC shall be 1, 2 in case of private company, 3 in case of public limited company and 5 in case of Producer Company.
The Director / Primary Owners / Office Bearers cum Authorised signatory must have valid PAN and must be Citizen & Resident of India.
Either DIN / PAN should be entered for Authorised Signatory. In case DIN is entered, click on Prefill button. PAN and applicant’s full name will be prefilled based on / Primary Owners the information available in the MCA records. In case PAN is entered, all details must be entered by the applicant.
A valid Indian mobile number and email Id has to be provided. The mobile number and email Id will be verified through OTP.
Photo of proposed director cum authorised signatory has to be attached. Size of photo shall not exceed 100KB. Only .JPG format is allowed.

IEC

‘Police Station’ as applicable for the purpose of ESIC registration has to be mentioned.
The appropriate Branch & Inspection office has to be selected.

Attachments

Each attachment has different size limits such as:

Property Tax Receipt – 100 KB
Municipal Khata copy – 100KB
Electricity Bill – 100 KB
Rent/ Lease Agreement – 2MB
Consent Letter – 100KB
Rent receipt with NOC (In case of no/expired agreement) – 1MB
Legal ownership document – 1MB
Letter of Authorisation – 100 KB
Copy of Resolution passed by BoD/ Managing Committee and Acceptance letter – 100KB
Specimen Signature from http://www.mca.gov.in/Ministry/pdf/specimensignature_07042019.pdf shall be downloaded, fill the requisite information as applicable, scan it and attach the same in AGILE form.

Declaration shall be made by director / Primary Owner / Office Bearer who is also an Authorised Signatory

Legal Terms

Arraignment

Show or prove to be right, reasonable, or justified.

MCA Updates

Engagement Of NAFRA Dated 24.04.2019.

SEBI Updates

RBI Updates

IT Updates

GST Updates

No major updates.

BSDA

Happy Financial New Year

Zappy wishes you and your team a very happy financial new year. May this New Year, you achieve your desired Financial Milestones.

In this edition, we will be seeing about “Basic Services Demat Account” (BSDA) and it’s latest amendments. Our usual Legal terms and News Bites related to notifications by MCA, SEBI, RBI, IT and GST will follow the article.

Saranya Deivasigamani,
CEO

BSDA

Since holding of demat account is beneficial to individual investors, SEBI initiated extensive consultations with all the stakeholders to address the concerns and suggestions with respect to cost of demat accounts especially from small individual investors.

The SEBI Board had taken decisions to extend the reach of IPOs for the benefit of retail investors. With a view to achieve wider financial inclusion, encourage holding of demat accounts and to reduce the cost of maintaining securities in demat accounts for retail individual investors, it has been decided that all depository participants (DPs) shall make available a “Basic Services Demat Account” (BSDA) with limited services and reduced costs. The details are provided in the circular dated August 27, 2012. In this edition, we will be seeing all about BSDA and it’s latest amendments.

The salient features of the BSDA are as follows:

a. Eligibility Criteria:

All the individuals who have or propose to have only one demat account where they are the sole or first holder shall be eligible to have a BSDA provided that the value of securities held in the demat account does not exceed Rupees Two Lakhs at any point of time. An individual can have only one BSDA in his/her name across all depositories.

b. Charges:

The Annual Maintenance Charges (AMC) structure for BSDA shall be on a slab basis; if the value of holding is
(i) upto INR. 50,000 there will be NIL AMC and

(ii) for value of holding from INR. 50,001 to INR. 200,000 AMC will be upto INR. 100

The value of holding shall be determined by the DPs on the basis of the daily closing price or NAV of the securities or units of mutual funds. If the value of holding in such BSDA exceeds the prescribed criteria at any date, the DPs may levy charges as applicable to regular accounts (non-BSDA) from that date onwards.

c. Transaction Statements:

Transaction statements shall be sent to the BO at the end of each quarter. If there are no transactions in any quarter, no transaction statement may be sent for that quarter.

d. Holding Statement:

One annual physical statement of holding shall be sent to the stated address of the BO in respect of accounts with no transaction and nil balance and for remaining accounts one annual statement of holding shall be sent in electronic or physical form as opted for by the BO.

e. Charges for statements:

Electronic statements shall be provided free of cost. In case of physical statements, the DP shall provide at least two statements free of cost during the billing cycle. Additional physical statement may be charged at a fee not exceeding INR.25/- per statement.

Rationalisation of services with respect to regular accounts: In order to reduce the cost of compliance of DPs, following rationalisation measures were decided for regular accounts:

a. Accounts with zero balance and nil transactions during the year: The DPs shall send one physical statement of holding annually to such BOs and shall resume sending the transaction statement as and when there is a transaction in the account.

b. Accounts which become zero balance during the year: For such accounts, no transaction statement may be sent for the duration when the balance remains nil. However, an annual statement of holding shall be sent to the BO.

c. Accounts with credit balance: For accounts with credit balance but no transactions during the year, one statement of holding for the year shall be sent to the BO.

Latest Amendments

SEBI vide circulars CIR/MRD/DP/22/2012 dated August 27, 2012 and CIR/MRD/DP/20/2015 dated December 11, 2015, introduced the facility of “Basic Services Demat Account” (BSDA) with limited services for eligible individuals with the objective of achieving wider financial inclusion and to encourage holding of demat accounts.
In order to further boost participation in Debt Market and based on representation received from market participants, in partial modification of the abovementioned SEBI circulars, it has been decided to revise the structure of charges for debt securities as defined in SEBI (Issue and Listing of Debt Securities) Regulations, 2008, as given below:
No AMC shall be levied in case the value of holdings of debt securities is up to INR. 1 lakh and a maximum AMC of INR. 100 shall be levied if the value of holdings of debt securities is between INR. 1,00,001 and INR.2,00,000. And
No AMC shall be levied in case the value of holdings other than debt securities is below INR. 50,000 and a maximum AMC of INR. 100 shall be levied if the value of holdings other than debt securities is between INR.50,001 and INR.2,00,000.
This circular shall come into effect from June 01, 2019.
The Depositories are advised to:-
make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision as may be applicable / necessary; and
communicate to SEBI, the status of implementation of the provisions of this circular by the DPs in the Monthly Development Report.
This circular is being issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 and section 19 of the Depositories Act, 1996 to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.

Legal Term

Vindicated

Show or prove to be right, reasonable, or justified.

MCA Updates

New version of form for incorporation—eForm INC-35 -AGILE
Extension of fees and last date for CRA-2, DIR-3-KYC.
Applicability of AS116, AS101

SEBI Updates

SEBI (Payment of Fees)(Amendment) Regulations, 2019. – Dated March 22, 2019.
Guidelines for BCP and DR of MIIs.
Empanelment of Insolvency Professionals (IPs) to be appointed as Administrator, remuneration and other incidental matters.
BSDA limit for securities.

RBI Updates

Revision on Establishment of Branch Office (BO) / Liaison Office (LO) / Project Office (PO) or any other place of business in India by foreign entities.

IT Updates

Income-tax (Second Amendment) Rules, 2019.

GST Updates

Advisory to GST Taxpayers on Invoice Series to be used wef 1st April, 2019