Pre-certification of forms & Returns required to be filed with Registrar of companies

Pre certification of forms & Returns required to be filed with Registrar of companies

Meaning

Pre certification refers to examination and authentication of various forms required to be filled with Authorities governed under various laws.

In other words, Pre certification means to check the form by the Independent Professional before filling it with the Ministry of Corporate Affairs.

Introduction

As per Notification [F.No.1/5/2014-CL-V] dated 28th April, 2014, notified asThe Ministry of Corporate Affairs issued a notification to amend the Companies (Registration offices and fees) Rules, 2014 wherein certain rules have been inserted to provide for mandatory certification in the case of certain e-Forms required to be filed under the Companies Act, 2013 except for in the case of One Person Company and Small Companies by a Company Secretary, Chartered accountant or Cost Accountant in Whole time practice, namely, INC-21, INC-22, INC-28, PAS-3, SH-7, CHG-1, CHG-4, CHG-9, MGT-14, DIR-6, DIR-12, MR-1, MR-2, MSC-3, MSC-4, MSC-1, GNL-3, ADT-1, NDH-1, NDH-2, NDH-3Certain other e-Forms have also been specified which require pre-certification by a practicing professional.

Mechanism

Pre certification would mean that the Registrar can rely on the certification of the Professional in practice and take the document on record without further examination. Thus, Pre-certification by such Professional in practice ensures that no form or return is filed in the Office of Registrar of Companies which is defective or incomplete.

Companies Act requires filing of various e-forms by the companies which may be event based form or need to file on annual basis. For ensuring greater transparency for better governance, a number of disclosures are to be made while filing e-forms. Hence all the e-forms are required to be authenticated by authorized signatories of the company filing the same, using digital signatures. MCA has entrusted practicing professionals like members of the Institute of Company Secretaries of India (ICSI) with the responsibility of certifying the compliances and ensuring reliability of documents filed by companies with MCA in electronic mode and also ensuring proper due diligence for the same.

The requirement of authentication of documents prescribed under Rule 8 of the Companies (Registration Offices and Fees) Rules, 2014 elaborates on the responsibility of professionals certifying the forms. The professional certifying the form must verify whether all the requirements as per the provisions of the Act and the rules made thereunder have been complied with and all the attachment to the forms have been duly scanned and attached completely and legibly. If professional notices any defect or finds that the information provided in the form is incomplete/defective, he appropriately advices/provides guidance for completion of document/ rectification of defect and makes pre-certification only after completion/rectification of defects;

The introduction of pre-certification by an independent professional in the e-form is aimed at reducing the work load of the Registrar of Companies. Once an e-form has been pre certified by a professional towards its authenticity based on the particulars contained in the books of accounts and records of the company, ROC is entitled to take on record the e-form. If a professional gives a false certificate or omits any material information knowingly, he is liable to punishment under the provisions of the Act as well as liable for professional or other misconduct.

The Act has also prescribed onerous duties and responsibilities for company directors as well as company secretaries. The punishment for violation of provisions of the Act has also been enhanced under the Act. Therefore, to ensure the correctness of information filed becomes very critical.

Persons who are eligible to pre-certify

The e-form should be certified by

  • Company secretary (in whole-time practice) or
  • Cost accountant (in whole-time practice) or
  • Chartered accountant (in whole-time practice) by digitally signing the e-form.

Exemption

No pre certification is required, if company is:

  • One Person Company;
  • Small Companies 

Benefits

  • To avoid registration delays;
  • To check correctness of documents filed by professionals;
  • To ensures that the particulars stated in the form are in agreement with the books and records of the company;
  • To ensure better governance;
  • To reduce the work load of the Registrar of Companies;
  • Pre-emptive check to ensure that the particulars stated in the form or return are as per the books and records of the company and are true and correct. 

Forms and Returns required pre-certification:

While certification of e-form the declaration is given by the certifying professional which is as follow:

“I declare that I have been duly engaged for the purpose of certification of this form. It is hereby certified that I have gone through the provisions of the Companies Act, 2013 and Rules thereunder for the subject matter of this form and matters incidental thereto and I have verified the above particulars (including attachment(s)) from the original/certified records maintained by the Company/applicant which is subject matter of this form and found them to be true, correct and complete and no information material to this form has been suppressed. 

I further certify that: 

  1. The said records have been properly prepared, signed by the required officers of the Company and maintained as per the relevant provisions of the Companies Act, 2013 and were found to be in order; 
  2. All the required attachments have been completely and legibly attached to this form;”

therefore, Pre-certification of forms is, not a routine or mechanical exercise but is a serious and involved work calling for sound application of mind in verifying the averments made in the respective forms after due consideration of the provisions of the Act read with the relevant rules.

Following is the list of some of the Forms and Return which are required pre certification under companies Act, 2013 and other applicable Laws:

Sl No.FormPurpose
1INC-20AApplication for Declaration prior to the commencement of business or exercising borrowing powers
2INC-22Notice of situation or change of situation of registered office
3INC-28Notice of Order of the Court or any other competent authority
4PAS-3Return of Allotment
5SH-7Notice of Registrar of any alteration of share capital
6CHG-1Application for registration of creation, modification of charge (other than those related to debentures)
7CHG-4Particulars for satisfaction of Charge
8CHG-9Application for registration of creation or modification of charge for debentures or rectification of particulars filed in respect of creation or modification of charge for debentures
9MGT-14Filing of Resolutions and agreements to the Registrar
10DIR-6Intimation of change in particulars of Director to be given to the Central Government
11DIR-12Particulars of appointment of Directors and the key managerial personnel and the changes among them
12MR-1Return of appointment of MD/WTD/Manager
13MR-2Form of application to the Central PCMA Government for approval of appointment or reappointment and remuneration or increase in remuneration or waiver for excess or over payment to managing director or whole time director or manager and commission or remuneration to directors.
14MSC-3Return of Dormant Company
15MSC-4Application for seeking status of active company
16MSC-1Application to Registrar for obtaining the status of Dormant Company
17GNL-1Applications made to Registrar of Companies
18GNL-3Details of persons/directors/charged/specified
19ADT-1Information to the Registrar by Company for  appointment of Auditor
20NDH-1Return of Statutory Compliance
21NDH-2Application for Not available extension of Time
22NDH-3Half yearly Return
23MGT-7Annual Return
24AOC-4Form for filing financial statement and other documents with the Registrar
25DIR-3 KYCKYC of Director

Penal Provisions: 

A wrong pre-certification leads to the following threat to the company, its authorized person and to the certifying professional. 

To the company: 

The provisions of the Companies Act, 2013 provides for the actions/ fine/ penalty to be imposed on the companies in case of the default made by the company/its officers. Further the action may be taken up by central government up to the order of the compulsory winding up of the company

To the authorized representative of the company: 

The provisions of the Companies Act, 2013 provides for the actions/ fine/ penalty to be imposed on the companies in case of the default made by the company/its officers. Further the action may be taken up by central government under section 447,447 and 449 of the companies act, 2013. 

To the Certifying professional: 

  1. Risk on Reputation: Wrong certifications will not only lead to penal provisions but also will affect the reputation of a Company Secretary’s firm and also in his individual capacity. It may lead to possibility of lose the practice also. Apart from this there is bad rift to ICSI. So, a PCS has to keep this in mind while certifying or attesting the forms. 
  1. Under the Company Secretaries Act 1980: The Second Schedule to the Company Secretaries Act, 1980 in clause 2 provides that where a Company Secretary in Practice certifies or submits in his name, or in the name of his firm, a report of an examination of the matters relating to company secretarial practice and related statements unless the examination of such statements has been made by him or by a partner or an employee in his firm or by another Company Secretary in Practice, he shall be deemed to be guilty of professional misconduct.

Further, clauses 5, 6, 7 and 8 provide that where a Company Secretary in Practice while pre certifying any e-Form or document fails to disclose a material fact known to him in his report or statement but the disclosure of which is necessary in making such report or statement, or fails to report a material mis-statement known to him or does not exercise due diligence, or is grossly negligent in the conduct of his professional duties or fails to obtain sufficient information which is necessary for expression of an opinion or its exceptions are sufficiently material to negate the expression of an opinion, he would be deemed to be guilty of professional or other misconduct under the provisions of the Company Secretaries Act, 1980. 

In case there is any false statement in any material particular or omission of any material fact in the form certified as correct by a Practicing Company Secretary, he would be liable for disciplinary action for professional or other misconduct under the provisions of the Company Secretaries Act, 1980.

In view of section 21B (3) of the Company Secretaries Act, 1980, in case he is found guilty of professional or other misconduct mentioned in the second schedule to the Company Secretaries Act, 1980, he will be liable for the following actions 

(a) Reprimand, 

(b) Removal of name from the registrar of members permanently or for such period as may be thought fit by the disciplinary committee, 

(c) Fine which may extend to five lakh rupees. 

iii. Under the Companies Act 2013: With a view to ensure that the secretary in practice carries out his work with due diligence, the Registrar may carry out scrutiny of Forms on random basis. As per rule 8(9) of the Companies (Registration Officers and Fees) Rules, 2014, where any instance of filing document, application or return etc. containing a false or misleading information or omission of material fact, requiring action under section 448 or section 449 is observed, the person shall be liable under section 448 and 449 of the Act. Section 448 of Companies Act, 2013 deals with penalty for false statements. The section provide that 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 deals with punishment for fraud which provides that any person who is found to be guilty of fraud, shall be 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. In case, the fraud in question involves public interest, the term of imprisonment shall not be less than three years.

In view of this, a company secretary in practice will be attracting the penal provisions of section 448, for any false statement in any material particular or omission of any material fact in the e forms. However, a person will be penalized under section 448 in case he makes a statement, which is false in any material particular, knowing it to be false, or which omits any material fact knowing it to be material.

It is pertinent to note that section 448 applies to “any person”. In view of this, a company secretary in practice, who is an independent professional, will be attracting the penalty, as prescribed in section 448 in case his observations in the secretarial audit report turns out to be false or he omits any material fact, knowing it to be false or material

iv. Action by Regulator Further as per rule 8(10) The Companies (Registration Offices and Fees) Rules, 2014, without prejudice to any other liability, in the case of certification of any form, document, application or return under the act containing wrong or false or misleading information or omission of material fact or attachments by the person, the Digital Signature Certificate shall be de-activated by the central government till a final decision is taken in this regard. As per MCA circular no. 10/2014 dated 07.05.2014, where any instance of filing of documents, application or return or form etc., containing false or misleading information or omission of material fact or incomplete information is observed, the Regional Director or the Registrar as the case may be, shall conduct a quick inquiry against the professionals who certified the form and signatory thereof including an officer in default who appears prima facie responsible for submitting false or misleading or incorrect information pursuant to requirement of above said Rules, 15 days’ notice may be given for the purpose. 

The Regional Director or the Registrar will submit his/her report in respect of the inquiry initiated, irrespective of the outcome, to the E-Governance cell of the Ministry within 15 days of the expiry of period given for submission of an explanation with recommendation in initiating action under section 447 and 448 of the Act wherever applicable and also regarding referral of the matter to the concerned professional Institute for initiating disciplinary proceedings. The 

E-Governance cell of the Ministry shall process each case so referred and issue necessary instructions to the Regional Director/ Registrar of Companies for initiating action under section 448 and 449 of the Act wherever prima facie cases have been made out. The E-Governance cell will thereafter refer such cases to the concerned Institute for conducting disciplinary proceedings against the errant member as well as debar the concerned professional from filing any document on the MCA portal in future.

Preparation before Certification: 

Professional in Practice before undertaking the work relating to Pre-certification should thoroughly read the requirements of the provisions of the Companies Act 2013 and Rules made thereunder and familiarize himself with the actual practices that are followed in this regard. He should particularly ensure the following: 

  • Ensure that letter of engagement/Board Resolution authorizing the professional for the assignment by the company to be obtained. (Where the statutory requirement is there for the board resolution or general meeting resolution then a copy of the extract of such resolution shall be obtained by PCS. Wherever the instance is possible it is recommended to record such appointment in the Board meetings.) 
  • Maintain a physical/scanned of all documents verified (subject to confidentiality requirement) 
  • Ensure that all relevant documents and attachments are legible & visible. 
  • Verification of the documents from the original records of the company. 
  • Correctness of the records and the material departure from the facts.
  • The form is signed by the authorized person of the company.
  • Before certification of any form, the person should be aware about the relevant provisions under the Act and Rules made thereunder, Process to be followed by the company, approval if any required etc.

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