COMPLIANCE MANAGEMENT AND DUE DILIGENCE

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PP-SACM & DD
The concept of Corporate Social Responsibility underlines the need for devising ways and means to
strengthen the hands of the regulators so that there is effective enforcement of the provisions of law without
much intervention into the day-to-day affairs of the company. When the legislature declares a charge as void
under certain circumstances, there should be valid reason for the same and every attempt should be made
to ensure that the unwary creditor does not lose his capacity to enforce the charge merely because he did
not ensure the filing of the same or the proper filing of the same.
Section 127 requires companies to file particulars of properties acquired subject to charge. Section 143
requires companies to maintain a register of charges, while filing of forms under Sections 125, 127, 128, 129,
135 and 138. Maintenance of register of charges under Section 143 of the Act would be covered by a
general question with regard to filing of forms and returns and maintenance of registers. Section 136 of the
Act requires the company to maintain a copy of every instrument creating/modifying charges.
Registered Office of Company (Section 146)
Registered office of a company is one of the most important provisions from the regulators point of view and
public interest point of view. In these days of virtual offices, naturally there will be question whether it is
necessary to have a particular place as the registered office of a company. A perusal of the provisions of the
Act and other legislations will show the importance accorded to the registered office by the legislature. There
are three most important matters, viz., (i) service of notice upon the company, (iij jurisdiction of courts,
Registrar of Companies, Regional Director, Company Law Board and officers of other regulators and (iii)
place of keeping books of account, statutory registers, returns and other documents and common seal.
Further even in respect of other legislations, registered office of a company determines various things. It is
therefore necessary to view with seriousness any omission to notify any change in the registered office of a
company.
Restrictions on Commencement of Business (Section 149)
Under Section 149 of the Act, there are two important aspects. A company is neither entitled to exercise its
borrowing powers nor entitled to commence its business unless it has obtained a certificate from the
Registrar of Companies that the company is entitled to commence business. Section 149 contemplates a
passing of a special resolution, if a company were to commence a new business not germane to its existing
business. Section 149(2B) of the Act empowers the Board of Directors to seek approval of Central
Government where the Board was able to obtain the approval of the members by an ordinary resolution only
instead of a special resolution as required by Section 149(2A) of the Act.
Power to Close Register of Members or Debenture holders (Section 154)
For listed companies the listing agreement operates in addition to the requirements of Section 154 of the Act.
Unlisted companies, where they close their books, there is compliance of this section.
Foreign Registers (Section 157 & 158)
If the company maintains a foreign register in any state or country outside India it has to comply with the
provisions relating to maintaining a copy of the same in accordance with Section 158 of the Act.
Place of keeping and inspection of Registers and Returns (Section 163)
Section 164 of the Act the evidentiary value of the statutory registers and the right of members and others to
inspect the registers and take extracts thereof are enshrined in Section 163 of the Act. It is a very important
section and it speaks sufficiently about the intention of the legislature in this regard. The legislature had
rightly created machinery for remedying any mischief arising out of refusal of the company to permit