Post Incorporation Compliance

Section 144 clearly lays down certain restrictions on the auditors to ensure independence and integrity on the part of auditor while discharging their responsibility as an auditor of the company. The law prescribes that an auditor must not engage in providing below services to the company or its holding company, whether directly or indirectly

• Accounting and bookkeeping services;
• Internal Audit;
• Design and Implementation of any financial information system;
• Actuarial Service
• Investment Advisory Services
• Investment Banking Services
• Rendering of outsourced financial services;
• Management Services; and

In other words, a statutory auditor must not do anything for the company other than the audit of the finalised final accounts of the company. The company is under responsibility to prepare the books of account and draft the balance sheet, profit and loss account, other financial reports and give to auditor for expression of his opinion and Audit Report.

The form ADT-1 is the prescribed e-form through which a company has to file an intimation to the ROC about appointment of the auditor with prescribed fee. The filing of ADT-1 is mandatory if the auditor is appointed by the General Meeting, however in case the appointment is through board of directors meeting the filing of ADT-1 is not necessary.

The form ADT-1 has to be filed within 15 Days of the appointment of the auditor.

Yes, the general fee as prescribed under the rules are also applicable for filing the form ADT-1 and the fee is based on the authorised capital of the company. Below is the list of the filing fee for the declaration for the certificate of commencement of business.

Yes, you have the option of filing the intimation of auditor appointment in form ADT-1 even if the due date is missed, however with an additional fee to be paid based on the delay of the number of days from the due date. Below table is for reference to calculate additional fee.

Following are the documents which need to be prepared for appointment of the auditor of the company

• Consent of the Auditor
• Minutes of the Board Meeting
• Extract of the Resolutions Passed at the Board Meeting
• Letter to auditor of his appointment

An auditor is appointed to do audit of the financial statements of a company on completion of the same the auditor has to issue an Audit Report expressing his independent opinion on the financial statements prepared by the company, whether or not it reflects true and fair view of the books of account and affairs of the company. The appointment of the auditor has to be done to meet the compliance requirements as prescribed under section 139 to 148.

The ADT-1 is the statutory form which is filed with the ROC for the purpose of intimation of the appointment of the auditor of the company in general meeting. In case of the first auditor the appointment is done by the board of directors, hence the requirement of filing ADT-1 is not necessary, However as a matter of caution, you may choose to file ADT-1 as the law on this subject matter is not express.

The documents to be prepared for the purpose of franking of the share certificate are as under, the procedure is through state-specific, however, in general, the below list would be acceptable for most of the states.

• Covering Letter on the letterhead (duly affixed Rs 10/- Court Fee Stamp).
• List of Directors of the Company
• List of Shareholders for which share certificate is issued
• Copy of the Share Certificates issues
• Certified copy of Spice Form (INC-32) with Fee Challan
• In case of subsequent allotment PAS-3 Form with Challan
• Signed copy of the MOA & AOA
• Authority letter in favour of Director / professional

Yes, the stamp duty is applicable for all kinds of securities, in case it shares the rates are different for different states, whereas in case of debenture the rate is same for all over India as it is covered under union list.

The rate on which the stamp duty is to be paid is different from state to state, and you should check the relevant state stamp act for the current stamp duty rates. To know the stamp duty payable on the share certificate for each state,please click here 

As per Section 21 of the Indian Stamp Act, the issue price/transaction price is the value for the payment of stamp duty and not the par or nominal value of the security. For example, in case of issue of the security is at a premium, then the stamp duty is payable on the issue price which includes par value and the premium thereon.

The companies act is silent on the point and nowhere prescribes that the share certificate must be issued from the registered address of the company, in other words, a company is free to issue securities from any other place as well. The stamp duty shall be paid in the state where from where the share certificate has been issued. Our suggestion is to hold a proper board meeting at any place and issue share certificate and pay the stamp duty based on the rate of that specific state.

The regulation 25 of the schedule I of the Indian stamp act provides that on the issue of the duplicate share certificate or issue of fresh share certificate on splitting the value of stamp duty is only Rs. 1/- [One Rupee]

Though the non-payment of stamp duty is a criminal offense for which the directors may be sentenced to imprisonment, however in case department has not launched the prosecution, then you shall be able to pay stamp duty by following the same method. However, after that, the department shall send a notice for determination of penalty.

Franking of the share certificate is one among several methods by way of which the stamp duty is paid on the share certificate, and these are impressions made on the share certificate by using a Franking Machine, which is usually installed in the office of the sub-registrar or collector of stamp office of the respective stamp. Typically these machines can affix impressions of up to Rs. 999 on stamp paper.