PAS-6 | Reconciliation of Share Capital Audit Report

GENERAL UNDERSTANDING & BACKGROUND:

Reconciliation of Share Capital is understood as to tally the records of dematerialized and physically held securities with all the securities, on regular basis. In other words, it is reconciliation of total Share Capital held in DMAT form with NSDL & CDSL and in physical form by the shareholders with the total Capital admitted, issued and listed capital, if any.

"Reconciliation of Share Capital Audit Report" is understood as to issuance of an Audit report to the issuer Company, auditing the reconciliation of total Share Capital held in DMAT form with NSDL & CDSL and in physical form by the shareholders with the total capital admitted, issued and listed, if any.

Initially "Reconciliation of share Capital Audit Report", was made applicable for those companies which were listed on Stock Exchange by inserting regulation 55A of SEBI (DEPOSITORIES AND PARTICIPANTS) REGULATIONS, 19961. Consequently, the listed Companies were required to file the Reconciliation of Share Capital Audit Report on quarterly basis to the stock exchange where the securities are listed.

Later, the Ministry of Corporate Affairs, has mandated for unlisted public companies to secure ISIN (International security Identification Number) and to facilitate the conversion of their existing securities in dematerialized form within a specified time frame and for fresh issue securities only in dematerialized form {Rule 9A(1)}. Further, in order to reconcile the Share Capital of the issuer Company also introduced the concept of Reconciliation of Share Capital Audit Report on the footings of regulation 55A supra and the same was required to be filed by the unlisted public on half-yearly basis with the Registrar of Companies {Rule 9A(8)}. (Notification dated 10th September, 2018 amending Companies (Prospectus and Allotment of Securities) Rules, 2014)2

Recently, Ministry of Corporate Affairs, has amended the earlier rule 9A(8) of Companies (Prospectus and Allotment of Securities) Rules, 2014 and introduced the concept of filing of PAS-6 within a period of sixty days of conclusion of each half year basis after certification by a Company Secretary in practice or Chartered Accountant in practice. (Amendment notification dated 22nd May, 2019: applicable from 30th September, 2019)3

COMPARISON TABLE OF ORIGINAL 9A(8) AND AMENDED 9A(8):

PURPOSE OF PAS-6

The basic purpose of this e-form is to file before the Registrar of Companies, an audited report of Reconciliation of Share Capital of a Company.

APPLICABILITY:

This amended rule 9A(8) requiring the filing of E-Form PAS-6 is applicable to "Unlisted Public Companies", governed under rule 9A of Companies (Prospectus and Allotment of Securities) Rules, 2014.

NON-APPLICABILITY:4

This rule shall not apply to an unlisted public company which is:

• a Nidhi Company;
• a Government Company; or
• a Wholly owned Subsidiary Company.

TYPE OF SECURITIES COVERED:

Since rule 9A of the Companies (Prospectus and Allotment of Securities) Rule, 2014 is applicable on "Securities". As per section 2(81) of the Companies Act, 2013 "Securities" means the securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956). As per section 2(h) of SCRA, 1956 Debentures, Stock, Bond derivatives, etc., including Shares and other securities as defined therein are covered under the definition of Securities. Thus, PAS-6 is not only for Shares (equity and/or preference) instead it is for Securities including Shares.

DUE DATE OF FILING PAS-6:

As per amended rule 9A(8), the PAS-6 is to be filed within 60 days of the conclusion of each half-year ending on 31st March or 30th September of every year, as the case may be.

DATE OF DEPLOYMENT OF FORM PAS-6:

15th July, 2020.

FIRST HALF-YEAR COVERED UNDER PAS-6:

The amendment notification dated 22nd May, 20192 requiring the filing of PAS-6 was made applicable from 30th September, 2019. Further, the General Circular No. 16/2019 dated 28th November, 20195 also mentioned at Para No. 2 that the filing requirement of PAS-6 of the half-year ending on 30.09.2019 is 60 days from the date of deployment of PAS-6. Therefore, the first half-year to be covered under the said PAS-6 is related to 1st April, 2019 till 30th September, 2019.

FILING OF PAS-6 FOR THE HALF YEARS FALLING IN FINANCIAL YEAR 2019-20

*Though nothing has been specified but as per our understanding the Form is deployed on 15th July, 2020. In such case it is understood that the period of sixty days for half year ending on 31st March, 2020 will start from 15th July, 2020.

LIST OF KEY DETAILS REQUIRED FOR PAS-6

1. ISIN;
2. Period of filing;
3. Details of Capital of Company i.e., issued, CDSL, NSDL and Physical form;
4. Reasons for difference in Capital i.e., difference between Issued Capital and total of CDSL, NSDL and Physical holding of Shares Capital.
5. Details of changes in share capital during the half-year under consideration;
6. Details of Shares held by Promoters, Directors and KMPs;
7. Particulars of Register of Members i.e., Updated or Not;
8. Details of dematerialised shares in excess in the previous half-yearly period, if any;
9. Details of DMAT;
10. Details of DMAT request pending beyond 21 days alongwith reason;
11. Details of Company Secretary of the Company, if any;
12. Details of Professional certifying the Form;
13. Details of appointment of common agency for share registry work;
14. Any other details the certifying professional signing the form;

SIGNING OF FORM

Director or Manager or Company Secretary or CEO or CFO can sign PAS-6.

CERTIFICATION BY PRACTISING PROFESSIONAL

PAS-6 is to be certified by Company Secretary in practice or Chartered Accountant in practice.

PROCESSING TYPE

The Form will be processed STP (Straight Through Process) mode.

IMPORTANT KEY INSIGHT

• PAS-6 is applicable for Unlisted Public Companies;
• An Unlisted Public Company which is a Nidhi Company or Govt. Company or Wholly owned Subsidiary Company is exempted to file PAS-6;
• Listed Companies are not required to file the said PAS-6;
• First PAS-6 will be related to the Half year ending on 30th September, 2019;
• First PAS-6 is to be filed within a period of 60 days from the PAS-6 Form deployment date (15.07.2020);
• PAS-6 is Bi-annual Form i.e., relating to half year ending on 31st March or 30th September of every year;
• Company Secretary in practice or Chartered Accountant in practice can certify PAS-6;

Conclusion: -

PAS-6 Form enables the reporting of Audit of Reconciliation of Share Capital of an Unlisted Pubic Company except the exempted unlisted public companies. Since the Form requires the detailed information of Securities of Issuer Company and also involves the third party like NSDL and/or CDSL, thus due care is required while auditing the reconciliation of share capital.

References: -

1. https://www.sebi.gov.in/acts/dpregu.pdf;
2. http://egazette.nic.in/WriteReadData/2018/189439.pdf;
3. http://egazette.nic.in/WriteReadData/2019/204592.pdf;
4. http://egazette.nic.in/WriteReadData/2019/195752.pdf;
5. http://www.mca.gov.in/Ministry/pdf/FormPAS6_28112019.pdf

Disclaimer: The entire content of this document has been prepared as per the relevant provisions of the Act and rules made thereunder, applicable at the time of preparation. Though proper care has been taken to ensure accuracy, completeness and reliability of the information provided therein. The users and readers agree that the information provided in this document is not professional advice. Therefore, we assume no responsibility therefrom. Further, this write up shall not be considered as solicitation in any manner.