Drafting a Compliance Certificate, Format, Guidelines and Examples

Drafting Compliance Certificate is an important task for every Company Secretary. A compliance certificate is a formal document that shows whether a company is following the rules and regulations set by authorities. While preparing such documents for the company secretaries, it is very important to keep clarity, accuracy, and completeness in mind. Below, we’ve mentioned some drafting tips, simple steps, and easy-to-follow instructions that will help students in preparing a compliance certificate.

What is a Compliance Certificate?

A compliance certificate is a written confirmation that a company has followed the required legal and regulatory rules. Drafting Compliance Certificate CS requires careful study of documents, records, and decisions taken by the company. The certificate is often signed and issued by a practising Company Secretary.

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Why is Drafting Compliance Certificate Important?

Below, we’ve mentioned the importance of Drafting Compliance Certificate:

• It ensures that companies stay transparent with their stakeholders by providing official proof of compliance with regulations.
• It proves that the company is following the rules given by SEBI, the Companies Act, and other regulations, which helps avoid penalties or legal issues.
• It builds trust between investors, directors, and regulators by showing that the company is committed to fairness and accountability.
• It gives shareholders confidence that the company is managing its responsibilities properly.
• It helps regulators keep track of whether the company is meeting its obligations without needing to do lengthy inspections every time.

Key Points to Remember While Drafting Compliance Certificate CS

Below, we’ve mentioned some simple tips for preparing the certificate:

1. Follow the Correct Format

Always use the standard compliance cert model as given under SEBI or the Companies Act. This ensures uniformity and avoids confusion.

2. Keep the Language Simple

Drafting Compliance Certificate CS should be done in clear and simple words. Avoid unnecessary jargon or complex terms.

3. Verify All Details

Check the company name, CIN number, registered address, and number of shares carefully. Any mistake in these details can create issues later.

4. Mention the Regulations Clearly

Always state the exact regulation under which the certificate is being issued. This adds authenticity to the compliance certificate.

5. Use Proper Structure

This is the same as seen in cs drafting examples, where step-wise points are followed. The compliance certificate should include:

• Introduction
• Basis of verification
• Points checked (like MoA, AoA, shareholding, disclosures)
• Assumptions and limitations
• Certification statement

Drafting Compliance Certificate CS: Step-by-Step Approach

Step 1: Begin with Addressing

Write the certificate to the Board of Directors, clearly mentioning the company name and address.

Step 2: Add Appointment Reference

Mention the letter or resolution through which individuals were appointed as the Company Secretary.

Step 3: State the Purpose

Explain the purpose of issuing the compliance certificate. For instance, it may be for a preferential allotment of shares.

Step 4: List Verification Points

Include all the points verified by them, such as capital structure, registers, resolutions, and disclosures.

Step 5: Add Assumptions and Limitations

Clarify that the responsibility of compliance is with the management, and they have relied on the documents provided to them.

Step 6: Final Certification

End with a clear statement that the proposed action is in compliance with the regulations.

Using a compliance cert model helps in covering all these steps properly.

Suggested Format of Compliance Certificate

Here is a simple compliance cert model that can be used while Drafting Compliance Certificate CS:

COMPLIANCE CERTIFICATE
(Pursuant to Regulation 163(2), Part III of Chapter V of the SEBI (ICDR) Regulations 2018)

To,
The Board of Directors
__________ (Name of the Company)
__________ (Address)

I/We, ____________, Practising Company Secretary, have been appointed vide letter no. ____ dated ____ by __________ Limited (hereinafter referred to as “the Company”), having CIN __________ and registered office at __________, to issue this Compliance Certificate under Regulation 163(2) of Chapter V of SEBI (ICDR) Regulations, 2018.

The Company has proposed issue of __________ equity shares of face value ₹___ each on a preferential basis at an issue price of ₹___ each. The proposal was approved in the meeting of the Board of Directors held on ____.

On verification of records, registers, disclosures, and representations made by management, I/we certify that:

1. The issue is in accordance with the Memorandum and Articles of Association.
2. The present capital structure, shareholding pattern, and statutory registers have been reviewed.
3. All equity shares held by proposed allottees are fully paid up and in dematerialised form.
4. Proper disclosures under SEBI (PIT) and SEBI (SAST) have been checked.
5. The minimum issue price has been calculated as per Regulation 161.
6. Resolutions of the Board and shareholders have been verified.
7. Other applicable provisions under Regulations, including lock-in, valuation, and payment terms, have been checked.

Assumptions: The responsibility of preparing and maintaining authentic records lies with the management. This certificate is based on documents shared with us and is not an audit opinion.

Certification: Based on examination and explanations given, we hereby certify that the proposed preferential issue is in accordance with SEBI (ICDR) Regulations, 2018.

Date: _______
Place: _______
For ___________,
Company Secretaries
Name: __________
Membership No: _______
COP No: _______
UDIN: _______

Common Mistakes to Avoid in Drafting Compliance Certificate CS

Below, we’ve mentioned some common mistakes students or cand idates should avoid in drafting compliance certificate cs:

• Missing important details like PAN of allottees, valuation report, or information about shareholding pattern, which can make the certificate incomplete.
• Using vague language instead of clear terms may confuse readers and weaken the value of the certificate.
• Forgetting to mention assumptions and limitations, which might create misunderstandings about the scope of verification.
• Copying without adapting to the company’s specific case leads to errors and makes the certificate unreliable.
• Not checking whether disclosures under SEBI regulations have been properly verified.
• Overlooking the correct reference to laws and rules can cause compliance issues later.

Useful Tips for Students and Practicing CS

Drafting Compliance Certificate CS becomes easier when they are prepared by reviewing practical cases and past certificates.

• Always practice cs drafting examples to get confidence and improve drafting skills through repeated exercises.
• Maintain a detailed checklist of points to verify before issuing the certificate, such as shareholding details, resolutions, disclosures, and statutory registers.
• Keep updated with SEBI regulations and amendments by reading official circulars, notifications, and professional updates from ICSI.
• Attend workshops and training sessions to gain exposure to practical aspects of compliance.
• Review sample formats and case laws regularly to stay familiar with how compliance certificates are presented in real-life situations.

Drafting Compliance Certificate CS is an important responsibility of Company Secretaries. It requires attention to detail, proper structure, and correct legal references. By following a proper compliance cert model and practicing through cs drafting examples, one can prepare clear and reliable certificates. With simple language, structured steps, and accuracy, compliance certificate drafting can be done smoothly and professionally.