Search and Status Report

Search and Status Report

A search report provides the history of the company which is based on the records available with the various regulators. The purpose of search report is to provide comfort to the stakeholder while dealing with the company and to get correct information about the various assets of the company and as well as the status of the company in the records of the Regulators.

As a general practice, banks these days demand Search Reports from companies as a pre-requisite for opening a bank account or giving loans. The Search Report gives master data regarding the Company including its history & details about its directors and an assurance that neither the company nor its directors are defaulters in any of the earlier loans and borrowings. It also evidences the existing charges created on the property of the company. Basically, a report made on the basis of information gathered by a search of specific records is made available for inspection in a public office or in any other convenient form and is supplemented by the comments and inspection done by the person furnishing the report.

The Search and Status Report is not merely verbatim reporting of the information as made available but also, supplemented by observations/comments by the Company Secretary or such other professional who furnishes the Report. It has two facets. The first being ‘search’ involving physical inspection of documents and the second activity ‘status’ which comprises of reporting of the information as made available by the search. Thus, it acts as a ‘Progress Report’ of the company and gives ready reference to the exact situation.

Purpose and Objective of Search and Status Report

The main objective of a Search and Status Report is to help Banks/ Financial Institutions/ Lenders/ Investors in making their lending and investment decisions. It also helps in taking an informed and speedy decision assuring the credit- worthiness or otherwise of the company. Search and Status Report is mainly beneficial for following entities:

For Banks:

Search and Status Report are basic tools for banks to know the viability of their customer who approach the bank for Cash Credit Limits, Term Loans or otherwise. The following basic information about the existing loans taken by the Company is given by the Company Secretary through such reports:

    • The date of loan taken by the company and the charge created in such respect;

    • The name and address of the charge holders;

    • The type of charge i.e. whether joint charge or consortium charge;

    • The amount of loan;

    • The property charged/ pledged against such loan;

    • The terms and conditions of such loan i.e. rate of interest, terms of repayment, margin money and extent of operation. 

For Directors:

An individual before becoming the Director of the Company may get the Search Report prepared from a Professional for following reasons:

    • To know the present directors of the company.
    • To know the assets and liabilities of the company.
    • To know the complete history as per ROC records since incorporation.

For Shareholders:

Shareholders may also demand the Search Report of the company for the following reasons:

    • To know the status of the company.
    • To know the status of their shares held in the company i.e. how many shares they are holding, on which date their shares were transferred, from whom the shares were transferred.
    • To know the Directors of the company.
    • To know the complete history as per ROC records since incorporation.

For Government Authorities:

Government Authorities like Income Tax Authorities, RBI, SEBI etc. can also get the Search Report prepared discerning the present status of the Company and various other financials filed by the company with the concerned Registrar of Companies.

For Customers and Suppliers

Before entering into any agreement/ contract with the company, the suppliers or the Customers get the Search Report prepared.

Process to Prepare Search Report

While issuing the ROC Search report the following process is performed by the professionals:

Examination of documents Registered on MCA 21 portal:

The MCA website provides much information relating to the Company. Some information are available without payment of fees like Name of the Company, CIN, Authorized and paid up capital, Name and address of the Directors etc. The website also provides for the viewing of document by public on payment of requisite fee. Public documents include the following:

    • Incorporation documents
    • Certificates, including Incorporation certificate and Charge creation, modification and satisfaction certificates.
    • Charge documents.
    • Annual returns and balance sheet,
    • Change in directors and other e-forms

MCA-21 offers the facility to view documents and also search and other facilities of public documents. The document can be viewed only within 7 days after the payment has been confirmed. Also, the documents are available for only 3 hours after the user has started viewing the first document of the company.

    • User has to access My MCA portal and login to the My MCA portal.
    • Click on the ‘My Documents’ tab after logging into the system.

 

 

    • List of company names will be displayed, for which user have already paid for public viewing. It also displays
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        • Date of request i.e. the date, when user made the request to view the company document.

       

       

        • Status of the request i.e. whether viewed or to view.

       

       

 

 

    • Click on the view link under status field.

 

 

    • The documents are grouped under five categories i.e. user has to click on the desired category under which the document falls.

 

 

    • If more than one document is listed, the user can arrange them name wise or date wise.

 

 

    • On clicking the document name, the document shall be displayed for viewing.

Inspection of Various Documents maintained by the company:

According to the scope of the Search report, the professional should go through the various documents required for the purpose of the report, some the documents which may require are as under: 

    • Various clauses of Memorandum and Articles of Association.
    • Forms filed with the Registrar of Companies with receipts.
    • All statutory registers.
    • Verification of financial statement along with notes to accounts and Auditor Report.
    • Report of Internal Auditor.
    • Copies of contracts made between the company and any of the related parties.
    • Transfer and Transmission of Share.
    • Instruments creating, modifying or satisfying charges.
    • Various Disclosures from Directors.
    • Related Party Transactions.
    • Corporate Social Responsibility (CSR).
    • Directors and Key Managerial Personnel (KMP).

Cross Verification of Documents from the MCA Records:

Some financial institutions require a Report by Company Secretaries in Practice, on certain additional points relevant and important for them. A separate Report can be given after inspecting or verifying the documents and records available with the Registrar and/or the company. In nutshell, while providing Search report the following factor should be taken care by the professional:

    • The Search and Status Report should give exact details of particulars of charges/modifications/satisfactions as effected, filed and registered from time to time.

    • Identify those charges and modification of charges, which have been created in favour of a particular lender.

    • Take the particulars of the documents creating the charge as specified in CHG-1 and CHG-9 under the Companies Act,2013 or Form 8 under the Companies Act,1956.

    • Ascertain as to whether the amount secured by the charge as per the documents executed has been duly mentioned.

    • Ascertain as to whether ‘properties’ offered as security are mentioned as per the documents creating the charge and attached with the Forms and verify whether they are as per the terms of Sanction.

    • Check whether the terms and conditions governing the charge have been mentioned.

    • Ascertain whether the name of the lender is properly mentioned.

    • In case of modification of charge ascertain whether the names of documents effecting the modification are mentioned and whether the particulars of modification are clearly mentioned.

    • In case of charge, the particulars of documents attached with forms, amount secured by the charge as per the documents and/or sanction ticket, the properties/assets secured by the charge, the terms and conditions governing the charge and the name of the lender is properly mentioned in the relevant columns of Form CHG-1.

Format of Search Report and its Preparation

Some of the banks and financial institutions insist that the Search Report be given in their own format. It would, therefore, be advisable to know if any specific format is insisted upon by the client.