Applicability of Secretarial Audit

The secretarial audit is basically a compliance audit which is part of the total compliance management in an organization. The main objective of the secretarial audit is to ensure that all the legal and procedural aspects have been complied with by the company and in case of any noncompliance, the same is timely and duly detected along with corrective measures.

The secretarial audit can be conducted only by the practicing company secretary who is being appointed as Secretarial Auditor of the company.

The provisions relating to secretarial audit is contained under section 204 (1) of the Companies Act, 2013.

 Applicability Criteria of Secretarial Audit –

Below mentioned list of companies are required to obtain ‘Secretarial Audit Report’, as per provisions of section 204 of the Companies Act, 2013 read with rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 –

1.    Every listed company (as per section 204 (1) of the Companies Act, 2013);

2.    Every public company having a paid up share capital of INR 50 Crore or more [as per rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014];

3.    Ever public company having a turnover of INR 250 Crore or more [as per rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014].

Other Important Aspects of Secretarial Audit –

·  The company needs to give complete assistance and facilities to the company secretary in practice in order to carry out the audit of the secretarial and related records of the company.

·     In case of any qualification, observation or any other remarks made by the company secretary in his secretarial audit report, the board of directors are required to explain the same in full in their board’s report as required in terms of section 134 (3) of the Companies Act, 2013.

·     In case of any default on the part of the company or any officer of the company or the company secretary in practice, the same would be punishable with the fine of minimum INR 1 lakhs and maximum up to INR 5 Lakhs.

Form of Secretarial Audit Report –

The Company secretary in practice is required to provide the secretarial audit report in Form No. MR-3.

Time Period of Submission of Secretarial Audit Report –

The Company secretary in practice is required to submit the secretarial audit report within a period of 30 days from the date of appointment.