A secretarial audit under Section 204 of the Companies Act, 2013 is an independent check by a practising company secretary of a company's compliance with corporate, securities and other applicable laws. It is mandatory for listed companies and public companies meeting paid-up capital, turnover or borrowing thresholds. The report is given in Form MR-3 and annexed to the board's report.
Who must get a secretarial audit
- Every listed company
- Public companies with paid-up capital of Rs 50 crore or more
- Public companies with turnover of Rs 250 crore or more
- Companies with outstanding borrowings of Rs 100 crore or more
Scope
- Companies Act and rules
- SEBI regulations for listed entities
- FEMA and depositories law
- Industry-specific laws applicable to the company
Process
- Board appoints a practising CS.
- Auditor reviews records, filings and minutes.
- Management responds to observations.
- MR-3 report issued and annexed to the board report.
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Get expert help →Penalties
Non-compliance with Section 204 attracts penalties on the company, officers in default and the company secretary in practice.
Frequently asked questions
Is secretarial audit required for private companies?
Generally no, unless a private company is a material subsidiary of a listed company or otherwise covered by SEBI requirements.
Who can conduct a secretarial audit?
Only a company secretary in practice holding a certificate of practice can conduct a secretarial audit.
What is the annual secretarial compliance report?
Listed entities also obtain an annual secretarial compliance report under SEBI regulations, focused on SEBI compliance, filed with stock exchanges.
Can the statutory auditor do the secretarial audit?
No. The secretarial audit is done by a practising company secretary, independent of the statutory financial auditor.
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