Secretarial Audit by CS

 What is a Secretarial Audit?

A Secretarial Audit is an independent verification process conducted by a Practicing Company Secretary (PCS) to ensure that a company complies with the legal and procedural requirements under various corporate laws. It ensures good governance, proper compliance, and transparency in the corporate structure and processes.

This audit is governed by Section 204 of the Companies Act, 2013, and relevant rules made thereunder.

📜 Objective of Secretarial Audit

• ✅ To check compliance with the Companies Act, 2013
• ✅ To detect non-compliance and provide corrective recommendations
• ✅ To instill discipline and transparency in corporate operations
• ✅ To protect stakeholders’ interest, including shareholders, regulators, and investors
• ✅ To ensure timely and proper filing of returns, resolutions, and statutory records

📘 Legal Provisions (Section 204 of Companies Act, 2013)

As per Section 204(1):

Every listed company and such other classes of companies as may be prescribed shall annex with its Board’s report, a Secretarial Audit Report given by a Company Secretary in Practice.

🔎 Companies required to obtain Secretarial Audit Report:

1. Every listed company
2. Every public company having:
   • Paid-up share capital of ₹50 crore or more; or
   • Turnover of ₹250 crore or more

📂 Scope of Secretarial Audit

The Company Secretary reviews and reports compliance on the following key laws:

1. Companies Act, 2013
2. Securities Contracts (Regulation) Act, 1956
3. Depositories Act, 1996
4. Foreign Exchange Management Act (FEMA)
5. SEBI Regulations (e.g., LODR Regulations)
6. Environmental, Labour and Taxation Laws (as applicable)
7. Industry-specific laws
8. Secretarial Standards (SS-1 and SS-2) issued by ICSI
9. Internal systems and policies related to corporate governance

📊 Secretarial Audit Report – Form MR-3

• A Company Secretary provides the audit findings in Form MR-3
• This report is annexed with the Board’s Report in the company’s Annual Report
• The report highlights:
  • Areas of compliance
  • Deviations or non-compliance, if any
  • Suggestions for improvement in governance and compliance

🔍 Importance of Secretarial Audit

• 🌐 Ensures statutory and procedural compliance
• 👁️‍🗨️ Increases transparency and accountability
• 🛡️ Acts as a preventive check against legal disputes
• 📈 Enhances investor confidence and corporate credibility
• ⚖️ Helps management in risk mitigation

📅 When to Conduct Secretarial Audit?

• It is an annual compliance for the companies falling under mandatory criteria.
• Recommended for other companies voluntarily to improve internal governance and stakeholder trust.

📋 Penalty for Non-Compliance

Failure to comply with Section 204 can lead to:

• Penalties for the company, officers, and Company Secretary in Practice (if found negligent)
• Additional scrutiny by regulatory authorities (MCA, SEBI, etc.)
• Reputation risk and loss of investor confidence

💼 Need Help With Secretarial Audit?

Our qualified Practicing Company Secretaries (PCS) offer complete services for:

• 🔍 Conducting Secretarial Audit
• 📁 Preparation of Form MR-3
• 📜 Maintenance of Statutory Registers
• 🖋️ Drafting of Resolutions, Notices & Minutes
• ⚖️ Compliance advisory under Corporate Laws, SEBI & FEMA

📞 Get in touch today for professional and affordable Secretarial Audit services!