Secretarial Audit is introduced by recently enacted Companies Act, 2013. It is a process to check compliances made by the Company under Corporate Law & other laws, rules, regulations, procedures etc. It is a mechanism to monitor compliance with the requirements of stated laws and processes. Periodically examination of work is necessary to point out errors & mistakes and to make a robust compliance mechanism system in an organization.
Every company needs to comply hundreds of Laws, rules, regulations. These laws are complex and non-compliances would attract major risk to company.
Periodically inspecting the records of company gives exact information whether, and if so, to what extent Company has complied with the laws applicable to
the Company. Secretarial Audit gives comfort to the regulators, stakeholders and management that company has disciplined approach to evaluate and improve
effectiveness of risk management, control, and governance processes.
TO WHICH COMPANIES SECRETARIAL AUDIT IS MANDATORY?
As per section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, following companies are required to obtain ‘Secretarial Audit Report’ form independent practicing company secretary;
(1) Every listed company
(2) Every public company having a paid-up share capital of Fifty Crore rupees or more; or
Every public company having a turnover of Two Hundred Fifty Crore rupees or more.
“Turnover” means the aggregate value of the realisation of amount made from the sale, supply or distribution of goods or on account of services rendered,
or both, by the company during a financial year. [Section 2(91)
Secretarial Audit is also mandatory to a private company which is a subsidiary of a public company, and which falls under the prescribed class of
WHO CAN BE APPOINTED AS SECRETARIAL AUDITOR?
Only a member of the Institute of Company Secretaries of India holding certificate of practice (company secretary in practice) can conduct Secretarial Audit and furnish the Secretarial Audit Report to the Company.