Secretarial audit is a key attribute of good governance and entails a detailed check into company’s policies, procedures and standards to identify areas of compliance and of non-compliance.
Applicability: Following companies are mandatorily subject to secretarial audit
Secretarial auditor is required to report on various applicable acts comprising of Companies Act, SEBI regulations, FEMA provisions, Depositories Act, 1996, Secretarial Standards and various other laws depending on the type and nature of entity.
Certificate of Incorporation along with Memorandum and Articles of company
All statutory Registers and Returns such as:
Periodical Returns:
Documents of Annual General Meeting:
Directors / Officers
Details of filings with various regulatory authorities
Details of material contracts or arrangements
Minute meeting book
Relevant approvals with ROC or stock exchange or any other regulatory body
Secretarial audit offers gamut of advantages, some of them are mentioned below:
Secretarial auditor is required to submit it’s report which is attached to the company’s boards report. Secretarial audit is considered to be a continuous process.
Q1. Whether secretarial audit is mandatory?
Law specifies certain classes of companies that are mandatorily required to get secretarial audit. However, its prescribed to get secretarial audit even if company doesn’t fall in the ambit of mandatory requirement as a part of good governance practice as it assures timely and adequate compliances.
Q2. What is the periodicity of secretarial audit?
Secretarial auditor submits its report which is annexed to the boards report. It’s advised to carry out secretarial audit periodically and on a continuous basis to ascertain non-compliance and take corrective actions well in time
Q3. Would secretarial audit be applicable to private company which is a subsidiary of public company?
As per the law, a private company which is a subsidiary of a public company shall be classified as “deemed public company” and if such deemed public company falls within the limit as prescribed for conducting secretarial audit. Then, the provisions of audit shall be applicable to such private company as well.
Q4. Is there any restriction on quantum of secretarial audits?
Limit of 10 secretarial audits shall be allowed per partner/PCS. In case of peer review, 5 additional limit of secretarial audit per partner/PCS be allowed.
Q5. What is the penalty applicable in case of incorrect audit report?
If any incorrect audit report, return or any statement which is false or omits material facts is issued, such person shall be liable u/s 447 of Companies Act,2013
Further, section 204 of Companies Act mentions that company secretary in practice who contravenes this section would be liable for fine which may extend to 5 lakh rupees.
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