What is Secretarial Audit?

‘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. Periodical examination is necessary to point out errors & to build a robust compliance mechanism system in an organization.

ICSI views on “Other Laws”

 

FAQ

 

Secretarial Audit offers comfort to the regulators, stakeholders and directors that the company has a disciplined approach to evaluate and improve effectiveness of risk management, control, and governance processes

 

Which Companies are mandatorily covered under Secretarial Audit?

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’ from an 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

 

3

Every public company having a turnover of Two Hundred Fifty Crore rupees or more.

 

4

Private company which is a subsidiary of a public company, and which falls under the aforesaid prescribed class of companies

 

Who can be your 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. A mature person with experience in dealing with business, bureaucracy, managers, bankers, etc should occupy this position. Dealing with Intermediaries is an essential part of this assignment.

How to Appoint?

As per Rule 8 of the Companies (Meetings of Board and its powers) Rules, 2014, Secretarial Auditor is required to be appointed by means of resolution passed at a duly convened Board meeting and resolution for appointment shall be filed with Registrar of Companies within 30 days in E-form MGT-14. A docket containing the above statutory forms must be offered to the Secretarial Auditor.

Interview with CMD, Auditor, Finance Head & Company Secretary is recommended

What is the scope of Secretarial Audit?

A secretarial auditor must check compliances by the company under the following laws and rules made there-under;

Periodic Report at every Board Meeting lends comfort to Visiting Directors

1

The Companies Act, 2013 & the Rules made thereunder

Coverage recommended by ICSI.

Retainership arrangement helps in compliance management & averts embarrassment.

Assignment basis engagement could also be examined.

2

The Securities Contract (Regulation) Act, 1956

Content of Check List

SCR Rules, 1957

CheckList

3

The Depositories Act, 1996

Content of Check List

CheckList

4

FEMA, 1999

Content of Check List

CheckList

5

SEBI Regulations

6

Secretarial Standards issued by ICSI

7

Listing Agreement

8

International Trade

Considered desirable by Directors in view of Schedule V & Economic Offences (Inapplicability of Limitation) Act, 1974 & Personal Liability aspect of Professional engagements.

 

 

9

The Indian Stamp Act, 1899, Transfer of Property & Indian Registration Act, 1908

10

The Central Excise Act, 1944 & Chapter V & VA of the Finance Act, 1994 – Service Tax Law

11

The Industries (Development & Regulations) Act, 1951 & The Competition Act, 2002

12

Air Pollution, Environment Protection & Water Pollution

13

Consumer Protection & Essential Commodities

14

The Prevention of Money-Laundering Act, 2002 & COFEPOSA

15

Trade Marks, Designs, Patents, Geographical Indications & Copyrights

16

CST Act, CST Rules, Income Tax Act, 1961 & Income Tax Rules, 1962

17

Arbitration & Conciliation, Contract Law, INCO Terms, Limitation, Negotiable Instruments & Sale of Goods

18

Insurance & Banking laws

19

Wages, Bonus, ESIC, PF, Compensation, Gratuity, Harassment Apprentices, Factory Law, Contract Labour, Child Labour, Industrial Disputes, Maternity Benefits & Trade Union

20

The Legal Metrology Act, 2009 & Information Technology

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Sub-Section 4 of Section 204 of the Companies Act, 2013, provides that if a company or any officer of the company or the company secretary in practice, contravenes the provisions of section 204 of the Act, the company, every officer of the company or the company secretary in practice, who is in default, shall be punishable with fine which shall not be less than 1 lakh rupees but which may extend to 5 lakh rupees.

Company Secretaries & KMP could consider our Advisory Services + Q&A arrangements – both under electronic mode

I handle my assignments all by myself without any intervening assistant or apprentice. This method is intended to provide data secrecy for clients & error-free consultancy. I travel to Mumbai, Bangalore, Chennai, Tatanagar, Delhi, Kutchh & many other places for handling assignments. Client bears the cost of travel & lodging & boarding, apart from retainership fee mentioned above.

 

In Mumbai, I do not need any lodging & boarding arrangements.

 

 

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