LEGAL SAHEB BUSINESS SOLUTIONS PVT. LTD.
Secretarial Audits
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Secretarial Audits:
- The companies act, 2013 first brought in the concept of secretarial audit for certain sets of companies. The secretarial audit is covered under section 204 of the companies act. It is an audit to check the compliance level of corporates under various legislations and not just companies act. It is mandatory for the following set of companies:
- All listed companies
- Unlisted public companies having paid-up share capital of INR 50 crores or more
- Unlisted public companies having turnover of INR 250 crores or more
- Such classes of company shall appoint a company secretary who is in whole-time practice for the purpose of conducting its secretarial audit. The companies shall ensure proper facilities and assistance are provided to such secretarial auditors who shall be appointed
Which are the acts covered under secretarial audits?
- The acts to be covered by a secretarial auditor will purely depend on the industry the company operates. Different companies will attract different sets of legislation to be complied with. Some of the acts which the secretarial auditor shall verify are:
- The companies act, 2013 and rules made there under
- Secretarial standards issued by the institute of company secretaries of India the securities contract (regulation) act, 1956 and rules made there under
- The depositories act, 1996 and rules made there under
- Foreign exchange management act, 1999 and rules made there under
Filing of Secretarial Audit Report:
- The secretarial audit report is to be annexed to the board of directors report in form number MR – 3. The report shall be issued by the auditor based on the proper verification of all the records, files, compliances, documents, and details provided by the company during the course of the audit. In case of any material findings or non-compliances observed during the audit, the auditor shall have the right to qualify such report.
Benefits of Secretarial Audit
- Secretarial audit brings with it material benefits for the company, stakeholders, promoters, investors, directors, government authorities, and regulators by providing a comfort level as to the compliance levels of the company.