Secretarial Audit on listed companies under Companies Act, 2013

Under the Companies Act, 2013, secretarial audit is a mandatory compliance requirement for certain listed companies and their subsidiaries. Section 204 of the Companies Act, 2013, along with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, governs the provisions related to secretarial audit.

Under the Companies Act, 2013, a secretarial audit is required for certain listed companies. Section 204 of the Companies Act, 2013 mandates a secretarial audit for specific companies, which includes:

1. Every Listed Company: All companies whose shares are listed on recognized stock exchanges in India are required to undergo a secretarial audit.
2. Public Companies with a Paid-up Share Capital of Rs. 50 Crores or More: Public companies having a paid-up share capital of Rs. 50 crores or more are also required to conduct a secretarial audit.
3. Public Companies with a Turnover of Rs. 250 Crores or More: Public companies with a turnover of Rs. 250 crores or more in the previous financial year are also required to undergo a secretarial audit.

The company secretary conducting the secretarial audit issues a secretarial audit report, which is submitted to the board of directors of the company and also to the relevant stock exchanges (in the case of listed companies). This report is annexed to the company's annual report and provides assurance on the company's compliance with various legal and regulatory requirements.

The secretarial audit report comprises of an evaluation of areas such as board meetings and general meetings' procedures, maintenance of statutory registers and records, compliance with filing of forms and returns with the Registrar of Companies (RoC), adherence to corporate governance norms, compliance with insider trading regulations, and other applicable laws.

The secretarial audit helps in enhancing corporate governance practices, improving compliance, and ensuring transparency in the functioning of listed companies. It provides stakeholders with confidence 

Secretarial audit compliance for listed companies

Here are the key points to understand about secretarial audit compliance for listed companies:

1. Applicability: Secretarial audit is applicable to the following entities: a. Every listed company: All companies whose shares are listed on any recognized stock exchange in India. b. Every public company having a paid-up share capital of Rs. 50 crore or more: Public companies that have a paid-up share capital of Rs. 50 crore or more are also required to undergo secretarial audit.
2. Appointment of Secretarial Auditor: The company is required to appoint a qualified company secretary in practice to conduct the secretarial audit. The company secretary should possess a certificate of practice issued by the Institute of Company Secretaries of India (ICSI).
3. Filing of Secretarial Audit Report: The secretarial auditor conducts an audit of the company's secretarial and compliance-related matters. The audit report needs to be submitted to the Board of company Directors. Moreover, in the prescribed form (MR-3) the company have to file the secretarial audit report with the Registrar of Companies (RoC).
4. Timeframe: The secretarial audit is conducted annually, and the report must be prepared within 60 days from the closure of the financial year.
5. Content of Secretarial Audit Report: The secretarial audit report covers various compliance aspects, such as the company's compliance with the Companies Act, 2013, and other applicable laws, rules, and regulations. The report also verifies the adequacy and effectiveness of the company's internal control systems.
6. Consequences of Non-Compliance: Failure to comply with the secretarial audit requirements can lead to penalties for both the company and its officers in default. The RoC may take appropriate actions in case of non-compliance.

In nutshell:

Secretarial audit is conducted by a qualified company secretary in practice, who examines the compliance of the company with the applicable laws, rules, regulations, and guidelines. The key objective of the secretarial audit compliance is to ensure that the company has satisfied with the provisions of the Companies Act, 2013, and other regulatory laws, and to recognize any non-compliance or irregularities. ASC Group have Company Secretaries and professionals who have comprehensive understanding the law related to companies in India, assist in Secretarial Audit Compliance matters, and stay continually abreast with the regulatory compliance in India, and assist clients in making companies comply under the Companies Act.

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Created on Jul 19th 2023 08:11. Viewed 131 times.

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